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  • FIRST POST
    • LittleP
    • By LittleP 11th Jan 18, 8:32 AM
    • 32Posts
    • 49Thanks
    LittleP
    January Ponderings of Where I Am.
    • #1
    • 11th Jan 18, 8:32 AM
    January Ponderings of Where I Am. 11th Jan 18 at 8:32 AM
    Sorry its another one of those how am I doing threads!!


    About four months ago I sat down with an IFA to look at my Pension Provisions in the hope of trying to retire before the State Pension age of 68 (at the moment). I am not looking for confirmation that the IFA is right, more so how my current position looks with regards to where it should be at my age.


    So a few facts

    Age - 38 (39 in July)
    Gross Annual Wage - 21,770
    Average Yearly bonus - 1,000
    Contributions to Company Pension Scheme 5%
    Employers Contribution - 5%
    Contributions to Personal Pension Scheme 8.2%

    My Works Pension Pot currently sits at 37,760.00 and my personal pension pot sits at 9,500. I have additional savings of 14,000 in regular savers and 1,2,3 account and a S & S isa currently at 10,400 (with an additional 150.00 going in each month.)

    My yearly outgoings over the last three years have been about 7700 (or 10,000 with big purchases or home improvements included). I am mortgage free.

    I guess I am looking for validation that I am doing ok because it seems that I may be a bit behind with regards to my current pension pot.

    Thanks for reading.
Page 1
    • TheTracker
    • By TheTracker 11th Jan 18, 9:10 AM
    • 1,175 Posts
    • 1,157 Thanks
    TheTracker
    • #2
    • 11th Jan 18, 9:10 AM
    • #2
    • 11th Jan 18, 9:10 AM
    As I understand it, it is unusual for it to be good value for someone with your net assets and at your age to be engaging an IFA in an ongoing basis. What does the IFA charge you? Oh, reading back it sounds like it was a once only affair.

    You sound like you have a good grasp on your finances and are contributing a healthy portion of your salary. Is it enough? Well, it’s not possible to comment without knowing how much money you need each year at retirement, aspirations and current status on children and property, and future expectations of salary. We’re I you, I’d see about constructing a simple spreadsheet that modelled much of that.
    Last edited by TheTracker; 11-01-2018 at 9:13 AM.
    • IanSt
    • By IanSt 11th Jan 18, 10:09 AM
    • 209 Posts
    • 160 Thanks
    IanSt
    • #3
    • 11th Jan 18, 10:09 AM
    • #3
    • 11th Jan 18, 10:09 AM
    If you were wanting to retire at about 65 then you look as though you're at about the right level of pension saving, but given that it looks like you want to retire early then I'd say you're at the low side.

    How low would depend on the specific age you want to retire and what funds you're investing in.

    At your age (with probably nearly 20 years until retirement) then I'd want to be heavily in equities in a few low cost globally diverse funds.
    • LittleP
    • By LittleP 12th Jan 18, 9:11 AM
    • 32 Posts
    • 49 Thanks
    LittleP
    • #4
    • 12th Jan 18, 9:11 AM
    • #4
    • 12th Jan 18, 9:11 AM
    Thank you for taking the time to reply.

    Well, its not possible to comment without knowing how much money you need each year at retirement, aspirations and current status on children and property, and future expectations of salary. Were I you, Id see about constructing a simple spreadsheet that modelled much of that.
    Originally posted by TheTracker
    That's the million dollar question isn't it, I think I could probably live pretty comfortably on anything between 10,000 to 12,000 a year. The top end would enable me to live a life of relative luxury!!

    As far as my home, I probably stupidly paid the mortgage off over two years ago. I have no children and am not planning on having any so that isn't really a consideration.

    How low would depend on the specific age you want to retire and what funds you're investing in.

    At your age (with probably nearly 20 years until retirement) then I'd want to be heavily in equities in a few low cost globally diverse funds.
    Originally posted by IanSt
    Good advice thank you. I have no specific age in mind as such but its more about giving myself options as time goes by. It seems I could maybe at the least consider increasing my contributions a little.
    • Audaxer
    • By Audaxer 12th Jan 18, 9:44 AM
    • 788 Posts
    • 393 Thanks
    Audaxer
    • #5
    • 12th Jan 18, 9:44 AM
    • #5
    • 12th Jan 18, 9:44 AM
    What percentage of equities do you have in your S&S ISA? As you have 14k in current account savings you could easily have 100% equities in your S&S ISA with only 10,400. I think in your position and age, I would have a higher proportion of the 24,400 in the S&S ISA and if 100% equities is too volatile for you, you could have a more balanced portfolio with 60% or 80% equities. Interested to know what fund(s) you have in your S&S ISA?
    • kidmugsy
    • By kidmugsy 12th Jan 18, 3:06 PM
    • 9,981 Posts
    • 6,736 Thanks
    kidmugsy
    • #6
    • 12th Jan 18, 3:06 PM
    • #6
    • 12th Jan 18, 3:06 PM
    ... trying to retire before the State Pension age of 68 ....

    Age - 38 (39 in July)
    Gross Annual Wage - 21,770
    Average Yearly bonus - 1,000
    Contributions to Company Pension Scheme – 5%
    Employers Contribution - 5%
    Contributions to Personal Pension Scheme – 8.2%

    My Works Pension Pot currently sits at 37,760.00 and my personal pension pot sits at 9,500. I have additional savings of 14,000 in regular savers and 1,2,3 account and a S & S isa currently at 10,400 (with an additional 150.00 going in each month.)

    My yearly outgoings over the last three years have been about 7700 (or 10,000 with big purchases or home improvements included). I am mortgage free.
    Originally posted by LittleP
    Suppose your hope is to retire at 60. Then, because you are below 40 at the moment, consider opening a LISA in 17/18, and filling it each tax year until you turn 50. That's 4k p.a., made up to 5k by the taxpayer. All your withdrawals (from age 60) will be tax-free.

    You presumably want to keep your cash as an emergency fund but you could divert the following money to a LISA: (i) Contributions to Personal Pension Scheme, 8.2% (ii) S&S ISA additional 150.00 going in each month. Then you could make up the balance by removing money from your S&S ISA, or simply accept that falling a few hundred quid short of the maximum is not the end of the world, and so leave your ISA money alone.

    After you stop contributing at 50 you could resume contributions to your Personal Pension.

    For you to have a high probability of comfort and security in retirement my arithmetic implies that you must hope that your investments grow faster than inflation. That has usually been the case in the past when measured over decades. More accurately, it has usually been the case in countries such as the UK, US, Australia, Canada, etc. But if our future looks more like the past of countries such as Austria, Russia, Japan, Turkey, or Germany, things look less rosey. Or even Belgium or Italy.


    Alternatively, you might plan to work part time after you are 60. if you aimed to earn about 8k p.a. you'd have no income tax to pay and next-to-no National Insurance, and yet you'd presumably be in a low stress job that left you with ample spare time. That's probably your fallback position: hope that investment success works for you, but with the prospect of part-time work as an insurance.
    Last edited by kidmugsy; 12-01-2018 at 3:09 PM.
    Free the dunston one next time too.
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