NEW BLOG. Featuring tips and pics from pet owners of the MSE Forum, we present to you Homemade pet toy ideas. Take a look
Pensions Planning: The NUMBER
in Pensions, annuities & retirement planning
2.3K replies 622.6K views
Latest MSE News and Guides
Energy Price Cap change
Martin Lewis on what it means for youMSE News
Best £1 you've ever spent?
Share your most impressive bargainsMSE Forum
New MSE Forum avatars available
Try 'em out nowMSE Forum
Presumably you have already got your 30 years in under the new rules, so entitlement to the basic would not be affected? If so the impact would just be on S2P, are you getting much from that under the old quote?
Of course you can request a new quote if/when you stop work at 60.
Where do you get 8%? The maximum drawdown rate is based on the mandated Goverment Actuary Department 'GAD' figure. This is variable and is compulsorily reviewed after 5 years after you initiate drawdown and is based on long term gilt yields I believe, it may also depend on age (not sure about that). Last time I looked it was about 6%.
GAD tables are here.They are based on 120% of the annuity rate, so 8% will not be unrealistic.
Useful quick calculator
[e] Plus, in all seriousness, I'm going to draw it down slower after a bit of time. I want to make sure that my 55-70 years can be spent pretty comfortably, but after that it will become a lot less important and the drawdown can slow substantially.
went back on and had a proper look - you can input various scenarios. Ed, yes, I will have the 30 years (£95.25) and the difference for S2P is around £14 a week, so that wouldn't put me off retiring early. Now I just need to work out how to fund an extra 5 years......
Sorryfor late response...
The figures are generally based on the NUMBER for a couple... but no problems with letting us know a good number for individuals.
Economies of scale help though!
Our number is a conservative 27.7k in 2016, at 49 years old. With 3% inflation, this means we need:
£44.5 PA at 65
£93.2 PA at 90!
My son states that we shouldnt worry, as he will arrange for a trip to Switzerland, when the cash runs out!
Assuming this can be divided equally between a couple it is £13,750 net to achieve this, assuming all income is taxable, it would require a gross income of £14,812 each. A tax free income from an ISA of £5,312 would eliminate this tax liability. This could be achieved by an ISA of between £170,000 & £100,000 or between 33 & 20 years of maximum allowance savings. It would, therefore, be wise to include a tax figure of between £500 to £1000 in your number, after all it's one of the more certain expenditures.
If you assume that the average state pension/serps income is £7,500 each then there is only £7,300 each, £14,600 jointly to fund. At your above figure of 5% would need a pension fund of £146,000 as an alternative to the ISAs above.
I reckon this is between £3,000 & £5,000 pa over 20 years or £1,500 & £2,500 pa over 30 years
Once you have set your target your savings should be calculated as a percentage of gross income, in future, so long as this percentage is maintained (thus effectively increasing the annual savings) the pension pot will still provide a pot sufficient to provide since wages increase faster than inflation.