Pensions Planning: The NUMBER

crv1963

JessyM wrote: »

My Number is £22K per year - which I am glad to say is achievable!

If that is your goal and you can reach it then you are on target. The next task is then to see when it can be achieved.

I worked out our target retired income and then I looked to see how soon it could be achieved, bringing our goal forwards. We left it a bit late but with planning we're on track for me to go at 58 and Mrs CRV at 55. With a bit more effort and planning we hope to bring this forward again to 57 and 54 respectively.

To do this we have planned stages and created different pots of pension savings-

1) DB (me) available from 55 maximum pension at 58.
2) DC (Mrs CRV) available 55
3) SIPP (Mrs CRV) available 55
4) Savings (Emergency fund and lifestyle fund-so two pots)
5) Age proofing fund- preparing for giving up income so doing the big jobs while in work.
6) SP from age 67 for both (full SP if work to 2021)

Current plan for us is-

Stage 1-Retire 57/54 use DB pension and lifestyle savings to fund year 1-

Stage 2- Year 2 until Mrs CRV 67-Use DB, DC (at around 3k pa) and SIPP (draw down at 6-8k pa). TFLS use to clear mortgage and any left over into Premium Bonds so we have to think before we spend it but it is available for one off purchases. SIPP will be drawn down to zero over the 12 years it is in payment, DC fund hopefully will last a lifetime at just under 3% draw down rate.

Stage 3- SPA- DB plus DC at 3k pa plus SP x2.

We could draw the DC fund down at a higher rate knowing the SP will kick in, but with an eye to income rates in the likely event that I die first then Mrs CRV will need the 3k pa plus DB survivors pension plus SP to maintain lifestyle.

So I'd play around with your figures JessyM and see if you can get your retirement earlier if that is one of your aims.

JessyM

crv1963 wrote: »

If that is your goal and you can reach it then you are on target. The next task is then to see when it can be achieved.

I worked out our target retired income and then I looked to see how soon it could be achieved, bringing our goal forwards. We left it a bit late but with planning we're on track for me to go at 58 and Mrs CRV at 55. With a bit more effort and planning we hope to bring this forward again to 57 and 54 respectively.

To do this we have planned stages and created different pots of pension savings-

1) DB (me) available from 55 maximum pension at 58.
2) DC (Mrs CRV) available 55
3) SIPP (Mrs CRV) available 55
4) Savings (Emergency fund and lifestyle fund-so two pots)
5) Age proofing fund- preparing for giving up income so doing the big jobs while in work.
6) SP from age 67 for both (full SP if work to 2021)

Current plan for us is-

Stage 1-Retire 57/54 use DB pension and lifestyle savings to fund year 1-

Stage 2- Year 2 until Mrs CRV 67-Use DB, DC (at around 3k pa) and SIPP (draw down at 6-8k pa). TFLS use to clear mortgage and any left over into Premium Bonds so we have to think before we spend it but it is available for one off purchases. SIPP will be drawn down to zero over the 12 years it is in payment, DC fund hopefully will last a lifetime at just under 3% draw down rate.

Stage 3- SPA- DB plus DC at 3k pa plus SP x2.

We could draw the DC fund down at a higher rate knowing the SP will kick in, but with an eye to income rates in the likely event that I die first then Mrs CRV will need the 3k pa plus DB survivors pension plus SP to maintain lifestyle.

So I'd play around with your figures JessyM and see if you can get your retirement earlier if that is one of your aims.

Thank you for the above. I have a spreadsheet (don't we all?). that I use to track actual and forecast expenditure, commitments and savings including pension tracking.

I am very lucky in that I am in a final salary pension scheme and I can forecast with some degree of certainty what my pension will be in yearly increments from now until State Retirement Age which will be in 2029 when I will be 67. My number uses these forecasts and also takes information from the Master Budget spreadsheet we have maintained since we got married 22 years ago. We are already debt free and could choose to be mortgage free at point of retirement. I have four scenarios which indicate what I can and cannot afford with an income of £22K per year.

At the moment, work is stress free and hubby is in relatively good health and so I choose to work. If either of those situations change dramatically for the worse, then I have surety that I can retire and won't be destitute. With SP I will actually achieve something like 60% of salary. Between Work retirement and State pension I have the opportunity to do something different such as voluntary work or something creative or both paid or non-paid or self-employment.

So in my case my income target is achieved. We planned to move to Scotland (from the overcrowded East Midlands) when we retired, and have done that when work offered the opportunity of relocation. So that was another goal achieved. We have the sea and the mountains close by. We planned a dog when we retired and have also achieved that goal. A mildly maniacal Hungarian Vizsla keeps us out and about and active, with the added benefits a dog brings.

I came to this thread to understand how much money was needed post retirement and learned what my number was. It is good to know that I am in a good place. And come 67 will be in an improved position. The decision is made to maintain NI contributions in the years between work and state pension.

These threads are really a good source of information

Spreadsheet_Addict

My number is £28,000 per year or about £2,300 a month, which equates to our monthly outgoings now, minus the mortgage and supporting 2 sons at university.

On top of that, we hope to have £5000 a year for extra travelling, taking us to £33,000.

Combined DB pensions from me (£18k) and Mrs. S (£10k) take us to the £28k and we are hoping AVCs will give us the £5k a year for 12 years before the state pension kicks in.

We dont have massively expensive taste and most of our interests are cheap but 2-3 breaks, some abroad outside of school holidays feature heavily.

P933alilli

Is this the number to aim for before state pension or including it?

BoxerfanUK

Collyflower1 wrote: »

Is this the number to aim for before state pension or including it?

I would imagine it includes state pension. Although with state pension age now at 67 and rising and people aspiring to retire in their 50's maybe there should be TWO numbers, one to take you to state pension age and one for beyond.

cloud_dog

Collyflower1 wrote: »

Is this the number to aim for before state pension or including it?

The number is the number. It or they (depending on different levels) is based on expected or hoped for income/lifestyle after stopping work.

Obtaining this or these numbers puts context around your financial retirement planning, i.e. are you on course to achieve the number. If you were to retire before SP age are you able to fund the gap before SP age, etc etc.

Spreadsheet_Addict

Is this the number to aim for before state pension or including it?

I think it differs from person to person. For me, the number of £33k P.A. is the minimum we'd need to retire prior to state pension. After state pension kicks in, we expect to be better off on a month by month basis, but have less of a lump sum left to fall back on since we both have DB pensions.

DairyQueen

Collyflower1 wrote: »

Is this the number to aim for before state pension or including it?

The number is the income required. It's the debit (total projected annual expenses) on the balance sheet. SP is a credit (revenue). The number minus SP equals the funding gap required from personal pension provision.

It's worth forecasting retirement income net of tax. Tax situation can change dramatically once retired and it pays to plan ahead in order to optimise the individual's/household's tax liability.

cloud_dog

For us the number (atm) is £26.5k net pa.

Our number is fine for NRA (65 for my DB scheme) but I am lacking should I wish to leave early (which I do) so, I am making every endeavour to bridge that gap.

Gatser

Collyflower1 wrote: »

Is this the number to aim for before state pension or including it?

I always saw The Number as the initial amount you need to take the first step into retirement. The amount of income you need to cover your total expenditure.
This will of course change every year as your lifestyle changes and age takes its toll 😬 (and inflation)
The early years are relatively easy to calculate... not so easy to guess how much we will need for old age care!
Happy planning 👍