Pensions Planning: The NUMBER

MarriedWithKids89

SouthCoastBoy said:

Imo option if you don't have the means to fund big ticket items in retirement you're most probably not financially ready to retire.

Absolutely, hence the query. 

michaels

SouthCoastBoy said:

Big ticket items definition for me are as follows

House deposits for kids 50k each
Enough money to move to a more expensive area if necessary due to be closer to family etc so maybe 100k
Cars renew every 10 years, we buy 3 year old cars as opposed to new cars so 30k every 10 years.
Holidays 5 to 10k per year
Boiler and white goods, carpets, furniture etc. I see as incidentals, as not that expensive in the scheme of things. If I'm scrabbling around to fund a 2.5k boiler I would say I am in financial trouble.

My definition of financial independence is to have enough money so you don't really have to budget to any great extent and the above are all taken care of. 

WE have pencilled in 100k each deposit money for the kids either through downsizing or passing on an inheritance - 100k for upsizing would barely cover the cost and taxes for moving to a house same value as our current very ordinary semi.

Other 'one offs' I do 'accrue' for in our spending plans, ie an annual budget for house maintenance, another for 'upgrades', same two categories for cars.  Most years these are not fully spent and our money in the bank thus looks healthy but I have at least a mental note that some of this equates to lumpy expenditure not that we are being frugal and can spend more on day to day.

[Aside, many seem to get into financial trouble because they let their day to day spending increase to match their total incoming so have no buffer for unexpected spending or reductions in income]

Dizee123

We have just had our roof replaced this July at a cost of £10,500.  This was for a bungalow with a small area of flat roof and a little bit of chimney repointing.  We also had quotes going up to £14K!. 
For a replacement of windows and new front door (two bay windows, one large side window, lounge side window, patio doors and new front composite door) we have gone for the quote of £10,500. Should be installed beginning of December.  Not necessarily the cheapest quote but I like the quality of the windows and they match the kitchen and bathroom which were done last year.  The installers also did a really good job with no damage on taking out old windows etc.  The front door could have been cheaper if I had gone for a white standard UPVC, but I am going to look at it (hopefully) for the next 20+ years so bought a blue one . 

I wanted to do this while I was still working but unfortunately life got in the way and we had 3 parents rapidly decline in health and leave us within 5 years.  They took precedence over repairs.  Then Covid hit and then the cost of everything went astronomical so it was only when I retired and got my lump sum that we had the time, energy and money to do these major jobs.

Now need to clear the loft to have it re-insulated - not looking forward to sifting through 25+ years junk .  

SouthCoastBoy

I've modelled my spending with a daily expenses account and a capital account. I have 400k in the capital account, that should take care of the "big ticket items" while in retirement. The rest is in the expenses account, for the last 18mths I have been funding the expenses account 2650/mth, in this time we have been to australia, had a new boiler and new radiators, new sofa and also new lounge, hall and stairs carpet, we have been left with a small surplus of around 5k, so that gives me some degree of confidence that 2650/mth after tax in todays figures should be ok.

Peterrr

We're budgeting £3,000/annum for property repairs and renewals. I once read that 5% of a property's value is a good rule of thumb for maintenance. Ours is a 1990s-built 4-bed detached in (what I like to think is) a good state of repair, having had an extension, mostly new windows, boiler, kitchen and bathrooms all done less than 10 years ago.
Coincidentally our dishwasher died last week, and a replacement (good spec Beko) was £500. At least I saved a bit by fitting it myself 

Pat38493

Peterrr said:

We're budgeting £3,000/annum for property repairs and renewals. I once read that 5% of a property's value is a good rule of thumb for maintenance. Ours is a 1990s-built 4-bed detached in (what I like to think is) a good state of repair, having had an extension, mostly new windows, boiler, kitchen and bathrooms all done less than 10 years ago.
Coincidentally our dishwasher died last week, and a replacement (good spec Beko) was £500. At least I saved a bit by fitting it myself 

That makes your property worth £60K?

Of do you mean you should set aside 5% of the property value at the start of retirement?

Peterrr

OMG - you're right! So wracking my brain, perhaps what I heard was 0.5% rather than 5%... though now that appears a bit low 

QrizB

Peterrr said:

OMG - you're right! So wracking my brain, perhaps what I heard was 0.5% rather than 5%... though now that appears a bit low 

5% a year is roughly the same (maybe a little bit lower) as your mortgage payments will have been.

If you've been spending as much as your mortgage on maintaining your home, you would have noticed.

chile_paul2

Peterrr said:

OMG - you're right! So wracking my brain, perhaps what I heard was 0.5% rather than 5%... though now that appears a bit low 

I have heard and always used the rule of budgeting 1% of your house value for repairs / maintenance per annum.

However make sure you use the rebuild value of the property rather than the market value for the calculation.

For us that works out about £2500 a year and our run rate is a little below that currently, however we need to get some roof repairs done soon and that will bring us back up in line with the expectation. 

westv

chile_paul2 said:

Peterrr said:

OMG - you're right! So wracking my brain, perhaps what I heard was 0.5% rather than 5%... though now that appears a bit low 

I have heard and always used the rule of budgeting 1% of your house value for repairs / maintenance per annum.

However make sure you use the rebuild value of the property rather than the market value for the calculation.

I was curious to know mine and the BCIS rebuild calculator said £256k.
As far as I'm aware, the sale price is only around £170k to £190k!