Pensions Planning: The NUMBER

hugheskevi

Based on spending since 2013/14, I calculate that we (my wife and I) have a 'number' of about £30 to £31K (post tax income).

However, as we will be moving from London to Wales, quite a few things will change. In particular, key spending changes will be:

• Higher Council Tax (from £1,800 to c£3,000 p/a)
  
• Paying voluntary National Insurance (c£1,800 p/a)
• Cost of pets (have none in London)
  
• Higher travel costs
• No holiday costs after we move (due to pets there will probably not be any holidays, or if there are they will just be very short periods away, eg to visit friends, probably with one person staying at home)

We plan to sell our current house and travel for up to 3 years before returning to buy a house in Wales, so I have varied my number for different life stages to take into account this, and also when different pensions become available (figures all in today's price terms, after tax):

I am about £65,000 away from where I would like to be (the negative figure against 'Reserve'), and expect to hit target toward the end of 2021.

The targets are pragmatic, based both on what I think we will need and what we have available.

OldMusicGuy

I've been retired for over 2 years now and we have completed our downsizing move so have a very clear idea of our outgoings. Our actual number is around 32K a year for a comfortable retirement for a couple excluding holidays. We run two cars and have an energy efficient 4 bedroom house. We only have one pet these days (a cat) and that reduced our number as our dog was costing around 1500 per annum in insurance, vet's bills and food. We could reduce our number a bit by saving money on food. We shop primarily at our local shops rather than supermarkets but that's been a conscious decision to both support local businesses and enjoy fresh local produce rather than try to maximize savings.

We aren't big holiday people, so holidays are a discretionary spend that we will decide how much to spend on based on how well our investments do. We mainly do short breaks in the UK but might do a couple more European trips in the next five years or so. 

MallyGirl

Yes dogs can be expensive, especially as they get older. Lots of people see retirement as the time to get a dog. My older one costs £1600 for insurance and vet plan - without food or vet bills. She also has a monthly injection to help with arthritis at £48 a time (old age is not covered by insurance) and she has just been diagnosed with hypothyroidism so that will be medication and monitoring blood tests for the rest of her life (not entirely covered by insurance due to her age). The younger one is cheaper so far thankfully. The cat was cheaper until she got cancer

DairyQueen

cfw1994 said:

This thread seems to have wandered off to questions/discussions that I would suggest merit their own post/thread.

A reminder of the origins of this, from the first post around a hundred years ago:
    The NUMBER is how much income you need to "live comfortably"
    So What's your number?
    Very important for pensions planning, to know what you are aiming for.

+1 to this ^.

My first post on this thread was about 50 years ago so I thought I would provide an update after many number revisions.

I had originally estimated an annual of around £18k (basic), £30k (comfortable) and £40k (luxury). All net of tax. Mr DQ will retire as soon as the world opens-up or at Christmas this year (whichever is the soonest) having delayed from last year. WFH is a major improvement on house arrest with little to do. 

We are currently in the middle of a major house move - two modest properties to sell and one to buy. One sold, one almost bought, one yet to list.

Uncertainty about the costs of running the new home mean that our retirement number is still provisional but should be in the ballpark of £35,147:

Non-discretionary
Housing
Utilities, council tax, TV licence, logs, window cleaner, chimney sweep, tree surgeon, house insurance, council bin rental, garden materials, house maintenance) £9830

Communication
Internet, landlane, mobile phones £1152

Vehicles (x2)
Petrol, servicing, MOT, car wash, insurance, breakdown cover, maintenance £3135

Groceries
Food, wine, toiletries, cleaning products, batteries, lightbulbs, blah de blah £6000

Health
Dentist, optician (inc replacement glasses and contacts) £1000

Clothes £1100

Hairdresser £400

Pets £820

TOTAL: £23,437

Discretionary

Subscriptions £710
Christmas £2500
Nephews' Pocket Money £300
Entertainment and Eating Out £6000
Gifts £1200
Charity £1000

TOTAL: £11,710

Our net income will be in the ballpark of £52k-55k so the surplus will fund whatever we please: spoiling kids, nephews and grandkids; travel; replacement cars; activities and adventures in early retirement (I have reduced life expectancy), and domestic support/walking frames/dentures/hearing aid and all other necessaries if Mr DQ creaks into extreme old age. 

The survivor of us will have an income of £35k-£40k and the house will cover care home fees as a last resort.

We are very lucky. Right now I feel like I've won the lottery.

cfw1994

MallyGirl said:

Mick70 said:

Our combined number , as at present day figures ,  ideal combined pension of 45k ,  but if could get 40k that would be fine .
would rather have slightly less and be able to retire at 58  (56 was original plan ) than have to work into early 60s 

me too - OH thinks we should stick it out till daughter graduates and we will be 59. He doesn't do the finances so he doesn't know that he is likely to hit LTA at 58 - I won't but will be 2/3rds of the way there. It will be enough (plenty). I have told him before but he glazes over. I now just say 58 on a regular basis in the hope that he will come around. I did make a joke about doing a happy dance if I was made redundant (54 this year) and he just said 'what would you do all day if I was still working'?

You tell him you'll be out with your MSE pals in the camper, hiking and enjoying the countryside     Sign us up!

swindiff said:

We are looking at a joint income of around £55k from 60-67, dropping to £45k at 67
I've calculated our pretty generous number at around £35k
I am just a month older than my wife so retiring at 60 for both of us works out quite well.

Unclear what you mean, I must be misunderstanding this - a decent number for you is £35k, but you are actually going to get 45-55k?   Sounds like you should relax NOW

FloraandFauna said:

The problem I have with working out my number, is not that I don't know roughly what my bills will be - I've been keeping records for a while now - it's the 'what will I want to do in retirement' amount.
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On current projections, there will be around £15k a year spare to do some of these things once I hit 60, but is that wildly too much and maybe I could relax on the savings a bit? How do people work out the number for things they have no intention of deciding on 13 years in advance?

I don't think I had a scooby-doo 13 years ago - I was more focussed on ensuring the investments were reasonable (& bringing up 2 offspring, & working hard!).
More recently - I think you have a decent grip there - knowing the 'fixed' amounts (as DQ just posted) is a very firm start.
On the "what else" - well, that will always be up for grabs!  We have seen how an utterly unpredictable pandemic can change things, but building up vague ideas & plans is half the fun.   I'd like to spend at least 6 weeks of next winter at Les Arcs, choosing to only ski on the lovely days, instead of the 1 week we have managed to date - oh yeah, I've gone up the lift alone (family too smart!), only to step off the lift into a blizzard, & battled just to get down in 1 piece, because we only had 6.5 days of actual skiing available

Our number hasn't changed a lot since I posted it, also about 50 years ago....essentially we have fixed outgoings around £800, variable ones at a minimum of £1,300 rising to £2.5k (incl £1k for hols), & those crazy luxury items would be on top of that - I am actually targeting us getting in £4k pcm, but for a while at least we are likely to still invest some of that.  
We are also very fortunate to have a holiday cottage on the IOW which we will spend more time in the garden of (spring/autumn - leave the summer to the guests, msg me for details!!!) - as DQ said, feels like winning the lottery really.

I believe it will only be after a couple of years that one will really know how well set you are, & even then I bet there will be a modest fear of running out, particularly for those stepping down sooner than 60....

swindiff

cfw1994 said:

swindiff said:

We are looking at a joint income of around £55k from 60-67, dropping to £45k at 67
I've calculated our pretty generous number at around £35k
I am just a month older than my wife so retiring at 60 for both of us works out quite well.

Unclear what you mean, I must be misunderstanding this - a decent number for you is £35k, but you are actually going to get 45-55k?   Sounds like you should relax NOW

We are only 50.  Those numbers assume we both retire at 60, continue to contribute at the rate we do now and that the DC part of our retirement planning grows at 5%/annum.  We should have more than we "need", but its always nice to have more than you need

cfw1994

swindiff said:

cfw1994 said:

swindiff said:

We are looking at a joint income of around £55k from 60-67, dropping to £45k at 67
I've calculated our pretty generous number at around £35k
I am just a month older than my wife so retiring at 60 for both of us works out quite well.

Unclear what you mean, I must be misunderstanding this - a decent number for you is £35k, but you are actually going to get 45-55k?   Sounds like you should relax NOW

We are only 50.  Those numbers assume we both retire at 60, continue to contribute at the rate we do now and that the DC part of our retirement planning grows at 5%/annum.  We should have more than we "need", but its always nice to have more than you need

Okay, so potentially you may have the option to duck out sometime before 60, by the sound if it. 
Nice indeed to have more than needed, but equally nice to have the option to cut loose early too!

Gatser

Prompted to check where our latest NUMBER is after numerous revisions ...
Groceries / Food           £ 6,000
Car running costs          £ 2,500
Household bills               £ 5,500
Holidays/Leisure             £ 5,000
Cash/Clothes/bits&bobs  £ 5,000  inc birthdays/xmas
Repairs/Replacements     £ 2,000
The NUMBER                   £ 26,000   (it was £22k in 2009)
Thankfully we cover this so we can spend the surplus on:
helping the children, more adventures, healthcare provision, next car, house mods.
 

swindiff

cfw1994 said:

swindiff said:

cfw1994 said:

swindiff said:

We are looking at a joint income of around £55k from 60-67, dropping to £45k at 67
I've calculated our pretty generous number at around £35k
I am just a month older than my wife so retiring at 60 for both of us works out quite well.

Unclear what you mean, I must be misunderstanding this - a decent number for you is £35k, but you are actually going to get 45-55k?   Sounds like you should relax NOW

We are only 50.  Those numbers assume we both retire at 60, continue to contribute at the rate we do now and that the DC part of our retirement planning grows at 5%/annum.  We should have more than we "need", but its always nice to have more than you need

Okay, so potentially you may have the option to duck out sometime before 60, by the sound if it. 
Nice indeed to have more than needed, but equally nice to have the option to cut loose early too!

Potentially yes, although my DB pension takes a big hit if I go before my 60th birthday. Literally go 1 day earlier than 60 will cost me nearly £2k a year index linked for life.  I may get lucky and be made redundant at 58, no actuarial reduction then

FloraandFauna

Thanks, @cfw1994, nice to hear that a bit of vagueness is to be expected.

I don't have a fear of running out, since I'll have 2 DB pensions plus SP giving me about £25k from 67 when I may not be doing quite so much, so - on top of starting the 2 DB at 60 - am going to attempt to blow my entire SIPP between 60-67 (leaving the Classic DB lump sum retained as the emergency fund). That will be about £40k per year across them all. More, if I've paid of my mortgage by then (there's a plan for that).

I might start pricing up speculative travel, get a better idea of cost (can't go anyway atm because pets). But I'm such a bookworm, for all I know I'll spend £3k on books and then not leave the house for 18 months.