Pensions Planning: The NUMBER

FloraandFauna

Oh, and like swindiff, I'd take a big hit on one DB if I left before 60. Besides, I've worked out there's only 2,958 working days left until then (jeez!), and I'm fairly sure I have more than 2,958 things I want to get done before then!

Croeso69

FloraandFauna said:

Oh, and like swindiff, I'd take a big hit on one DB if I left before 60. Besides, I've worked out there's only 2,958 working days left until then (jeez!), and I'm fairly sure I have more than 2,958 things I want to get done before then!

Strange. Most DB have an early retirement "penalty" of 3% - 5% for each year early (months pro rata). Not really a penalty - you get a slightly lower pension for slightly longer, fonancially neutral to the scheme on average. Both my private sector DB pensions (latest scheme closed in 2007) use 3% and have a unisex NRA of 60. Pity they didnt continue instead of being forced into DC (employer match max 6% but i am sal sacrificing a lot more than 6% and we also get 50% of the employer NI saving).

My DB plus state pension (eventually) will be £20k in today's money. My wife will also get a full state pension, so say £30k in today's money in total. Probably need another £10k to get a desired £40k. My DC should provide this hopefully.

swindiff

There is an early retirement actuarial reduction which as you say is in that sort of range. But there is a cliff edge if you go before 60.  I am just going on the online modeller that my pension provider provides.  Each month of early retirement knocks off around £80-90 from my annual pension. The monthly reduction actually reduces the younger you get, so you lose more going from 66 to 65, than you do from 61 to 60. However going from 60 to 59 years and 11 months knocks off about £1400 (not £2k, I just checked).  But in taking retirement at 59 years and 11 months compared to 60 loses what would be equivalent to one whole years early retirement at any other time, either before or after 60.

PJM_62

swindiff said:

There is an early retirement actuarial reduction which as you say is in that sort of range. But there is a cliff edge if you go before 60.  I am just going on the online modeller that my pension provider provides.  Each month of early retirement knocks off around £80-90 from my annual pension. The monthly reduction actually reduces the younger you get, so you lose more going from 66 to 65, than you do from 61 to 60. However going from 60 to 59 years and 11 months knocks off about £1400 (not £2k, I just checked).  But in taking retirement at 59 years and 11 months compared to 60 loses what would be equivalent to one whole years early retirement at any other time, either before or after 60.

Hhmm, I think I need to check my own (uss) situation in the modeller.  I'm 99% sure I'll pull the plug on work next year, age 56. But think I need to do the calcs, comparing taking reduced DB (7.5k) straight away , or leaving it deferred until age 60, and making larger DC UFPLS withdrawals until then.
With it being only 4 years of deferment, i'd be surprised if it made much difference, taking into account that at 56 I'd be getting (and saving) the TFLS and there would be more untouched DC staying in the pot to (hopefully) grow.

swindiff

I'm in the USS. Go into the modeller and check the difference between 60 years and 1 month and 60 years. Compare it to 60 years and 59 years and 11 months. It might come as a bit of a shock.

PJM_62

swindiff said:

I'm in the USS. Go into the modeller and check the difference between 60 years and 1 month and 60 years. Compare it to 60 years and 59 years and 11 months. It might come as a bit of a shock.

Can I tell it I won't be working / paying in from age 56 ?

swindiff

No I don't think it allows you to put any deferral into the modeller.

SouthCoastBoy

I've given up trying to second guess my number, too many variables, currently at 3k per mth net in today's money, but no idea if that is correct. Depends on kids rents uni housing costs etc.

stephenadarglas

SouthCoastBoy said:

I've given up trying to second guess my number, too many variables, currently at 3k per mth net in today's money, but no idea if that is correct. Depends on kids rents uni housing costs etc.

You are so right regarding the variables however we may have to contend with the Chancellor's statement very soon as well.  Always expect the unexpected.

cfw1994

SouthCoastBoy said:

I've given up trying to second guess my number, too many variables, currently at 3k per mth net in today's money, but no idea if that is correct. Depends on kids rents uni housing costs etc.

My “Number” doesn’t have our offspring’s rent....one has finished, the other in their last year anyway, but I do allow for some monthly payment to help them along (or continue to save in their LISA/ISA, etc).
If it did, however, you should still be able to figure that out - in theory the parental support goes up to about £5k....I would call it £6k (£500 pcm).  See https://www.savethestudent.org/money/asking-parents-for-money-university.html 
On the “too many variables” comment - that’s precisely why you break it down to fixed and variable costs.   Why not give it a go: it’s part of the journey to figuring out when you can chose to give it all up!