Pensions Planning: The NUMBER

Peterrr

I’m not sure if I’m doing this right. I do have ‘a number’ of sorts, but more to the point I’m working to a date – my 60th birthday which is in 4 and ½ years. At that point I will be happy to retire on whatever pot I have by then and will cut my cloth accordingly. My wife is less inclined to compromise on our accustomed lifestyle, and intends to work on a couple more years in order to retain something closer to our current spending - being 2 years younger than me I can hardly complain.

I have spreadsheets coming out of the ying-yang and reckon we’ll be fine, trying not to listen to that little voice saying 'how nice it would be to have that little bit more' and 'work isn’t all bad'. Timing will coincide with the youngest reaching post-uni age and us making the final mortgage payment. 

Our ‘basic’ figure is £24k (net), with a further flexible £10-17k of discretionary social/holiday/second car spend should the DC pension funds perform to the historic average. My calculations have the budget growing with inflation and the discretionary spend reducing gradually when we transition from the go-go and go-slow years into our no-go dotage.

The unmentionable question (which I’m going to mention anyway) is around inheritances – should we factor such in at all? We are fortunate enough that parents have more than enough to even cover extended periods of nursing home care, and still we’d benefit from an inheritance. So I’m currently accounting for a lowest expectation figure, and even then not until all have reached at least 95 years of age. Anyone else factor inheritance in? To be fair, we aren’t actually dependent on such, though it would negate any requirement to downsize the house and release equity.

Daffodil1234

That is useful @Peterrr

We chose to ignore inheritance completely.  Firstly because of the obvious that there might be none or almost zero, if money is used up in care homes / nursing care etc - or if elderly parents choose to leave money elsewhere.  Secondly because when one of us had an inheritance a couple of years ago, the actual amount received was quite different to what might have been guessed, and also took around 18 months - 2 years to come through.

SouthCoastBoy

I think inheritance should be ignored, as  no guarantee when and if you are going to get anything.

Peterrr

For what it's worth, here is our current projected budget when we (hope to) retire in 4 1/2 years, mortgage and (hopefully) dependent-free. Colour coded in order of necessity, so if funds don't allow then the 2nd car will be forfeited first, then holidays budget cropped and so on.

Yankee24

I don’t think inheritance should be ignored.  My husband and I both lost all of our parents in one year.  All were 80 plus, we were early 50s with young adults.  We had planned for some of it, and therefore had felt comfortable years before supporting our son to study in the USA and relocate there.  We knew we could afford to be generous with house deposits, tuition fees etc.  it wasn’t frittering, but without that foresight we would not have supported some pretty fundamental things.  Now, at mid 50s, we know we have passed on, and can look at our pot and think, that’s all ours.  When our ifa runs the yearly Monte Carlo we look for ways to get rid of the excess.  We won’t be the richest in the graveyard 

Daffodil1234

Thanks @Peterrr and the colour coding looks very helpful.  We have a similar approach about what's essential versus what's discretionary, though the details will vary of course.

We also added in a couple more lines re health - you've got dental / optical already but we've also found the need to pay for items to do with other health matters, including hearing / physio / some other health related items.  We expect this will be essential (and increase!) in all the years going forward.

arthurdick

Hi, I may have one of the smallest numbers in this thread?.  I  had always planned to go in 2021 because I had a small 15 yrs in the LGPS, plus 8yrs of £300 P/M AVC's,  my AVC target was £30000 cash plus my small £3600 P/A LGPS.  Thanks to Silvertabby for pointing out a couple of things I had overlooked, I had to work another year to get to my Target, but if it wasn't for Silvertabby's help, I would have retired with less money P/A.  Plus Silvertabby pointed out that my residue amount from the AVC's would buy me very generous bump up to my LGPS  from £3600 to £4630 P/A. 

Also, to coincide with my retirement was to sell my house to move back to London to be nearer my mum, like I had always promised her that I would be back for her, my mum was 83, so I knew I had to get back to enjoy her last decade +.
Had accepted an offer on my house, my mum was so excited knowing that I was coming back.  Things turned out a bit different to what I had planned, my mum got ill, and passed away in July and we didn't complete our house sale until the 31st October.  
So we are now living in my mums flat until we can buy our own flat,  sorry for rambling on a bit but it is sort of connected to the expecting inheritance, we are staying in my mums flat until it sells, which should be between £600000 and £700000, and to be split equally between 7 people, , I would rather have my mum still alive than any of this inheritance.  Sorry for the too much rabbiting on, anyway my number was always around the £4000-£6000, plus the money left over from downsizing.

arthurdick

As for the early retirement, I am absolutely enjoying it, some mornings when the missus goes to work, I take a little walk over to Greenwich park and sit by James Wolfe statue and enjoy the best view of London, with a nice cup of tea and compare it to being at work earning a little bit more each year, no contest, early retirement is the way to go if you get the chance.

Mick70

https://www.which.co.uk/money/pensions-and-retirement/planning-your-retirement/how-much-will-you-need-to-retire-aNmlv7V7sVe9

saucer

Peterrr said:

For what it's worth, here is our current projected budget when we (hope to) retire in 4 1/2 years, mortgage and (hopefully) dependent-free. Colour coded in order of necessity, so if funds don't allow then the 2nd car will be forfeited first, then holidays budget cropped and so on.

That’s a really clear and helpful table Peterr. One question , what’s happened the poor dog? Is he an ex-dog or a retirement plan?