Pensions Planning: The NUMBER

Spreadsheetman

Also note that the average care cost figures reflect the rate paid by local councils for care which is considerably less than a self-funded resident.

DairyQueen made a good point about outliving your good health. I've seen it in my own family and I'd much prefer just to drop dead of a heart attack instead of circling the drain for an extended period.

shinytop

Spreadsheetman said:

Also note that the average care cost figures reflect the rate paid by local councils for care which is considerably less than a self-funded resident.

DairyQueen made a good point about outliving your good health. I've seen it in my own family and I'd much prefer just to drop dead of a heart attack instead of circling the drain for an extended period.

This.  My dad just died after a rapid decline aged 92.  My FiL has been hanging on for several years with various ailments including Parkinsons.  I know which I'd prefer.  

Wednesday2000

I can't even remember when I contributed to this thread but this is an update on our situation.

We are currently in the process of a house move out of London and to live by the sea. We sold our house and bought the house we wanted within 15 days!

My husband has his projections for his pension and we think he could leave work as early as 2023 if he wanted. Sadly our dog just died (two of the most stressful things at once, moving house and grief!) but it will improve our financial situation as he had a host of health problems which were very time consuming and expensive.

We still have our other dog who will be 10 this year and two cats 16 and 13. No kids.

I was advised to apply for Personal Independence Payment for my health issues which I received so that helps a little bit. The letter said it will be reviewed again in 2023.

We want to see how different in price the new house is in terms of bills etc... before we make any final decisions. We are moving 15 minutes walk from a train station so he can still commute into London for his job.

I think that is all.

Anonymous101

Linton said:

PJM_62 said:

Anyone seen any figures for the average total care home costs, before death ?

Obviously most people don't end up in a care home.
But for those that do, I cant imagine the average time spent in the home is more than a couple years.

https://helpandadvice.co.uk/care-home-costs/

AVerage cost - £34K/year. 

https://eprints.lse.ac.uk/33895/1/dp2769.pdf

Mean stay - 2.5 years
Median stay - 1.6 years

The difference is because a few people stay for a large number of years.

It does represent a challenge in saving for care. In a way its a shame there isn't an insurance policy you could purchase to protect against care costs. The distribution is such that a shared risk over many people would be beneficial to the individual. Rather than as it is now where individuals have to assess the probability and potentially hold large amounts of capital in reserve for a tail risk occurrence later in life.

Terron

Linton said:

PJM_62 said:

Anyone seen any figures for the average total care home costs, before death ?

Obviously most people don't end up in a care home.
But for those that do, I cant imagine the average time spent in the home is more than a couple years.

https://helpandadvice.co.uk/care-home-costs/

AVerage cost - £34K/year. 

https://eprints.lse.ac.uk/33895/1/dp2769.pdf

Mean stay - 2.5 years
Median stay - 1.6 years

The difference is because a few people stay for a large number of years.

From the same source - For nursing home costs UK fees rose to £47,320 each year.

paulr71

Good morning - really enjoyed reading this thread - would like some advice -  age 49 - currently in a corporate role - really disillusioned with all the politics and not getting any job fulfilment - wanting to retire at 55 but really do noy  think i can last that long !  have a wife who does not work as ill health- she has MS and 2 kids tracked our spending and we live off roughly £3500 per month. really want to spend more time with her
current assets 
2 properties fully owned at value of approx £280k which we get rent of £12,600
Savings in Shares & ISAs of £100,000
Pensions - mine @ £354k and wifes of £83k - i contribute  £1900 per month - company pays £760
would love to leave earlier than 55 with £42k being the number
Liabilities

£77k of mortgage left on house valued at £350k which we are overpaying 

Any advice appreciated  to give me the courage to jump ship - would still like to work but not in profession i am in 
thanks 

jimi_man

Well extremely rough ballpark figures which I'm sure you've worked out yourself.

Ignoring the two properties for the moment, you have assets of £537k. You need £30k a year (£42k minus the rental take - £12.6k) up to state pension age and £12k beyond it (assuming full State Pensions).

If you left at 50 in a year's time, then you'd add another £32k to the pot - so around £570k. With 17 years to go till SPA that's 17 x £30k = £510k, which doesn't leave much for after SPA, so it's looking rather tight!

Another five years (54 say) gives you an extra £160k and takes you to around £700k. then it's 13 years of £30k = £390k which seems a lot more doable. I guess it's playing around with those figures to see what a workable scenario is.

(I haven't made any mention of the mortgage - wasn't sure if that was captured in your £3500 per month.)

Another alternative is to spend less than £3500 per month. 

paulr71

thanks very much - yes the mortgage payment  is part of the £3500 

michaels

paulr71 said:

thanks very much - yes the mortgage payment  is part of the £3500 

So at this level of approximation perhaps it is easier to subtract 77k from the available pot and subtract the mortgage payment from the monthly number and then do the long term income available vs required expenditure calcs?

jimi_man

paulr71 said:

thanks very much - yes the mortgage payment  is part of the £3500 

Right. So, as michaels says, that may have a big impact on the figures. If you now only need £2500 a month because your mortgage is £1000 a month, then your figure drops to £18k a year plus the rental income. So on the 'going at 50' figures, your pot is now £500k with the mortgage taken off, but you only need £18k x 17 years - £306. After state pension age, you'd be fine with £18k State pension and £12k rental income.

Every year you work adds £32k to the pot, means one less year of needing £18k (and a little more paid from your mortgage)

Again play around with the numbers until you get something that's acceptable. You seem to be in a reasonable position.

There is probably a sophisticated financial tool to help you plan this, but just looking at it from the eyes of a non financial professional, that's how the figures stack up to me.