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  • FIRST POST
    • sparkychris
    • By sparkychris 17th Mar 17, 8:20 PM
    • 482Posts
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    sparkychris
    Hundred grand in 23 years
    • #1
    • 17th Mar 17, 8:20 PM
    Hundred grand in 23 years 17th Mar 17 at 8:20 PM
    Hello team!

    I have been awful with money my whole life and up to my neck in debt until a few years ago when I had my light bulb moment and dug myself out of debt.

    I am now allergic to borrowing and rent my home, which is not wise, I know.

    If I want to retire in 23 years time with a lump sum, how would/could I work out how much I would need to accrue, one way or the other that would equate to a hundred grand of today's money?

    I am up to about 20k at the minute, and won't lock my cash away in pensions. I pay into a ls 80 fund, punt on shares and basically just save up!
    lurker
Page 1
    • eskbanker
    • By eskbanker 17th Mar 17, 8:30 PM
    • 4,475 Posts
    • 4,219 Thanks
    eskbanker
    • #2
    • 17th Mar 17, 8:30 PM
    • #2
    • 17th Mar 17, 8:30 PM
    On what basis do you rule out pensions? They are, after all, designed to provide lump sums and/or income at retirement and the tax benefits (and employer contributions where applicable) will usually make a significant contribution to long-term fund growth over and above what you can achieve outside that wrapper....
    • Alice Holt
    • By Alice Holt 17th Mar 17, 8:31 PM
    • 992 Posts
    • 1,062 Thanks
    Alice Holt
    • #3
    • 17th Mar 17, 8:31 PM
    • #3
    • 17th Mar 17, 8:31 PM
    These may help:

    https://www.hl.co.uk/pensions/interactive-calculators/pension-calculator/pension-calculator?theSource=PCGSN&Override=1&adg=G+SIPPEN G+CAL&gclid=CjwKEAjwkq7GBRDun9iu2JjyhmsSJADHCD_H6I jT6hOVMaRcSaedX4cCjRZejjaaQmYq7EJTBalybxoCDAHw_wcB

    http://www.investopedia.com/ask/answers/04/040104.asp

    Hold any necessary emergency funds in high (!) interest accounts.
    But then I'd use a pension and get the income tax uplift. Plus an employer contribution if applicable.
    Silly not to really - just throwing away money!
    Carefully consider how to minimise costs and taxation - these eat into returns.

    This is a good resource and points you to some tools which would help your calculations:
    http://monevator.com/how-to-retirement-plan/

    Are you enrolled into a workplace pension?
    What is the forecast for your state pension?
    Last edited by Alice Holt; 18-03-2017 at 11:47 AM.
    • ViolaLass
    • By ViolaLass 17th Mar 17, 8:41 PM
    • 4,911 Posts
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    ViolaLass
    • #4
    • 17th Mar 17, 8:41 PM
    • #4
    • 17th Mar 17, 8:41 PM
    Is the 100k all that you will have on retirement? Are you sure it's enough?
    • masonic
    • By masonic 17th Mar 17, 8:51 PM
    • 9,126 Posts
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    masonic
    • #5
    • 17th Mar 17, 8:51 PM
    • #5
    • 17th Mar 17, 8:51 PM
    OP, how much do you think you will need to spend on your living costs in retirement? Will you already be of state pension age when you retire, and will you get the full state pension? It does rather sound like you plan to retire into semi-poverty, especially if you will still be renting.
    • JohnRo
    • By JohnRo 17th Mar 17, 8:53 PM
    • 2,305 Posts
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    JohnRo
    • #6
    • 17th Mar 17, 8:53 PM
    • #6
    • 17th Mar 17, 8:53 PM
    You're aiming for a final pension pot of approx 190K then, that's if the last 23 years are any guide to the future, which they're not but it's as good a guess as any.

    According to the BoE, 100K in 1993 would be worth ~186K in today's money with a 2.8% average annual inflation rate.

    How much a month can you afford to save into this?
    'We can't solve problems by using the same kind of thinking we used when we created them.' ― Albert Einstein
    'Facts do not cease to exist because they are ignored.' ― Aldous Huxley
    • sparkychris
    • By sparkychris 17th Mar 17, 9:02 PM
    • 482 Posts
    • 838 Thanks
    sparkychris
    • #7
    • 17th Mar 17, 9:02 PM
    • #7
    • 17th Mar 17, 9:02 PM
    I rule out pensions because the idea that my money is inaccessable if a disaster should occur is really scary... My slightly less scary idea is a buy to let so that a tenant would help pay for my property over 20 years or so. Should the property be empty then I'd be paying the mortgage and just think of it as paying into my pension .. should disaster strike I could sell... Or I could retire into it and live rent free, perhaps

    The reason I don't buy my home now is because I could never afford to live in a house I'd enjoy living in but can afford the rent. The house I live in is worth about 250,000 and the rent is 650... (ish)
    I could afford a terraced home but I'd be miserable.

    I know it's not great thinking but pensions scare me to death.

    And a hundred grand wouldn't be enough but it's better than nothing!
    lurker
    • sparkychris
    • By sparkychris 17th Mar 17, 9:05 PM
    • 482 Posts
    • 838 Thanks
    sparkychris
    • #8
    • 17th Mar 17, 9:05 PM
    • #8
    • 17th Mar 17, 9:05 PM
    OP, how much do you think you will need to spend on your living costs in retirement? Will you already be of state pension age when you retire, and will you get the full state pension? It does rather sound like you plan to retire into semi-poverty, especially if you will still be renting.
    Originally posted by masonic
    Semi poverty is the best I can go for at the minute!

    Am 41, in a rented home with 20k in the bank!
    lurker
    • MoneySavingUser
    • By MoneySavingUser 17th Mar 17, 9:33 PM
    • 1,600 Posts
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    MoneySavingUser
    • #9
    • 17th Mar 17, 9:33 PM
    • #9
    • 17th Mar 17, 9:33 PM
    I rule out pensions because the idea that my money is inaccessable if a disaster should occur is really scary...
    Originally posted by sparkychris
    You should build up an emergency fund to deal with this situation. As you have 20k that should be enough.

    For saving for retirement you need a pension or an ISA.

    Are you employed? Does your employer offer a pension scheme?

    Don't forget you should also (in theory) get the state pension at some point.
    • Prothet of Doom
    • By Prothet of Doom 17th Mar 17, 10:23 PM
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    Prothet of Doom
    I have various pensions from previous employment, which should just about pay the council tax and heating, on the house we own.
    We have invested in a Buy to let, which will pay off it's mortgage just about the age of 65, so that is about 700 a month, which is probably enough to run a car and eat.
    So I am also investing in a SIPP which might be enough in the next 15 years to provide some luxury.
    If I had to worry about paying rent in my retirement I'd be bricking it.
    I did think we could always rent our house out and go and live in a caravan in my kids garden. LOL
    • ViolaLass
    • By ViolaLass 17th Mar 17, 10:24 PM
    • 4,911 Posts
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    ViolaLass
    Why not start by working out how much you'll need to have saved?
    • jdw2000
    • By jdw2000 17th Mar 17, 10:35 PM
    • 415 Posts
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    jdw2000
    It's quite easy to work out how much you need. Just use the figure of 3% as a rough guide.

    100,000 in your pension pot will give you 3000 per year (without denting the pot, after fees, and allowing for inflation).


    That is 250 per month. So combine that with whatever you expect the state pension to be and that's how much you will be living on.


    Considering that some people live on the state pension, an extra 250 per month on top of that is probably doable. But won't be great.
    • masonic
    • By masonic 17th Mar 17, 10:37 PM
    • 9,126 Posts
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    masonic
    The reason I don't buy my home now is because I could never afford to live in a house I'd enjoy living in but can afford the rent. The house I live in is worth about 250,000 and the rent is 650... (ish)
    I could afford a terraced home but I'd be miserable.
    Originally posted by sparkychris
    Semi poverty is the best I can go for at the minute!

    Am 41, in a rented home with 20k in the bank!
    Originally posted by sparkychris
    There seems to be a worrying conclusion reached when these two posts are taken together.

    I hate to break it to you, but 100k (today's money) is not going to allow you to keep renting a home at 650 per month in retirement, especially since you intend to retire several years before you will qualify for the state pension. You will presumably want some money to feed and clothe yourself as well.

    If you can only save 80k over the next 23 years, then buying a home is going to leave you unable to save much at all for retirement. I think some lifestyle changes are warranted.
    Last edited by masonic; 17-03-2017 at 10:41 PM.
    • ViolaLass
    • By ViolaLass 17th Mar 17, 10:42 PM
    • 4,911 Posts
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    ViolaLass
    There seems to be a worrying conclusion reached when these two posts are taken together.

    I hate to break it to you, but 100k (today's money) is not going to allow you to keep renting a home at 650 per month in retirement, especially since you intend to retire several years before you will qualify for the state pension. You will presumably want some money to feed and clothe yourself as well.

    If you can only save 80k over the next 23 years, then buying a home is going to leave you unable to save much at all for retirement. I think some lifestyle changes are warranted.
    Originally posted by masonic
    Indeed. sparkychris appears to be opting for deferred misery.
    • masonic
    • By masonic 17th Mar 17, 10:44 PM
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    masonic
    Considering that some people live on the state pension, an extra 250 per month on top of that is probably doable. But won't be great.
    Originally posted by jdw2000
    I'd imagine most if not all who manage on the state pension alone can do so because they own their own home or live with relatives.
    • jdw2000
    • By jdw2000 17th Mar 17, 10:45 PM
    • 415 Posts
    • 108 Thanks
    jdw2000
    I rule out pensions because the idea that my money is inaccessable if a disaster should occur is really scary... My slightly less scary idea is a buy to let so that a tenant would help pay for my property over 20 years or so. Should the property be empty then I'd be paying the mortgage and just think of it as paying into my pension .. should disaster strike I could sell... Or I could retire into it and live rent free, perhaps

    The reason I don't buy my home now is because I could never afford to live in a house I'd enjoy living in but can afford the rent. The house I live in is worth about 250,000 and the rent is 650... (ish)
    I could afford a terraced home but I'd be miserable.

    I know it's not great thinking but pensions scare me to death.

    And a hundred grand wouldn't be enough but it's better than nothing!
    Originally posted by sparkychris
    "...if a disaster should occur..."

    "... scary..."

    "... should disaster strike..."

    "... I'd be miserable..."

    "... scare me to death..."

    Use positive language. Internally, as well as externally. I'd be a bag of nerves too if I used that sort of language everyday.
    • jdw2000
    • By jdw2000 17th Mar 17, 10:47 PM
    • 415 Posts
    • 108 Thanks
    jdw2000
    I'd imagine most if not all who manage on the state pension alone can do so because they own their own home or live with relatives.
    Originally posted by masonic
    Not all of them, surely. The council provide must provide accommodation too.
    • masonic
    • By masonic 17th Mar 17, 10:51 PM
    • 9,126 Posts
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    masonic
    Not all of them, surely. The council provide must provide accommodation too.
    Originally posted by jdw2000
    Then they'd not be relying on the state pension alone, they'd be making use of housing benefit as well.

    I don't think this will be any good for the OP if living in a terraced house is beneath him
    • jdw2000
    • By jdw2000 17th Mar 17, 10:56 PM
    • 415 Posts
    • 108 Thanks
    jdw2000
    Then they'd not be relying on the state pension alone, they'd be making use of housing benefit as well.

    I don't think this will be any good for the OP if living in a terraced house is beneath him
    Originally posted by masonic
    Good point!
    • Fatbritabroad
    • By Fatbritabroad 18th Mar 17, 6:53 AM
    • 147 Posts
    • 66 Thanks
    Fatbritabroad
    I rule out pensions because the idea that my money is inaccessable if a disaster should occur is really scary... My slightly less scary idea is a buy to let so that a tenant would help pay for my property over 20 years or so. Should the property be empty then I'd be paying the mortgage and just think of it as paying into my pension .. should disaster strike I could sell... Or I could retire into it and live rent free, perhaps

    The reason I don't buy my home now is because I could never afford to live in a house I'd enjoy living in but can afford the rent. The house I live in is worth about 250,000 and the rent is 650... (ish)
    I could afford a terraced home but I'd be miserable.

    I know it's not great thinking but pensions scare me to death.

    And a hundred grand wouldn't be enough but it's better than nothing!
    Originally posted by sparkychris
    So you won't get a pension but you're happy to invest in shares and hold a chunk of illiquid cash in a property that might not "just sell" with all the hassles of being a landlord and the initial upfront costs like 3% stamp duty
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