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Pensions Planning: The NUMBER
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MoneySavingExpert
Chair, Martin Lewis · Editor, Marcus Herbert
Replies
Maybe you didn't get a nasty PM from WF
No one ganged up on him. He made an extravagant claim and refused/ was unable to back it up, apart from being thoroughly obnoxious and unpleasant.
....and your NUMBER is?
What is your view on the thread topic?
After over 100 posts, it appears lots of folks have not calculated their NUMBER (or will not reveal it?)
Thanks to those that have given their views on the NUMBER.
To date...average is £27,350
It would be useful to see the breakdown as comparisons.
Some people say their NUMBER is "two thirds of salary" but the principle
of the NUMBER is that you should calculate (estimate) how much you NEED
to live comfortably (happy). Not a proportion of your current salary.
So what's your NUMBER?
Happy new Year :beer:
I have detailed records on how much we have spent on what for the past 13 years. I decided to retire when the MSMoney-based plan showed that we had the resources to continue to live at our then standard of living +10% for the rest of our lives assuming 3% inflation and a pretty conservative 4% return on investments.
If I hadnt had a detailed planning model I would have been in no position to make any sort of rational decision on the life changing decision to retire early.
IMHO people who say that you dont know the future so you cannot plan are missing the whole point. Its just like saying that since you dont know whether the motorway will be blocked because of an accident there is no point in planning a route for a long car journey. You should just sort of make a decision (toss a coin?) each time you come to a road junction.
It is essential to make a plan on your best pessimistic current guess. You then keep the plan updated as circumstances change. In my case we are ahead of what I planned 5 years ago so I am happy. If I hadnt any plans I could well be unhappily still at work.
As well as giving me the confidence to stop working the plan helps me make sensible investment decisions. I know how much cash we will need for the next few years and so can put the right money in a series of fixed rate deposits earning more than 4%. I know that some of my wealth will not be needed for 10 years and so I can put that into high risk but potentialy high return unit trusts and shares.
OK, if circumstances change significantly I will need to change my plans, but even here having a plan helps. If I hadnt a plan how would I know that circumstances had changed significantly? With the plan I can reduce our expenditure now to avoid running out of funds at some point in the future.
On the positive side, the plan avoids the temptation to skimp unnecessarily. For example our actual expenditure for the past few months is well below budget so we have no qualms about taking a relatively expensive holiday in the sun to recover from the past few weeks of grim weather.
So listen to Whiteflag, make your plan and take control of your future!!
I agree on all points.
Planning is essential to know if you are going to achieve your NUMBER
and gives an early warning if not, so you can do something about it.
I think we ALL agree on that, not just Mr.WF
Interesting that you have your NUMBER as Gross income
Its a personal preference, but I calculate what I need (my NUMBER) as Net Income (and then Gross it up).
As mentioned by Zygurat, tax is very important and another part of pensions planning... to try and avoid HR tax by smoothing out income
over both our working and non working periods.
I suppose for that reason, having gross income around £42k is ideal as it avoids HR tax.