Pensions Planning: The NUMBER

DairyQueen

Coppice10 wrote: »

Having read up on this post today, do you all create your own spreadsheets? Or is there a link to a basic one that I could start with?
Many thanks - new to all this!

I create my own but MS provide some reasonable templates for starters:
https://templates.office.com/en-us/Budgets

Changing $ to £ is cosmetic.

enthusiasticsaver

I have a spreadsheet for recording expenditure. We have found since retiring our disposable income is much higher. No NI or pension deductions. No work clothes or commuting costs and lower tax due to lower gross income. The main reason is though we don't save any more beyond budgeting for annual costs like holidays and Christmas.

However our entertainment budget is higher. We pay more on gas and electric as home more in the daytime than when working. Our holiday budget is higher as we go on more breaks than when working. We also now tend to treat ourselves to first class train tickets rather than basic and we don't skimp on theatre tickets so no more cheapest ones.

We decided we needed a minimum of £2500 per month net. We actually get around £2900 once we include income from our income portfolio. We run two cars though and have an expensive leisure club membership although we have reduced it by moving to off peak hours.

We could manage on a lot less if we just covered essentials and budgeted entertainment and holidays and got rid of one of our cars.

shinytop

Gosh, all these spreadsheets! I have no idea what I spend on what and don't really want to know. I take more of a top-down approach. Rather than work out a 'number' and save up for it, I decided roughly when I wanted to retire, saved as much as I reasonably could and we will make do with what we have when I do. Fortunately what I have looks to be about enough; if not I'll have to do without some things. If I have too much money I'll simply buy more/more expensive things. I thought that's what everyone did?;)

TBC15

Unfortunately that may leave you open to the query “are you working love”. If anything requires a spot of planning, retirement does.

DairyQueen

shinytop wrote: »

Gosh, all these spreadsheets! I have no idea what I spend on what and don't really want to know. I take more of a top-down approach. Rather than work out a 'number' and save up for it, I decided roughly when I wanted to retire, saved as much as I reasonably could and we will make do with what we have when I do. Fortunately what I have looks to be about enough; if not I'll have to do without some things. If I have too much money I'll simply buy more/more expensive things. I thought that's what everyone did?;)

If you have no idea how much you spend then how do you keep within your income. No offence but sounds like a recipe for debt to me.

LHW99

If you have no idea how much you spend then how do you keep within your income. No offence but sounds like a recipe for debt to me.

Well during our working life, I kep an eye on whether the C/A balance was positive at the end of the month. If it wasn't I moved a bit in from savings, if it was I moved it back.
Apart from ensuring all required insurances were in place, and basic bills were met on time, if we couldn't afford something like a holiday, we didn't have one.
I do have a spreadsheet now (since the middle of last year) just to check that what I think was the case really is (it is!) and to ensure I know to what degree I will need to use SIPP income in future when we finally do fully retire (12 months or so..... or more ......)

jamesd

DairyQueen wrote: »

If you have no idea how much you spend then how do you keep within your income. No offence but sounds like a recipe for debt to me.

The "saved as much as I reasonably could" part may be the clue. Consider my decade plus with a savings ratio above 60%. I didn't and don't use a budget or very closely track spending because I don't need to. Of course I've been broadly non-extravagant and do pay attention to substantial exceptions to my base spending.

If finances were tighter or I was inclined to engage in shopping as a pleasurable activity or buy and change cars or computers frequently the approach I use just wouldn't work and spending budgeting beyond core needs would be required.

DairyQueen

jamesd wrote: »

The "saved as much as I reasonably could" part may be the clue. Consider my decade plus with a savings ratio above 60%. I didn't and don't use a budget or very closely track spending because I don't need to. Of course I've been broadly non-extravagant and do pay attention to substantial exceptions to my base spending.

If finances were tighter or I was inclined to engage in shopping as a pleasurable activity or buy and change cars or computers frequently the approach I use just wouldn't work and spending budgeting beyond core needs would be required.

That sounds very like how my OH ran his finances before I met him. It worked fine for him because his salary was paid net of generous pension contributions, and his income was sufficiently high that he always had a surplus. However, he had no incentive to seek out value on things like insurance, and his management of the surplus was grim.

I don't track expenses monthly but create a budget at the beginning of each year. Non-discretionary expenses from the previous year are my starting point. Then I broadly analyse non-discretionaries to reach the total. I allow 1/2% of property value for maintenance. Once inflation is added I have my income requirement for the year.

This allows me to make year-on-year comparisons.

One-off, high-value spends (cars, white goods, holidays) are funded from savings.

This method should fit within our retirement income strategy. We will use UFPLS to make a single withdrawal to fund any deficit between guaranteed, regular income and the expenses forecast for the coming year.

AnotherJoe

DairyQueen wrote: »

If you have no idea how much you spend then how do you keep within your income. No offence but sounds like a recipe for debt to me.

There's a difference between knowing how much you spend, and how much you spend on what.
The OP said the former, not the latter. I operate the same way, I know what I'm spending per month because my bank balance stays roughly constant, but i couldn't tell you what i spend as a % in all the different categories such as food, motoring, entertainment, holidays etc etc. If I find my bank balance seems to be decreasing I'd reign back overall spending, maybe decide i wont go on that £3k holiday I've been fancying for a while, etc.

I could decide what the allocation is between (say) "entertainment", holidays, car etc at the start of the year and then have budgets and move thinsg between them, but I find i dont need to, and such allocations are arbitrary anyway. It might be useful for people who overspend to do this, or to do it to analyse why you are overspending, but if you "naturally" live within your means then you get a feel for whats reasonable.

Then there's also the situation which I'm now in that to a certain extent, and so are many here, I should be spending beyond my means, because I have no particular wish to snuff it with a million in the bank, forgoing (say) holidays in the Seychelles and Hawaii, or [STRIKE]suffering[/STRIKE] flying economy instead of business to meet an arbitrary budget. Of course, you could argue that as long as your budget includes that burn down then fair enough as you dont want to exhaust that million when there's still (say) 20 years to go. Not of course you know how long that period is.

bugslet

I've never had a budget as such. I know as long as I don't spend more than 150.00 per week on food incl dog food, toiletries, going out, discretionary stuff then I'm ok. Being old school, I draw that in cash once a week.

As for spreadsheets, wouldn't know how to do one. I know my pension will be circa 400 k by the end of the year. I know that minimum I will have 250k in the bank, but more likely to be 400+k. It all broadly brings it to what I live on now, 25k pa. I've future proofed the house over the last few years, mortgage has <20k to pay off.

I'm definitely of the jump and it will happen mindset.

PS that translates to my business as well. I'm rubbish at maths and would probably would fail the financial side of the CPC to run a haulage business, but someone told me a long time ago, fuel + wages should be 50% of your costs and it worked. Definitely a folllower of the KISS orinciple:rotfl: