Pensions Planning: The NUMBER

SouthCoastBoy

I'm going round in circles with my number, looking at all my costs I think I need 3k a month net for the next 6 years after that it drops to 2.5k a month net, then to 2k a month net when I get to 80 (all figures adjusted for inflation which is assumed to be 2.5% per annum). I'm soon to be 56. So if I retire now I think I need a pot of around 1.2m with 300k in cash as a buffer for stock market volatility. I am anticipating I will be able to cope with any unexpected costs plus capital expenditure on cars etc. I have assumed by the time I get to 80 I will no longer be running two cars and going on expensive holidays.  Both wife and I get full state pensions when we get there also wife has a small DB of around 7k a year when she hits 60, around 7 years time.

AlwaysLearnin

SouthCoastBoy said:

..... wife has a small DB of around 7k a month when she hits 60, around 7 years time.

Blimey, I reckon you're pretty sorted then, if that's the small DB.... 😁

SouthCoastBoy

AlwaysLearnin said:

SouthCoastBoy said:

..... wife has a small DB of around 7k a month when she hits 60, around 7 years time.

Blimey, I reckon you're pretty sorted then, if that's the small DB.... 😁

sorry should be year! I wish it was a month

NedS

I'm around 5 years away from early retirement, so have been giving some though to my NUMBER. Since April, I've been tracking our total income and expenditure on a spreadsheet, and April-March it's looking like our total outgoings will be around £18k. It's been a quiet year due to Covid, with hardly any travel expenses due to working from home, but that nicely reflects what our situation will be like in retirement with no commute. There haven't been any large one-off bills to contend with, so I think this is a fair approximation of what our basic (bare minimum) annual costs would be in retirement. I'm not interested in breaking it down further into individual categories as I know we have already been pretty frugal this year with very little unnecessary spending.

In my mind, I'd always been thinking £25k, purely as that maximises 2 people's tax free allowances and gives us 7k per year on top of bare minimum ongoing costs for one off costs (new car, boiler, house repairs etc). I'm not factoring in holidays as I consider those luxuries that can come out of additional funds. So our NUMBER for a comfortable living covering the basics is £25k

MarriedWithKids89

NedS said:

I'm around 5 years away from early retirement, so have been giving some though to my NUMBER. Since April, I've been tracking our total income and expenditure on a spreadsheet, and April-March it's looking like our total outgoings will be around £18k. It's been a quiet year due to Covid, with hardly any travel expenses due to working from home, but that nicely reflects what our situation will be like in retirement with no commute. There haven't been any large one-off bills to contend with, so I think this is a fair approximation of what our basic (bare minimum) annual costs would be in retirement. I'm not interested in breaking it down further into individual categories as I know we have already been pretty frugal this year with very little unnecessary spending.

In my mind, I'd always been thinking £25k, purely as that maximises 2 people's tax free allowances and gives us 7k per year on top of bare minimum ongoing costs for one off costs (new car, boiler, house repairs etc). I'm not factoring in holidays as I consider those luxuries that can come out of additional funds. So our NUMBER for a comfortable living covering the basics is £25k

When you say that luxuries can come out of additional funds it implies that you have a separate "pot" for holidays. So how much do you think you need to spend on luxuries per year? And how big a pot have you put aside for it?   

rebuswad

NedS said:

I'm around 5 years away from early retirement, so have been giving some though to my NUMBER. Since April, I've been tracking our total income and expenditure on a spreadsheet, and April-March it's looking like our total outgoings will be around £18k. It's been a quiet year due to Covid, with hardly any travel expenses due to working from home, but that nicely reflects what our situation will be like in retirement with no commute. There haven't been any large one-off bills to contend with, so I think this is a fair approximation of what our basic (bare minimum) annual costs would be in retirement. I'm not interested in breaking it down further into individual categories as I know we have already been pretty frugal this year with very little unnecessary spending.

In my mind, I'd always been thinking £25k, purely as that maximises 2 people's tax free allowances and gives us 7k per year on top of bare minimum ongoing costs for one off costs (new car, boiler, house repairs etc). I'm not factoring in holidays as I consider those luxuries that can come out of additional funds. So our NUMBER for a comfortable living covering the basics is £25k

If it helps our spending for 2018 & 2019 was £26K pa, but with covid figure 2020 dropped to £18K (WFH, less out and about spending, less holidays etc.) so last year was quite an anomaly (well, lets hope so anyway ). Normal retirement spend when you add back in those activities except for work related would be about £24K for us. Big spends are included in those figures as I put £100 a month aside and count as a kind of amortised spend to smooth those things out over the years.

NedS

MarriedWithKids89 said:

NedS said:

I'm around 5 years away from early retirement, so have been giving some though to my NUMBER. Since April, I've been tracking our total income and expenditure on a spreadsheet, and April-March it's looking like our total outgoings will be around £18k. It's been a quiet year due to Covid, with hardly any travel expenses due to working from home, but that nicely reflects what our situation will be like in retirement with no commute. There haven't been any large one-off bills to contend with, so I think this is a fair approximation of what our basic (bare minimum) annual costs would be in retirement. I'm not interested in breaking it down further into individual categories as I know we have already been pretty frugal this year with very little unnecessary spending.

In my mind, I'd always been thinking £25k, purely as that maximises 2 people's tax free allowances and gives us 7k per year on top of bare minimum ongoing costs for one off costs (new car, boiler, house repairs etc). I'm not factoring in holidays as I consider those luxuries that can come out of additional funds. So our NUMBER for a comfortable living covering the basics is £25k

When you say that luxuries can come out of additional funds it implies that you have a separate "pot" for holidays. So how much do you think you need to spend on luxuries per year? And how big a pot have you put aside for it?   

We don't need to spend anything per year on luxuries.

This thread is about your NUMBER. Our income in retirement in likely to be higher than our NUMBER, so we'll have additional income available each year to spend on discretionary/luxury items, such as long-haul holidays. I think our income could likely be £10k more than we need for a comfortable existence covering essentials (our NUMBER), so I'm hoping we can probably manage a couple long haul trips per year in the early years.

MarriedWithKids89

NedS said:

MarriedWithKids89 said:

NedS said:

I'm around 5 years away from early retirement, so have been giving some though to my NUMBER. Since April, I've been tracking our total income and expenditure on a spreadsheet, and April-March it's looking like our total outgoings will be around £18k. It's been a quiet year due to Covid, with hardly any travel expenses due to working from home, but that nicely reflects what our situation will be like in retirement with no commute. There haven't been any large one-off bills to contend with, so I think this is a fair approximation of what our basic (bare minimum) annual costs would be in retirement. I'm not interested in breaking it down further into individual categories as I know we have already been pretty frugal this year with very little unnecessary spending.

In my mind, I'd always been thinking £25k, purely as that maximises 2 people's tax free allowances and gives us 7k per year on top of bare minimum ongoing costs for one off costs (new car, boiler, house repairs etc). I'm not factoring in holidays as I consider those luxuries that can come out of additional funds. So our NUMBER for a comfortable living covering the basics is £25k

When you say that luxuries can come out of additional funds it implies that you have a separate "pot" for holidays. So how much do you think you need to spend on luxuries per year? And how big a pot have you put aside for it?   

We don't need to spend anything per year on luxuries.

This thread is about your NUMBER. Our income in retirement in likely to be higher than our NUMBER, so we'll have additional income available each year to spend on discretionary/luxury items, such as long-haul holidays. I think our income could likely be £10k more than we need for a comfortable existence covering essentials (our NUMBER), so I'm hoping we can probably manage a couple long haul trips per year in the early years.

Sorry, my mistake. I assumed everyones NUMBER (whatever it is) was all inclusive, including any luxuries they plan to enjoy. Anyway, good luck. Keep safe.

westv

stephenadarglas said:

Gatser said:

stephenadarglas said:

Here's our numbers. 

The NUMBER is about what each person feels they (ideally) need to have a comfortable retirement.
Income is something else and hopefully exceeds The NUMBER! 
What is your NUMBER?

My number is where I am today.  Simple reason is we never know where the markets go.  Your number will change in my opinion depending on circumstances therefore this is my number - today. 

Your number isn't the value of your pension pots and DB incomes - as already mentioned it's how much you expect to spend in retirement.

DairyQueen

Anonymous101 said:

I've opened up that can of worms on here before... Personally I think the whole system needs reforming. In my opinion there are far too many courses which offer little value but whilst University is pushed as the default path for 50% of the population chances are I'll have to factor it in for my children when they are of age.

Expect your young adult kids to cost the same as a small house (in some parts of the country) and you won't be far wrong in planning your budget, regardless of what they study/whether they attend uni. Unlike our generation (off-parental-hands by early 20s and no requirement for education and housing subsidies) young adults of today require a huge amount of financial support to give them a reasonable start. 

Our 50s were our most expensive decade courtesy of financing my (much-loved) stepdaughters.

Youngest = £500p.m. x 3 years of uni = £18k. £10k toward house deposit. £7.5k toward wedding. Total = £35.5k. She also maxed-out student loans and worked throughout holidays, undertook apprenticeships, etc.
 Eldest = £500p.m. x 3 yrs of 4 yr undergraduate degree = £18k, plus £1000p.m. for year abroad = £12k. Plus £11k p.a. for 2 year postgraduate fees and housing support. Total = £52k.  Plus maxed-out student loans.

That's without additional costs (e.g. driving lessons and cars).

Youngest studied English Lit and eldest qualified as a lawyer. Both now entirely self-supporting. Both doing well in London-based careers. Neither have been furloughed and the humanities student is doing as well as her lawyer sister. 

Money well-spent but they could not have achieved that leg-up without the bank of (step)mum and dad. Nor was the goal met without sacrifice from us. You pays your money and makes your choice. Do not anticipate that taxpayers who don't benefit from the same advantages as your uni-attending kids should foot the bill but do expect a whole lot of costs even if they don't go to uni.

Student loans are a graduate tax and both of my stepds have already repaid their dues (plus interest) to the taxpayer.

Useless degrees are out there but it's your job as a parent to discourage such a waste of your/their/the nation's resources. I despair when I hear that my neighbour has encouraged her gifted son to attend a mediocre college to take 'theatre studies' at age 16. Indulging the youngster's hobbies at this stage of his life is just crazy. The real world rarely rewards such specialism, and especially at such an early age.