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Pensions Planning: The NUMBER
in Pensions, annuities & retirement planning
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So why do you dismiss a software system that helps you to plan much more accurately, given as you correctly state planning is essential?
btw - can you explain why an income of £42K keeps you under the hrt threashold.. I have many clients with retirement income in excess of £50K per annum that pay basic rate tax?
Excellent post Linton - its a joy to see someone that truly understands the concept of the number.
The real enjoyment I get with my clients once they realise that they are not going to run out of money, is discussing where and when they can spend their cash or give it away!!!
...like most people on here !
...to their IFA as well earned fees. :beer:
Is that the best you can do now - you are obviously dodging the serious questions.
So we learn a little more from your experience...
The NUMBER is not interesting in itself, its useful to know what others have included...or not.
As you say, we can be pleasantly surprised by how little we need to have a happy retirement :j
I live comfortably (happy) on what I earn. The kids take up about a third of my income, so therefore I calculate (estimate) that I need two thirds of salary in retirement, to carry on living comfortably.:D
As I will no longer be saving towards retirement, but have more time on my hands, the money I now save towards retirement should be sufficient for all those extras (like more holidays) in my free time.:D
It's an estimate. It really doesn't have to be that scientific, as no one can really predict what will happen in the future. For starters, I don't even know if I will be around to pick it up, or I may emigrate and then the exchange rate crashes; - look at all those people in Spain who are now regretting moving. What about divorce, disability etc?
The main thing is, I know what I am aiming for, and this figure will probably change depending on hundreds of different factors, which haven't been forseen yet.
I will adapt and overcome!:rolleyes:
The number is based on what we actually spent for the previous 6 years, so its top-down rather than bottom-up. The figure was then upped by 10% as we wanted to enjoy our retirement as much as reasonably possible.
Our expenditure on basics is about £10000 and has barely changed in the past 12 years despite inflation. Basics includes food, bills & utilities, house and car insurance, car tax, clothing, and healthcare. It also includes cash, but that is minimised by full use of credit/debit cards as this aids expenditure data collection.
The remaining £30K has to cover everything else ( holidays, house repairs and redecoration, running our boat, electrical goods, furniture replacement etc) except the 6-yearly car replacement which has its own budget.
The PLAN reduces our expenditure by about 20% after we are 80 as we presumably wont go on so many holidays nor run a boat, but it does ensure that we have a sufficient cash fund left over in our extreme old age to cover any care costs.
I do not allow us to exceed our budget in any running 12 month period, but do consider it our duty to get as close as reasonably possible.
I would not claim that my NUMBER and PLAN guarantees happiness, but it does minimise the stress of financial worries.
Seriously, 50k a year from a business or property is what I'm aiming for. If I sell either, then I'll have enough.
Couldn't think about living on £200 a week.
By the time I am 55 the children will all be through University and financially independent (I hope) and with the lack of a mortgage and not paying pension contributions we should be in a healthy financial position to realise a comfortable, and god willing, a long retirement. A lot can happen in the next 11 years though!
I wish I was organised enough to maintain a spreadsheet of past living costs and outgoings in order to conduct a more scientific analysis of retirement needs, but I am not!
Not trying to be too scientific... I just meant that the NUMBER is best calculated as bottom up...adding up all one's needs and desires.
Also, more interesting to compare with each other then.
But if two thirds of salary is good for you thats all that matters.
If we start using salary as the benchmark, it will make comparisons more difficult too because we don't like revealing our salaries (generally)
Totally agree on the unknowns... just had a close (youngish) death as a solemn reminder...it brings some reality to these NUMBER debates