Pensions Planning: The NUMBER

michaels

If you are 47 the state pension will not be until 67 increasing to 68....

bluenose1

swindiff wrote: »

My Number is about £30k net for a couple going on current expenditure and being generous with fun money. I have halved the fuel bill as not commuting to work. This is based on my wife and I both retiring at 60. We are both currently 47.


If we can retire at 60 then I will have a USS pension of around £15k, my wife will have an NHS pension of around £2k and an LGPS pension of around £5k. Thats £22k per year for 6 years until we can both draw our full state pension which will increase the total to about £38.5k Gross (net about £34k). I will have about a £45k lump sum from the USS pension and currently paying 15% of salary into ACV's which should give about another £100k in 13 years time. So this should bridge the gap until we are both 66. Thats the plan anyway, just hope there are no unforeseen spanners

My husband and I reckon we will also require about £30k per annum to have the lifestyle we want. He has already retired getting a pension of £19,500 per year. I have just requested to increase my USS deductions by an additional 60% so that in 5 1/2 years I will have an annual income of approx £12k per annum to cover me until my other works pensions start at age 60. Hoping to retire at age 57. Will use the surplus of my additional contributions to sub my pension until I start receiving state retirement pension at 67.

Can’t believe how much tax and NI I am saving by increasing my pension contributions. Decided to stop wasting money on unnecessary things so I can retire earlier than 60.

DairyQueen

swindiff wrote: »

My Number is about £30k net for a couple going on current expenditure and being generous with fun money. I have halved the fuel bill as not commuting to work. This is based on my wife and I both retiring at 60. We are both currently 47.

Car Lease £200.00
Council tax £130.00
Gas and Electric £80.00
Sky TV £85.00
Water Rates £50.00
Fuel £60.00
Mobile Phones £60.00
Home Insurance £25.00
Car Insurance £25.00
TV License £12.00
Food £300.00
Holidays £250.00
Property Maintenance £150.00
Fun Money £1,000.00

Total Monthly expenditure £2,427.00
Net annual income required £29,124.00

If we can retire at 60 then I will have a USS pension of around £15k, my wife will have an NHS pension of around £2k and an LGPS pension of around £5k. Thats £22k per year for 6 years until we can both draw our full state pension which will increase the total to about £38.5k Gross (net about £34k). I will have about a £45k lump sum from the USS pension and currently paying 15% of salary into ACV's which should give about another £100k in 13 years time. So this should bridge the gap until we are both 66. Thats the plan anyway, just hope there are no unforeseen spanners

Very impressed that you are so advanced in your retirement finance planning at the (tender) age of 47.

Well done.

swindiff

michaels wrote: »

If you are 47 the state pension will not be until 67 increasing to 68....

Oh yes I forgot that. Thanks for reminding me lol

swindiff

bluenose1 wrote: »

My husband and I reckon we will also require about £30k per annum to have the lifestyle we want. He has already retired getting a pension of £19,500 per year. I have just requested to increase my USS deductions by an additional 60% so that in 5 1/2 years I will have an annual income of approx £12k per annum to cover me until my other works pensions start at age 60. Hoping to retire at age 57. Will use the surplus of my additional contributions to sub my pension until I start receiving state retirement pension at 67.

Can’t believe how much tax and NI I am saving by increasing my pension contributions. Decided to stop wasting money on unnecessary things so I can retire earlier than 60.

The problem with going before 60 is that the DB part of the pension takes quite a hit. If you look at the modeller on the USS website changing by the odd month just over 60 makes quite a small difference, but as soon as you go down to 59 years and 11 months, bang.

I know what you are saying about the tax and NI stoppages, mine have gone down by nearly £160/month

swindiff

DairyQueen wrote: »

Very impressed that you are so advanced in your retirement finance planning at the (tender) age of 47.

Well done.

Thanks, not wanting to wish my life away but will be glad when I no longer have to work

bluenose1

swindiff wrote: »

The problem with going before 60 is that the DB part of the pension takes quite a hit. If you look at the modeller on the USS website changing by the odd month just over 60 makes quite a small difference, but as soon as you go down to 59 years and 11 months, bang.

I know what you are saying about the tax and NI stoppages, mine have gone down by nearly £160/month

I think I am willing to forgo some income to retire early.
An easy way to calculate how much extra you will make from your pension pot per year is your annual salary divided by 75. I would have thought a month early ie 59 years 11 months would have been just 1/12 of that figure. The USS investment builder doesn’t include salary sacrifice calculations so I had to spend ages useing a generic salary calculator to do all my plans. I have spreadsheets of my spreadsheets!!
My plan is to drawdown each year to make up my income to the tax free limit annual limit of £11,500 to avoid paying tax.

swindiff

bluenose1 wrote: »

I think I am willing to forgo some income to retire early.
An easy way to calculate how much extra you will make from your pension pot per year is your annual salary divided by 75. I would have thought a month early ie 59 years 11 months would have been just 1/12 of that figure. The USS investment builder doesn’t include salary sacrifice calculations so I had to spend ages useing a generic salary calculator to do all my plans. I have spreadsheets of my spreadsheets!!
My plan is to drawdown each year to make up my income to the tax free limit annual limit of £11,500 to avoid paying tax.

If I put my details into the USS benefit modeller these are the figures I get for retirement around the age of 60.

at 60 years and 2 Months £17,280
at 60 years and 1 Month £17,210 reduction of £70 for 1 months service
at 60 years and 0 months £17,140 reduction of £70 for 1 months service
at 59 years and 11 Months £15,650 reduction of £1,490 for 1 months service
at 59 years and 10 Months 15,570 reduction of £80 for 1 months service

As you can see there is quite a large reduction for going before the age of 60, it definitely is not linear at that point.

bluenose1

Hi, yes, I see what you mean. That is a massive variation between 59 years 11 months to 60 years. Just been looking at the benefit modeller and it seems that this is the only month that there is a big variation. It must be a bonus for getting to 60 for your pension!!
As I intend to be long gone by then it wont make any difference to me, but definitely worth considering staying for if you are going to work close to 60.
I am hoping that with the massive voluntary increase I am making in my contributions it will make up the shortfall in my DC pension. Once I am 60 my NHS and Civil Service pension start. Though my most well off time of life should be 67 when in theory my State Pension should start.

swindiff

Would you be in a position to draw on the DC portion of the pension and defer the DB part until 60. Might be worth doing the sums to see how that would work out.