Pensions Planning: The NUMBER

crv1963

DairyQueen said:

Albermarle said:

What's surprising reading some other posts , is that most people who know me would regard me as being cautious/careful  with money. However compared to some others it seems like I/we are big spenders ! Our food ( & alcohol ) bills seems a bit high, as does 'other/miscellaneous ' so could work on that if necessary .

Same here.
I am constantly reworking the spreadsheets as I'm still stunned at that bottom line. 

Similar picture here, re-working our expenditure to a realistic amount has pushed up our figures and in early stages of retirement we'll need more than I had originally estimated, so my basic retirement, would like retirement and luxury retirement amounts came out too low. Now the would like amount is in fact the basic sum we need.

Plan is to work a bit longer and save hard(ish) to increase the pension pots!

JoeCrystal

Linton said:

I would certainly split leisure and emergency funds. You don’t want excess spending in one to force a cutback in the other. Clothing? Phone? Food at about £3.50/day or £1.20 per meal seems unbelievably frugal.

It is possible, though. You can get a tin of chicken soup from Tesco for 29p in my personal experience. £3.50 per day is entirely feasible. That is roughly how much I spend on my foods, although you may have to miss a meal or two a day. 

caveman38

Bravepants said:

DairyQueen wrote: »

Would you mind posting how you managed to receive that return on cash within a SIPP wrapper? We are holding cash in SIPPs (for drawdown within the next 5-ish years) and it's returning diddly squat.

Many thanks.

Hi, yes its a MINERVA SIPP held with Investacc Pensions. They are the trustees where the sum is actually held in an Investec 2 year fixed Cash Deposit Account. I am just coming up to 1 year with them, and I have another year to run.

Are there annual charges with that cash SIPP. That is obviously a good interest rate compared with next to nothing with cash held in a HL SIPP. But there are zero charges with HL, so it would be interesting to compare.

PJM_62

Wife and myself still a year or two away from early retirement (at 56 ish), but we've done our Numbers and a joint income of 36k will be plenty for our needs. About half of that will be from DB income. The other half using SIPP income. When we're retired and living off our Numbers I'd like to have a bucket scheme in place with 20k ish in a cash bucket. The bucket will initially be filled using about 20% of a VLS ISA pot, and kept topped up with SIPPs while they are performing ok.
What do folks think about getting that cash bucket safely in place now, a couple years early ?
And also what are thoughts on best place to put a 20k cash bucket ?

Albermarle

We anticipate that our essential spends will be in the same ballpark as your's and that we will live very comfortably on £37k net (plus travel/holidays). However, we have now calculated that, minus disasters, we are actually online for a net income of around £52k!

I am constantly reworking the spreadsheets as I'm still stunned at that bottom line. 

Well £37K net + holidays = £42/£43K net , which is the same figure as Mick 70 and Mgdavid have said . 

Barring disasters and when we both get SP's , we can be looking at £60K net hopefully . I don't know exactly because I am not very good with spreadsheets  but like you I would never imagined it when I was younger . Just shows what having a reasonably well paid job and no great urge to splash the cash can result in. When  I see  some friends /relatives  approaching retirement still with mortgages , no pensions, or in one case bankrupt , then all that working/saving seems worthwhile in the end. 

Linton

PJM_62 said:

Wife and myself still a year or two away from early retirement (at 56 ish), but we've done our Numbers and a joint income of 36k will be plenty for our needs. About half of that will be from DB income. The other half using SIPP income. When we're retired and living off our Numbers I'd like to have a bucket scheme in place with 20k ish in a cash bucket. The bucket will initially be filled using about 20% of a VLS ISA pot, and kept topped up with SIPPs while they are performing ok.
What do folks think about getting that cash bucket safely in place now, a couple years early ?
And also what are thoughts on best place to put a 20k cash bucket ?

In my view 6 months income in a cash buffer is much too small - major crashes can last much longer than that.  Perhaps more importantly, the larger the cash buffer the less stress you feel when the big one comes.

What's your plan if a crash happens in the next 2 years?  Will you happily carry on working or would you prefer to retire regardless? If the latter I suggest you get your buffer in place immediately.

As to where to put it: I dont think it matters much as long as the money is safe and easily accessible.  You are not holding the money to provide a return but rather security.  We hold our cash buffer in PBs.  The money is 100% safe, accessible in a few days and as a bonus one gets a couple of minutes excitement once a month.

PJM_62

Linton said:

PJM_62 said:

Wife and myself still a year or two away from early retirement (at 56 ish), but we've done our Numbers and a joint income of 36k will be plenty for our needs. About half of that will be from DB income. The other half using SIPP income. When we're retired and living off our Numbers I'd like to have a bucket scheme in place with 20k ish in a cash bucket. The bucket will initially be filled using about 20% of a VLS ISA pot, and kept topped up with SIPPs while they are performing ok.
What do folks think about getting that cash bucket safely in place now, a couple years early ?
And also what are thoughts on best place to put a 20k cash bucket ?

In my view 6 months income in a cash buffer is much too small - major crashes can last much longer than that.  Perhaps more importantly, the larger the cash buffer the less stress you feel when the big one comes.

What's your plan if a crash happens in the next 2 years?  Will you happily carry on working or would you prefer to retire regardless? If the latter I suggest you get your buffer in place immediately.

As to where to put it: I dont think it matters much as long as the money is safe and easily accessible.  You are not holding the money to provide a return but rather security.  We hold our cash buffer in PBs.  The money is 100% safe, accessible in a few days and as a bonus one gets a couple of minutes excitement once a month.

A couple of minutes excitement once a month sounds perfect
The cash bucket, I see as a joint 1 year bucket. 20k in that supplementing similar yearly amount from combined DBs.
So you think a 2 year 40k cash bucket would be the way to go, spending from that over 2 years if necessary, before topping it up again when SIPPs are hopefully in better health?

tigerspill

Bravepants said:

Hi, yes its a MINERVA SIPP held with Investacc Pensions. They are the trustees where the sum is actually held in an Investec 2 year fixed Cash Deposit Account. I am just coming up to 1 year with them, and I have another year to run.

Hi Bravepants,
Do you open this direct with Investec?
I am trying to find a good cash SIPP to hold money for around three years (for my wife).  The likes of AJ Ball and HL offer 0.1/0.2%.  1.95% seems great.  Just wondering about how to go about opening this SIPP?
Thanks 

Linton

To add some practical experience into the discussion:

We retired early 15 years ago (pre crash, pre mainstream drawdown, pre mainstream online investing) on the basis of a pessimistic plan with a required income somewhat higher than our actual normal expenditure whilst working as we needed to  include the running costs of a boat which has been a key part of our retirement.  At today's prices the income would equate to about £56K. Despite some major unplanned expenditure the plans now show, on the same pessimistic assumptions, a potential steady inflation adjusted income of £65K until our mid 90's, whilst retaining sufficient money for several years care funding.

This increase in potential income is not surprising given the pessimistic assumptions.  However not using pessimistic assumptions would be foolish.  The result is that most people, most of the time, should get an income significantly higher than they plan for.

As our potential steady income now far exceeds our normal needs there is no need for investment growth beyond inflation. In addition to taking more foreign holidays,  I am steadily refocussing our investment strategy towards wealth and income preservation and away from capital growth.

caveman38

tigerspill said:

Bravepants said:

Hi, yes its a MINERVA SIPP held with Investacc Pensions. They are the trustees where the sum is actually held in an Investec 2 year fixed Cash Deposit Account. I am just coming up to 1 year with them, and I have another year to run.

Hi Bravepants,
Do you open this direct with Investec?
I am trying to find a good cash SIPP to hold money for around three years (for my wife).  The likes of AJ Ball and HL offer 0.1/0.2%.  1.95% seems great.  Just wondering about how to go about opening this SIPP?
Thanks 

Unless there are zero fees, then it's hard to compare. I too await Bravepants reply regarding fees.