Pensions Planning: The NUMBER

Gatser

exil wrote: »

Currently we are living on £2,500 a month "take home" (mum dad and 18 year old) with mortgage paid off. This includes the cost of commuting to work and
the other costs of working (getting takeaways or ready meals instead of cooking, holidays to "destress" and so on). We reckon that when the 18 year old has flown the nest the remaining 2 should be able to retire comfortably on £2,000 a month.

The Food and Expenditure Survey (http://www.statistics.gov.uk/downloads/theme_social/Family_Spending_2007/FamilySpending2008_web.pdf) is a useful guide to how much people actually spend. The average for retired couples "not mainly dependent on the state pension" is £360 a week - £1,600 a month.

Very Interesting for a NUMBER anorak like me!
Thanks.
So at £1,600/month = £19,200 ... that is coming out rather low compared to our averages... but I guess we are more likely to be planning ahead for a more comfortable retirement. £19200 would be relatively basic.

Gatser

Frazer wrote: »

Forgive the newbie question, and the belated reference to a long-forgotten post (it was #19), but what is this "lifetime spreadsheet" of which you speak? Is it something you worked out for yourself, or is there a template somewhere that I could crib?

thanks for asking... and good to see you are all reading EVERY post! :T
I created my lifetime spreadsheet and have fine tuned/modified it over the years. Actually, I started it on column analysis paper before computers had arrived! Happy to discuss the layout/content though...

the NUMBER features in the 370th column!

jamesd

siegfried, 12 times income is too ambitious for most people. 6% or more cautious 5% of capital as income is safer. That's 17-20 times current income to maintain current income indefinitely.

My own minimum target is a bit under £12,000 income to maintain the way I live now, which is very aggressively saving towards being able to do that as soon as possible.

Gatser

jamesd wrote: »

siegfried, 12 times income is too ambitious for most people. 6% or more cautious 5% of capital as income is safer. That's 17-20 times current income to maintain current income indefinitely.

My own minimum target is a bit under £12,000 income to maintain the way I live now, which is very aggressively saving towards being able to do that as soon as possible.

You must manage your expenditure very well James.
I'd appreciate your hints & tips on how to live on £12k.
If we can reduce our NUMBER, we can all retire earlier with you! :T

Frazer

Gatser wrote: »

thanks for asking... and good to see you are all reading EVERY post! :T
I created my lifetime spreadsheet and have fine tuned/modified it over the years. Actually, I started it on column analysis paper before computers had arrived! Happy to discuss the layout/content though...

the NUMBER features in the 370th column!

Well, actually, I fast-forwarded through the flame wars on pages 2-7, but the other posts were quite good.

On the subject of spreadsheets, I use them for specific tasks like tracking my savings accounts, but I wouldn't know how to create one for my entire life. Is yours basically a retirement income calculator, like the many online ones? (I'm not allowed to post links, but there's an example on moneymadeclear.fsa.gov.uk>Pensions & Retirement>Pension Calculator.)

Gatser

Frazer wrote: »

On the subject of spreadsheets, I use them for specific tasks like tracking my savings accounts, but I wouldn't know how to create one for my entire life. Is yours basically a retirement income calculator, like the many online ones?

Thanks for the link...

No, my spreadsheet has columns for the years (I work in Tax years)
The rows are used for:
* Income
>Salaries
>Pension
>Investment income
* Tax
* Expenses (analysed on different rows)
* Surplus / Deficit for that year

* Savings Op Balance
* Investment Returns
* Savings Cl Balance

* Pensions op Balance
* Pension Investment Returns
* Pensions Cl Balance

That's the summary version, but I also breakdown the various Savings and Pensions on a linked spreadsheet, so I can keep track of tax wrappers and maturity dates etc.

Personally I prefer this to "Tools" because I am in total control of it and can fully understand the results it gives me. It may not suit everyone of course and I do appreciate that tools do have their uses.

Frazer

Gatser wrote: »

Thanks for the link...

No, my spreadsheet has columns for the years (I work in Tax years)
The rows are used for:

<snip>

That's the summary version, but I also breakdown the various Savings and Pensions on a linked spreadsheet, so I can keep track of tax wrappers and maturity dates etc.

Personally I prefer this to "Tools" because I am in total control of it and can fully understand the results it gives me. It may not suit everyone of course and I do appreciate that tools do have their uses.

Thanks for those details. It looks as if your affairs are more complicated than mine, but perhaps I should start now rather than waiting until it all gets overwhelming.

jamesd

Gatser wrote: »

You must manage your expenditure very well James. I'd appreciate your hints & tips on how to live on £12k.
If we can reduce our NUMBER, we can all retire earlier with you! :T

I'm just used to living on relatively low incomes and haven't become much more extravagant as my income has increased greatly in recent years. So that £12,000 includes £425 in rent in an inexpensive area and all the other costs of living that come with it. It doesn't include much allowance for holidays or for lots of eating out or pub visits. I also don't own a car, or live in a place where that's essential.

It's not what I want to live on long term but it is the minimum I can live on comfortably without a change in lifestyle. With stock market variations that have to be assumed to be plus or minus 30% this would be the low end of the -30% range while the upper end for the same money put in would end up at £22,300. I prefer the upper end but that's market variation and risk for you.

Things like spending £1,000 on a very nice thirty inch computer monitor and computer to go with it this Christmas definitely don't come into the budget for this minimum, though since it's once in the last five years it's not strictly impossible. Can't do things like that at this sort of level with the rest of my lifestyle, even though it's easily affordable if I wanted to spend my full income. I'm not going to be spending anything close to my full income until I can be reasonably sure of getting that minimum income from investments.

If you want to have a £12,000 minimum that's still way above what the state pensions pay you need to clearly identify the difference between required core spending and things that you don't want to live without but could live without. Housing, heating, power, food, water and minimal clothing are essential, anything else is some degree of luxury. There's a fair bit of luxury in my minimal target.

Gatser

jamesd wrote: »

If you want to have a £12,000 minimum that's still way above what the state pensions pay you need to clearly identify the difference between required core spending and things that you don't want to live without but could live without. Housing, heating, power, food, water and minimal clothing are essential, anything else is some degree of luxury. There's a fair bit of luxury in my minimal target.

Good point!
What one person considers as essential can be luxury items to another.
I have recently asked some family & friends what is their NUMBER...
Many will not say and react as if I am asking for their salary details!
Perhaps because their INCOME = their NUMBER.

The NUMBER should be what we are aiming for... nothing more.

Q. How much should we include for essentials?
* FOOD
* FUEL/BILLS
* CLOTHING
* TRANSPORT
* POCKET MONEY / HOLS / LEISURE

Gatser

thewhiteone wrote: »

Gatser, while your enthusiasm to keep this thread going is to be applauded having read everything you've posted I wonder if you have in fact read THE NUMBER Lee Eisenberg.

Thank's for the applause O'White One... :j

thewhiteone wrote: »

Each person can only have their own number (and one number only) . It should be irrevelant how other people live THEIR lives. If people want to live on £12 K pa thats their choice but how they do that is nothing to do with anyone elses number.

The Book may suggest just one NUMBER .... but that's not the law you know! If I want 17 NUMBER's .... it's my choice... or yours!

Likewise...if folks want to chat on here about their NUMBER... it's a free world. I like to learn from others views and experiences. I like to compare with higher and lower NUMBER's ...

thewhiteone wrote: »

The book omits say how to work out the Number, so I have to say given you started the thread, i find it puzzling that you took so long to reveal you use a spreadsheet that runs to 370 columns.

...so what?
(actually it may be 372 columns...does it really matter? .... No.):rotfl:

Have a sherry on me...:beer: