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  • FIRST POST
    • ChrisJBSC
    • By ChrisJBSC 13th Oct 16, 10:42 PM
    • 6Posts
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    ChrisJBSC
    Retirement stages
    • #1
    • 13th Oct 16, 10:42 PM
    Retirement stages 13th Oct 16 at 10:42 PM
    I am 60, and trying to decide when to retire...
    Most pension calculators seem to say: Decide what you need, tell us what you have available, and then they calculate the same thing year in, year out for 30+ years (AND tell me I cant afford it!)
    BUT that feels wrong to me.
    I feel as though I need lots of money now (fun, enjoyment, long holidays) for around 10 years. Then a period of calm, serene settled life with little needs for 10 years. Then a period of rising costs again, as I need carers or support or care home costs for the last 10 years.

    Are there any calculators that will show me these differing early / mid / late periods? Are there any products that will help me?!
Page 1
    • ChrisJBSC
    • By ChrisJBSC 13th Oct 16, 10:43 PM
    • 6 Posts
    • 1 Thanks
    ChrisJBSC
    • #2
    • 13th Oct 16, 10:43 PM
    • #2
    • 13th Oct 16, 10:43 PM
    Additional: I was thinking of:
    Using up my pension pot (from about 4 different pots from 4 different jobs) over the first 10 years. Then living on State pension for 10 years. Then down-sizing the property for the last 10 years. Does that make sense? Is it do-able??
    • ex-pat scot
    • By ex-pat scot 13th Oct 16, 10:59 PM
    • 125 Posts
    • 116 Thanks
    ex-pat scot
    • #3
    • 13th Oct 16, 10:59 PM
    • #3
    • 13th Oct 16, 10:59 PM
    far too little information to allow meaningful response, I'm afraid.


    The #general# comment here is that an annual income of £24,000 pa is desirable in retirement.
    I don't know if that's net or gross (the tax on one person drawing £24,000 gross in retirement is £2,600 so not a huge drain).
    I don't know if that's per couple or per person.
    Frankly - I have no idea of your circumstances, "base running costs", monthly ongoing commitments (children still (semi) dependent?), mortgage.


    I've seen research suggesting a U shape to retirement spending: higher early on, as people tick off the travel and adventure whilst they have their health, and gradually diminishing as health deteriorates and the wish list is completed, before possible care costs increase the end-of-life cost profile.
    All of that is very subjective.
    The number of people requiring expensive care is relatively low.
    But that can be £35-£60k per person per year, depending on the level of care required.


    From the information given, i'd ask why you are thinking of downsizing only once the funds are depleted and SP kicks in. Why not downsize earlier and make more of the freed-up-cash perhaps? (although be warned that you might not be able to free up quite as much cash as you think- bungalows and retirement friendly accommodation is small but not cheap).


    THe way I see things, you can take one of two approaches:


    1. do a lot of planning around what cash you need at each stage, and work for a long while to try and achieve the funds that it will require. As you note, this is a scary amount, and you will spend a lot of time working to generate that amount.


    2. Jump in and make the most of what you have now. Downsize if you can to free up cash and minimise ongoing running costs, then work out what you can achieve with what you have. It's a bit more scary but I suspect would be a lot more fun
    • badmemory
    • By badmemory 14th Oct 16, 1:11 AM
    • 231 Posts
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    badmemory
    • #4
    • 14th Oct 16, 1:11 AM
    • #4
    • 14th Oct 16, 1:11 AM
    the problem with downsizing is that once you reach a certain age ANY change can be detrimental. So if you are factoring in a downsize as part of your financial plan you need to be absolutely convinced that it is also going to be feasible which means that it should be early enough to actually be feasible!
    • chiefie
    • By chiefie 14th Oct 16, 6:22 AM
    • 202 Posts
    • 168 Thanks
    chiefie
    • #5
    • 14th Oct 16, 6:22 AM
    • #5
    • 14th Oct 16, 6:22 AM
    Once you go into care your income just gets taken in full by the council until it is more than the care costs. And if it is less the council then ask family to top it up. My dad had a good pension but it was less than the cost of very basic care. We had to top this up to get him into a home that didn't smell but the service was still poor. Don't be fooled. Take your own money and give it away asap.
    • jerrysimon
    • By jerrysimon 14th Oct 16, 7:41 AM
    • 116 Posts
    • 52 Thanks
    jerrysimon
    • #6
    • 14th Oct 16, 7:41 AM
    • #6
    • 14th Oct 16, 7:41 AM
    Very simlar thoughts myself though I am younger at 56.

    I plan to leave around March next year. Our budget will be around £1500 net a month with both my wife and my pension. No morgage and I will also have a lump sum of around 60K. Downsizing plans are uncertain as well. We have about 500K tied up in our house. Initially we plan to stay put. Our house is not huge but is in a major city so it would probably mean moving out and we love city life. Have already travelled exstentively so not got any big plans on that side yet. Of course in 10 years time we can add add another 13K+ for both our state pensions. Unless the government chnage the rules again of course.

    I have spent the last six months going round and round the figures. This forum helpded be a lot and stopped me be impulsive when I almost resigned because work was being very difficult. But slowly I am putting the plans in place by looking closely at monthly income, working on bills and thinking about different things that we will do (need a bucket list).

    Its both exciting (feels great to think I can ditch the daily grind) but also quite scarey. At 40 I always wondered why people procrastinate so much over retirement. Now I am much less judgemental.

    Jerry
    Last edited by jerrysimon; 14-10-2016 at 7:46 AM.
    • ChrisJBSC
    • By ChrisJBSC 14th Oct 16, 10:13 AM
    • 6 Posts
    • 1 Thanks
    ChrisJBSC
    • #7
    • 14th Oct 16, 10:13 AM
    • #7
    • 14th Oct 16, 10:13 AM
    I agree to the downsizing early enough comments - I know the trouble we have had with my parents in moving them from their family house before / after it got too big for them to manage. The longest we have lived in one house is around 20 years - and we expect to be living in retirement for longer than that! So moving at that point will be a big issue.

    Thanks, Jerry - your thoughts confirm that something similar is possible. Its all a case of keeping the flexibility for as long as possible. If I can live on pension pots for longer, and therefore delay the taking of the SP, then that allows the SP to be larger and more useful into the future. This automatically means a pension drawdown arrangement early on, rather than an annuity.
    Maybe the down-sizing has to happen earlier - but it is something that can be varied and flexible depending on financial position at the time.
    • Silvertabby
    • By Silvertabby 14th Oct 16, 10:23 AM
    • 384 Posts
    • 412 Thanks
    Silvertabby
    • #8
    • 14th Oct 16, 10:23 AM
    • #8
    • 14th Oct 16, 10:23 AM
    Have you requested a State pension forecast? If any of your 4 pensions were contracted out, you may not qualify for the full £155 per week.
    • westv
    • By westv 14th Oct 16, 10:39 AM
    • 4,066 Posts
    • 1,719 Thanks
    westv
    • #9
    • 14th Oct 16, 10:39 AM
    • #9
    • 14th Oct 16, 10:39 AM
    Rather than downsizing I think I'll consider equity release when (if) I get into my 80s.
    • Stirfry
    • By Stirfry 14th Oct 16, 11:32 AM
    • 19 Posts
    • 12 Thanks
    Stirfry
    Having just moved out of our home of 26 years at the age of 59 years I can understand why some people on this forum say if you are going to move do it while your still young and fit enough. Do not underestimate how much unnecessary junk you have collected over the years.

    We moved to retire in another area and free up cash, having planned to do so for 2 years.
    • Silvertabby
    • By Silvertabby 14th Oct 16, 12:03 PM
    • 384 Posts
    • 412 Thanks
    Silvertabby
    We love our home and have no intentions of moving/downsizing. We may well look at some form of equity release to help pay for a cleaner/gardener when the time comes, but it's different for us as we don't have any children to leave the house to.
    • jerrysimon
    • By jerrysimon 14th Oct 16, 1:21 PM
    • 116 Posts
    • 52 Thanks
    jerrysimon
    I must admit equity release seems like an expensive option to me, but only in terms of leaving money to kids I guess.

    Re SP I was opted out and mine is reduced even though I have contributed a lot more years than my wife who wasn't and will have almost the full amount. That said I am sure she earnt it all those years she spent at home with young children!
    Jerry
    • Triumph13
    • By Triumph13 14th Oct 16, 2:26 PM
    • 719 Posts
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    Triumph13
    I was assuming the extra £13k+ you mentioned for SP was post-tax. If it's a pre-tax number because you are thinking that you will get less than the £155.65 then get on and pay some voluntary NICs to get the full amount. It's by far the best value investment available to you unless you have good reason to expect to turn up your tootsies before reaching 70.
    • ChrisJBSC
    • By ChrisJBSC 14th Oct 16, 2:30 PM
    • 6 Posts
    • 1 Thanks
    ChrisJBSC
    Have you requested a State pension forecast? If any of your 4 pensions were contracted out, you may not qualify for the full £155 per week.
    Originally posted by Silvertabby
    Yes... They say I will, from 2022, be getting £179 a week.
    • jerrysimon
    • By jerrysimon 14th Oct 16, 2:54 PM
    • 116 Posts
    • 52 Thanks
    jerrysimon
    Our combined SP is pre tax though my wife wont pay any tax on hers unless I die and she inherits half my final salary pension

    From memory when I checked on line mine was about £120/w and hers about £145/w. Pension wise at 66ish we will be well off assuming like I said they don't change the rules again in the next 10 years.

    I am leaving next March so no more NI payments for me thanks very much.

    Jerry
    Last edited by jerrysimon; 14-10-2016 at 2:57 PM.
    • Triumph13
    • By Triumph13 14th Oct 16, 3:30 PM
    • 719 Posts
    • 659 Thanks
    Triumph13
    Our combined SP is pre tax though my wife wont pay any tax on hers unless I die and she inherits half my final salary pension

    From memory when I checked on line mine was about £120/w and hers about £145/w. Pension wise at 66ish we will be well off assuming like I said they don't change the rules again in the next 10 years.

    I am leaving next March so no more NI payments for me thanks very much.

    Jerry
    Originally posted by jerrysimon
    If you are paying tax in retirement then a year's worth of NICs is a one-off payment of £733 in return for £185.51 A YEAR FOR LIFE post tax. For your wife, a one-off £733 gets her £231.89 a year for life (dropping to £185.51 if you predecease her). Those sums have the same inflation proofing as the rest of your state pension and you would be quite frankly mad not to take them.
    • Clifford_Pope
    • By Clifford_Pope 14th Oct 16, 5:59 PM
    • 2,967 Posts
    • 2,896 Thanks
    Clifford_Pope
    Looking at the theory of a U-shaped expenditure curve, I wonder if it would be better to see it as two streams of distinct kinds of expenditure, revenue and capital?

    I retired a few months ago, and planned on the basis that I needed to sustain broadly the same level of revenue expenditure as previously. My costs have not diminished appreciably, mainly travel to work, but with more time I want to do more with my leisure. I certainly don't want a lower standard of living. I envisage that continuing indefinitely.
    So revenue expenditure throughout retirement would be flat.

    But early on there might be a case for capital expenditure, eg using a lump sum, for house improvements, catching up on neglected maintenance, world cruise, sports car, etc .

    As for the possibility of later rising costs, that too is better seen as capital. Most people who need care need it only for a few years, and yes, it can make an enormous bite in someone's wealth. But it is essentially unplannable, with a reasonable chance of not being needed. So I don't really see how it fits into a planned rising revenue cost - better perhaps as a contingent capital cost.

    Combining the two profiles gives a sort of U-graph, but on a firmer basis I suggest.

    Two fundamental factors do occur to me;
    One is on the downsizing question. We are in the position of not needing to include the house value in any consideration of pension needs, so probably envisage staying put indefinitely, and passing the house to descendants.
    The other is to be clear whether planning is per person or per couple.
    My SIPP would pass to my wife if she were to survive me (she is ten years younger) so the income considerations would remain pretty much unchanged. I am drawing down less than the natural income of the SIPP. But obviously circumstances vary, and someone whose widow's pension might only be 50% would face different considerations.
    • jerrysimon
    • By jerrysimon 14th Oct 16, 7:01 PM
    • 116 Posts
    • 52 Thanks
    jerrysimon
    If you are paying tax in retirement then a year's worth of NICs is a one-off payment of £733 in return for £185.51 A YEAR FOR LIFE post tax. For your wife, a one-off £733 gets her £231.89 a year for life (dropping to £185.51 if you predecease her). Those sums have the same inflation proofing as the rest of your state pension and you would be quite frankly mad not to take them.
    Originally posted by Triumph13
    Hold on I pay around £350/month in NI so you are saying I would only need to pay in one £733 lump sum to get £185 extra a year for life ?

    That said I would have to wait to 66.5 to draw it i.e. 10 years away.

    Jerry
    • enthusiasticsaver
    • By enthusiasticsaver 14th Oct 16, 8:09 PM
    • 2,571 Posts
    • 4,383 Thanks
    enthusiasticsaver
    We had these conversations earlier this year when trying to decide if OH could afford to retire this year. We came to the conclusion that we needed around £1500 per month to live as we do now with access to £100k capital for house maintenance/ car replacement and holidays for next 10 years. OH is 58, I am 56. As you say the most expensive years are early retirement and possibly later years should care costs be needed. We have pensions, savings, OHs TFLS, property and stocks and shares. We have determined not to blow lump sum on big holidays, new cars etc etc but to live as we do now for next few years and confident our finances will allow this.

    Whether your plan will work or not depends on your outgoings and your pension pots. Is it worth waiting and only drawing one or two initially until you see how things go?

    We are delaying taking my main pension until around 62 (LGPS) as I will be carrying on working for one more year and we will live off my salary and OH pension then savings then a private frozen pension of mine which kicks in at 60. State pensions will subsidise our income probably just as TFLS decreasing.
    Debt and mortgage free and saving for early retirement
    • Triumph13
    • By Triumph13 14th Oct 16, 8:38 PM
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    Triumph13
    Hold on I pay around £350/month in NI so you are saying I would only need to pay in one £733 lump sum to get £185 extra a year for life ?

    That said I would have to wait to 66.5 to draw it i.e. 10 years away.

    Jerry
    Originally posted by jerrysimon
    That's precisely what I'm saying. Voluntary NICs are insanely good value. If you had £120 pw at April 2016 you'd need 8 more years to get to the full new SP level. You'll get one for this year so that leaves 7 to go. At current prices that would be a little over £5k of capital expenditure to get £1,300 a year post-tax income from 66.5. You could theoretically wait a few years to avoid tying up the money for so long, but I personally plan to pay each year as it comes in case HMRC put the prices up as it just seems too good to last.
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