Pensions Planning: The NUMBER

michaels

Cus said:

I don't have a number. I save the maximum I am allowed into our pensions, I save into our ISAs, then some for kids, and then spend the rest. I don't really know how to decide what to potentially cut back on to retire. I know I am very unlikely to reach a number that would lead to the same amount as I earn now, but I also know I overspend a lot now and could very easily cut back.  I'm kind of just ignoring it and see how it turns out in a handful of years. Is that a bit rubbish?

Depends if you like working or not - I think a lot who have a number then link it to the earliest date at which they can achieve the number and thus stop working (or have the option to do so).  No doubt you could spend less and retire earlier but why bother if you like your current lifestyle?

LHW99

michaels said:

Cus said:

I don't have a number. I save the maximum I am allowed into our pensions, I save into our ISAs, then some for kids, and then spend the rest. I don't really know how to decide what to potentially cut back on to retire. I know I am very unlikely to reach a number that would lead to the same amount as I earn now, but I also know I overspend a lot now and could very easily cut back.  I'm kind of just ignoring it and see how it turns out in a handful of years. Is that a bit rubbish?

Depends if you like working or not - I think a lot who have a number then link it to the earliest date at which they can achieve the number and thus stop working (or have the option to do so).  No doubt you could spend less and retire earlier but why bother if you like your current lifestyle?

To be truthful, I think that's how we operated. Certainly in our 20's, 30's, 40's as long as we were able to put something into pensions each month and have enough left to keep the family going and enjoying life that was fine. Luckily by a degree of ignorance and the magic of compounding we haven't had too much catchup to do in the 50's and 60's. Given what inflation (and mortgage rates) did over the past 50 years I suspect any plan couldn't have been kept to

cfw1994

michaels said:

Cus said:

I don't have a number. I save the maximum I am allowed into our pensions, I save into our ISAs, then some for kids, and then spend the rest. I don't really know how to decide what to potentially cut back on to retire. I know I am very unlikely to reach a number that would lead to the same amount as I earn now, but I also know I overspend a lot now and could very easily cut back.  I'm kind of just ignoring it and see how it turns out in a handful of years. Is that a bit rubbish?

Depends if you like working or not - I think a lot who have a number then link it to the earliest date at which they can achieve the number and thus stop working (or have the option to do so).  No doubt you could spend less and retire earlier but why bother if you like your current lifestyle?

I think that nails it.  

I know a lot who get/got jaded with their work for a myriad of reasons.  Many in well paid jobs, which is almost a poisoned chalice when it comes to deciding when to split!

Key to me is to BE HAPPY 😎

If you enjoy work, crack on 👍

If you can see a time ahead when you may not....well, cut back a little and plan to save more with a view to one day having the money to step away.

Keep outside interests up - take up new sports/clubs/activities/crafts.   Find things you enjoy doing, and one day you will decide you want to spend more time doing them and less doing the day job.   Many find a way to go part time which might help ease them in.

Daffodil1234

Working through figures for "The Number" for us currently.  Married couple, both still working at present, no mortgage, living a fairly modest life.  Between us we have a mixture of DB and DC pensions, plus some money in various sorts of cash (£200k) and some money in various sorts of investments (£120k).

I think "The Number" for us works out somewhere between £28k and £30k per year in today's figures.  Maybe that number will need to increase slightly with cost of living /utilities etc, we will keep on reviewing it.

pensionpawn

cfw1994 said:

michaels said:

Cus said:

I don't have a number. I save the maximum I am allowed into our pensions, I save into our ISAs, then some for kids, and then spend the rest. I don't really know how to decide what to potentially cut back on to retire. I know I am very unlikely to reach a number that would lead to the same amount as I earn now, but I also know I overspend a lot now and could very easily cut back.  I'm kind of just ignoring it and see how it turns out in a handful of years. Is that a bit rubbish?

Depends if you like working or not - I think a lot who have a number then link it to the earliest date at which they can achieve the number and thus stop working (or have the option to do so).  No doubt you could spend less and retire earlier but why bother if you like your current lifestyle?

I think that nails it.  

I know a lot who get/got jaded with their work for a myriad of reasons.  Many in well paid jobs, which is almost a poisoned chalice when it comes to deciding when to split!

Key to me is to BE HAPPY 😎

If you enjoy work, crack on 👍

If you can see a time ahead when you may not....well, cut back a little and plan to save more with a view to one day having the money to step away.

Keep outside interests up - take up new sports/clubs/activities/crafts.   Find things you enjoy doing, and one day you will decide you want to spend more time doing them and less doing the day job.   Many find a way to go part time which might help ease them in.

Reduced my hours to 70% recently and am plotting on reducing them further to 57% next April. Then with a net drawdown of  ~£1500 a year (peanuts), after bank holidays / leave entitlement I'll still be on a decent wage and only be in the office 1 week in 2 on average, although for me it will be more like 6 week blocks in and out. This way should keep me going until a potential redundancy situation in around 20 - 27 months. Either way, I can't see me working any longer than that as with kids moved out and wife retiring soon it's a gentle coast towards the chequered flag!

NedS

pensionpawn said:

Reduced my hours to 70% recently and am plotting on reducing them further to 57% next April. Then with a net drawdown of  ~£1500 a year (peanuts), after bank holidays / leave entitlement I'll still be on a decent wage and only be in the office 1 week in 2 on average, although for me it will be more like 6 week blocks in and out. This way should keep me going until a potential redundancy situation in around 20 - 27 months. Either way, I can't see me working any longer than that as with kids moved out and wife retiring soon it's a gentle coast towards the chequered flag!

Sounds like a plan! Although I'm not sure I could return to work for 6 weeks having just had 6 weeks off.

pensionpawn

NedS said:

pensionpawn said:

Reduced my hours to 70% recently and am plotting on reducing them further to 57% next April. Then with a net drawdown of  ~£1500 a year (peanuts), after bank holidays / leave entitlement I'll still be on a decent wage and only be in the office 1 week in 2 on average, although for me it will be more like 6 week blocks in and out. This way should keep me going until a potential redundancy situation in around 20 - 27 months. Either way, I can't see me working any longer than that as with kids moved out and wife retiring soon it's a gentle coast towards the chequered flag!

Sounds like a plan! Although I'm not sure I could return to work for 6 weeks having just had 6 weeks off.

It's horses for courses. You could also argue that it's difficult to come in on Mondays when you always have a nice long weekend of Thr - Sun inc. With the longer blocks it gives me the opportunity to fully recharge and take as many foreign holidays as I like / can afford during school term time with a decent buffer at home before flying away / home. It also cuts out the dross of my job leaving only the element I actually enjoy. However time will tell as an ex colleague of mine echoed your observation not long before fully retiring. That said he was ten years older than me.

expectingtofly

This has been a fantastically useful thread, so I thought I would update with our experiences :

As a couple, we have now not worked since around the end of 2020.   
We had a pretty good idea of what our NUMBER was before we stopped, as we had always recorded all our expenditure in Microsoft Money (we had detailed expenditure records going back to 1999!) and always operated our financial affairs completely jointly.
Our aim was to continue the same lifestyle we had while we were working once we had stopped (without the worky bit!).  We don't have a lavish lifestyle,  but we like not having to worry about money. 
We have found that always recording what we spend and having all our finances in joint accounts means that we naturally live within our means and helps us to plan.   My personal experience is that recording what you spend takes less time than you would think and for us it means we can spend less time worrying about it!

Having now lived the retirement life for almost  2 years and we are now pretty sure what our current NUMBER is, it's around £37,500 net.  

As well as recording all our finances in Microsoft Money, I have a detailed planning spreadsheet where I record our overall monthly spend and plan where all our money comes from in the future to ensure that we can continue to cover our NUMBER as inflation rises, and that we can afford the odd one off expenditure (house maintenance, car replacement etc).   From there I have a useful graph that shows the monthly rolling annual expenditure compared to the maximum we can spend without blowing our resources.  As you can see it's reasonably consistent (you can also see the impact of inflation!) and we are managing to live within our means.


In case it is useful to anyone, this is our current categorised spending for the last 12 months so you can see how our NUMBER has currently broken down.



Hope that is of some use to other's plans.

PJM_62

expectingtofly said:

This has been a fantastically useful thread, so I thought I would update with our experiences :

As a couple, we have now not worked since around the end of 2020.   
We had a pretty good idea of what our NUMBER was before we stopped, as we had always recorded all our expenditure in Microsoft Money (we had detailed expenditure records going back to 1999!) and always operated our financial affairs completely jointly.
Our aim was to continue the same lifestyle we had while we were working once we had stopped (without the worky bit!).  We don't have a lavish lifestyle,  but we like not having to worry about money. 
We have found that always recording what we spend and having all our finances in joint accounts means that we naturally live within our means and helps us to plan.   My personal experience is that recording what you spend takes less time than you would think and for us it means we can spend less time worrying about it!

Having now lived the retirement life for almost  2 years and we are now pretty sure what our current NUMBER is, it's around £37,500 net.  

As well as recording all our finances in Microsoft Money, I have a detailed planning spreadsheet where I record our overall monthly spend and plan where all our money comes from in the future to ensure that we can continue to cover our NUMBER as inflation rises, and that we can afford the odd one off expenditure (house maintenance, car replacement etc).   From there I have a useful graph that shows the monthly rolling annual expenditure compared to the maximum we can spend without blowing our resources.  As you can see it's reasonably consistent (you can also see the impact of inflation!) and we are managing to live within our means.


In case it is useful to anyone, this is our current categorised spending for the last 12 months so you can see how our NUMBER has currently broken down.



Hope that is of some use to other's plans.

Thanks for taking the time to post. I take a similar approach to logging all expenditure to see what's being spent where.
I dont have a cool graph though     Is that something that budgeting with MS Money gives you ?  Currently I use the fairly basic Good Budget site/app.

Mick70

think as a couple we are aiming for (at todays prices - as if retiring today) for a combined pension of £45k , as things stand prob have about £36k,  hope to bridge that gap in the next 5 years then retire age 57 (spouse 60)