Pensions Planning: The NUMBER

rjmachin

I turn 40 next week and based on my current outgoing as a single person.  Excluding pension contributions and mortgage payments:
I calculate: £10,000
based on
Food £2,000
Bills/Utilities £6,000
Holidays/Leisure £500
Clothing/Cash/Xmas/Other £500
Repairs/replacements £1,000

kev2009

£10k seems a bit low @rjmachin or will you get SP on top of that?  Have you included money for a car, home insurance?
Kev

rjmachin

Thank @kev2009, home insurance is included.  A car is not included, but I currently get that through Motability using my PIP Benefit.  
Of course, I don't know the future of this benefit, so it could stop and then I would need to cover the costs of the car, mot, insurance etc.

DT2001

LULULU1 said:

Our number is 30k per year including heavy mortgage payment

I am 58 and have a full time job paying 45k per year gross. I am hoping to retire from this role next year in March 2022 and work part time with an income of approx 10k per year gross. I will just tip into the higher tax bracket this year by 2k as I still pay a lot into my AVC, Approx £1k per month 
I have a final salary pension which will pays me £15k gross a year which I now taken to help us pay down our debts.

My wife is 54, she is earning gross 12k per year. She has a final pension of £5k per year due when she is 55.
Both of us are due to receive full state pension.

We have a mortgage of 114k at 1.64% interest rate fixed for 5 years and due to finish in 19 years time. This is still high as currently we favour investments over mortgage overpayments but can flip this if things change when rate expires in 2024. 

We a few small debts less than 5k in total which we will pay off before retirement.
We have 105k in our AVCs which we can access when we reach 55. (me 45k, wife 60k)
We have 100k in my wife’s SIPP.

Any other thoughts or ideas or improvements would be greatly appreciated. 

Can you increase your AVC’s to utilise higher rate tax relief?

When you reach SPA you’ll have £18k SP and DB’s worth £20k so good margin over your number. When are you both aiming to retire fully and when there is just one of you what income would be required? If both DB pension offer 50% to spouse plus any AVC’s left will provide a good sole income.

Is mortgage covered by joint life insurance?

You could use 25% TFLS to reduce mortgage if rates have risen higher than you have planned in 2024.

openside50

I'm asset rich cash poor, we have downsized to a nice flat in Surrey, also have a house abroad which we dont rent out just use it as a second family home, plus we have inherited a half share in my wife parents house which we rent out providing us a reasonable £700 per month income, no mortgages on any of them
Sounds good on the face of it, but we have no private pension, have approx £40k savings but we both will be in receipt of the full state pension 
We are looking then at an income of approx £28k when we reach retirement age of 66 in 3 years time, havnt a clue as to wether it's enough, fortunately I have never been a worrier so will just suck it and see 

LULULU1

DT2001 said:

LULULU1 said:

Our number is 30k per year including heavy mortgage payment

I am 58 and have a full time job paying 45k per year gross. I am hoping to retire from this role next year in March 2022 and work part time with an income of approx 10k per year gross. I will just tip into the higher tax bracket this year by 2k as I still pay a lot into my AVC, Approx £1k per month 
I have a final salary pension which will pays me £15k gross a year which I now taken to help us pay down our debts.

My wife is 54, she is earning gross 12k per year. She has a final pension of £5k per year due when she is 55.
Both of us are due to receive full state pension.

We have a mortgage of 114k at 1.64% interest rate fixed for 5 years and due to finish in 19 years time. This is still high as currently we favour investments over mortgage overpayments but can flip this if things change when rate expires in 2024. 

We a few small debts less than 5k in total which we will pay off before retirement.
We have 105k in our AVCs which we can access when we reach 55. (me 45k, wife 60k)
We have 100k in my wife’s SIPP.

Any other thoughts or ideas or improvements would be greatly appreciated. 

Can you increase your AVC’s to utilise higher rate tax relief?

When you reach SPA you’ll have £18k SP and DB’s worth £20k so good margin over your number. When are you both aiming to retire fully and when there is just one of you what income would be required? If both DB pension offer 50% to spouse plus any AVC’s left will provide a good sole income.

Is mortgage covered by joint life insurance?

You could use 25% TFLS to reduce mortgage if rates have risen higher than you have planned in 2024.

Hi there,
Yes I will be paying the extra 2k into the AVC to stay just below the higher tax bracket.
We haven't decided when to retire fully yet, OH enjoys her job and I have no idea what I will be doing.
Both DBs offer 50% to spouse so yes AVC left will provide a good sole income.
Some Mortgage is covered by life insurance approx 80%.
Yes the plan has always been to invest until the interest rates rise and then we have options to pay down mortgage etc....

Many thanks for help.... 

LHW99

LULULU1 said:

DT2001 said:

LULULU1 said:

Our number is 30k per year including heavy mortgage payment

I am 58 and have a full time job paying 45k per year gross. I am hoping to retire from this role next year in March 2022 and work part time with an income of approx 10k per year gross. I will just tip into the higher tax bracket this year by 2k as I still pay a lot into my AVC, Approx £1k per month 
I have a final salary pension which will pays me £15k gross a year which I now taken to help us pay down our debts.

My wife is 54, she is earning gross 12k per year. She has a final pension of £5k per year due when she is 55.
Both of us are due to receive full state pension.

We have a mortgage of 114k at 1.64% interest rate fixed for 5 years and due to finish in 19 years time. This is still high as currently we favour investments over mortgage overpayments but can flip this if things change when rate expires in 2024. 

We a few small debts less than 5k in total which we will pay off before retirement.
We have 105k in our AVCs which we can access when we reach 55. (me 45k, wife 60k)
We have 100k in my wife’s SIPP.

Any other thoughts or ideas or improvements would be greatly appreciated. 

Can you increase your AVC’s to utilise higher rate tax relief?

When you reach SPA you’ll have £18k SP and DB’s worth £20k so good margin over your number. When are you both aiming to retire fully and when there is just one of you what income would be required? If both DB pension offer 50% to spouse plus any AVC’s left will provide a good sole income.

Is mortgage covered by joint life insurance?

You could use 25% TFLS to reduce mortgage if rates have risen higher than you have planned in 2024.

Hi there,
Yes I will be paying the extra 2k into the AVC to stay just below the higher tax bracket.
We haven't decided when to retire fully yet, OH enjoys her job and I have no idea what I will be doing.
Both DBs offer 50% to spouse so yes AVC left will provide a good sole income.
Some Mortgage is covered by life insurance approx 80%.
Yes the plan has always been to invest until the interest rates rise and then we have options to pay down mortgage etc....

Many thanks for help.... 

Have you tried living on your projected income for a bit to see how you manage?

LULULU1

LHW99 said:

LULULU1 said:

DT2001 said:

LULULU1 said:

Our number is 30k per year including heavy mortgage payment

I am 58 and have a full time job paying 45k per year gross. I am hoping to retire from this role next year in March 2022 and work part time with an income of approx 10k per year gross. I will just tip into the higher tax bracket this year by 2k as I still pay a lot into my AVC, Approx £1k per month 
I have a final salary pension which will pays me £15k gross a year which I now taken to help us pay down our debts.

My wife is 54, she is earning gross 12k per year. She has a final pension of £5k per year due when she is 55.
Both of us are due to receive full state pension.

We have a mortgage of 114k at 1.64% interest rate fixed for 5 years and due to finish in 19 years time. This is still high as currently we favour investments over mortgage overpayments but can flip this if things change when rate expires in 2024. 

We a few small debts less than 5k in total which we will pay off before retirement.
We have 105k in our AVCs which we can access when we reach 55. (me 45k, wife 60k)
We have 100k in my wife’s SIPP.

Any other thoughts or ideas or improvements would be greatly appreciated. 

Can you increase your AVC’s to utilise higher rate tax relief?

When you reach SPA you’ll have £18k SP and DB’s worth £20k so good margin over your number. When are you both aiming to retire fully and when there is just one of you what income would be required? If both DB pension offer 50% to spouse plus any AVC’s left will provide a good sole income.

Is mortgage covered by joint life insurance?

You could use 25% TFLS to reduce mortgage if rates have risen higher than you have planned in 2024.

Hi there,
Yes I will be paying the extra 2k into the AVC to stay just below the higher tax bracket.
We haven't decided when to retire fully yet, OH enjoys her job and I have no idea what I will be doing.
Both DBs offer 50% to spouse so yes AVC left will provide a good sole income.
Some Mortgage is covered by life insurance approx 80%.
Yes the plan has always been to invest until the interest rates rise and then we have options to pay down mortgage etc....

Many thanks for help.... 

Have you tried living on your projected income for a bit to see how you manage?

Yes .......
I write down everything we spend but against our retirement number and we are there or there about....
We send a lot on holidays which is a tap we could turn a bit slower if needed..

Korkyb

I haven't got a clue what my number is.

I have to admit to not really keeping close tabs on my expenditure although I do make sure that I get VFM for anything I am shelling out for.

I'm 54 at the moment and am lucky enough to have a decent final salary pension which I may (have to) take before my NPA of 60.

The reason I might have to take it early is that I'm hoping to reduce my hours at work in the next year and as my pension is based on the best 12 months salary in the 3 years before the pension is taken I may have to activate the pension early to ensure it captures my wage at its highest point.

I've worked out that if I take the pension when I hit 56 years old I should receive 22k ish (after actuary reduction).
My wife's pension (also final salary & able to be taken without actuary reduction at age 55) will be around 9k ish.
Her indoors will also receive a smaller pension of 2k ish when she reaches 60.

Mortgage is paid off, we have no debt & around 50k in savings.

Both our pensions pay out lump sums which should amount to 85k ish between us so unless I splash out on a Bentley or a new wife we should have 130k+ in savings in a few years.


So ignoring the fact that I (& probably she) will still be working part time our income from pensions alone should be:

31k in pensions if we take them in around 2-3 years when I hit 56 ish & she 55 years old (22k + 9k).

This will rise to:

33k when wifie is 60.
50k+ when our state pension kicks in (we are both on track to get the full pension).


It seems crazy to me our income will be that level for "not working" but I guess that's why we knocked our pans in since we were 16?


So I feel we are in a much better position than many (or than we ever expected to be) and the only uncertainties / concerns / questions I do have are:

- If I do take my pension early at 56 ish but continue working part time a fair chunk of the pension will be lost through tax (I guess that's life & I wouldn't be able to do much about that).

- What to do with our savings - rather than watching them slowly depreciate in a savings account should I be doing something else with them?  p.s. I'm pretty risk adverse - I don't mind spending my money but I don't like gambling with it (the house always wins imho).

If there is any other advice you feel might be relevant please fire away!

Stay safe y'all.
 

bownyboy

openside50 said:

I'm asset rich cash poor, we have downsized to a nice flat in Surrey, also have a house abroad which we dont rent out just use it as a second family home, plus we have inherited a half share in my wife parents house which we rent out providing us a reasonable £700 per month income, no mortgages on any of them
Sounds good on the face of it, but we have no private pension, have approx £40k savings but we both will be in receipt of the full state pension 
We are looking then at an income of approx £28k when we reach retirement age of 66 in 3 years time, havnt a clue as to wether it's enough, fortunately I have never been a worrier so will just suck it and see 

You both need to get a state pension forecast from HMRC if you haven't already. 
Let's assume its £179.60 from April 6th 2021 which equals £9,340 per year so £18,678 for the both of you. 
Add in £700 rental income which is £27,078 in total. 
Congratulations, you're on track!