Pensions Planning: The NUMBER

Gatser

Linton wrote: »

Not quite right I think - on the plus side there is the state pension which with SERPS/2nd pension could provide say £15K/year for two people.

On the negative side, if you want to match inflation the Annuity rate would be about 3%. So taking both into consideration you need a pension pot of about £420000 in today's money, or about £0.75M in 20 years time with inflation of 3%.

There are always variables so we are both correct really.
I was not including any state pension because that is only available at age 65 (and increasing!) I tend to think of State pension as an "Additional Possible Income" ..... rather than a guaranteed pension income.
That's what I think of our politicians!

zygurat789

Gatser wrote: »

There are always variables so we are both correct really.
I was not including any state pension because that is only available at age 65 (and increasing!) I tend to think of State pension as an "Additional Possible Income" ..... rather than a guaranteed pension income.
That's what I think of our politicians!

Nevertheless it does account for over half of the income required by people who have responded to you. I don't see how you can ignore this.

Gatser

zygurat789 wrote: »

Nevertheless it (STATE PENSION) does account for over half of the income required by people who have responded to you. I don't see how you can ignore this.

I am being cautious because at present State Pension is not accessible until age 65....and increasing.
I for one would like to fund my NUMBER before I get my State Pension.

The State Pension is not something I wish to rely on... sadly alot of people do have to rely on it.

So long as we know what we need and what we are likely to get, we know what to expect!

zygurat789

Yes it's whatever makes you feel comfortable in life. I feel it is a bit of a shame to die with a large pension pot never having used it.
Why do you think it's sad that people have to rely upon the state pension? I will rely upon it for x% of my retirement income and after all hasn't it been the best value pension available over the last 50 years?

Gatser

zygurat789 wrote: »

Why do you think it's sad that people have to rely upon the state pension? I will rely upon it for x% of my retirement income and after all hasn't it been the best value pension available over the last 50 years?

Oh, please do not misunderstand me... I only meant that if anyone relies totally on the state pension, they will not have a particularly comfortable existance.

I will also welcome whatever state pension is available when I qualify for it... but it seems to move further away and be worth less and less as i get older! I cannot wait to get my hands on it though and GUARANTEE to spend every penny! :beer:
State pension does figure on my spreadsheet but I have discounted it to build in political mistrust and uncertainty.

zygurat789

But you didn't answer my last question

lemma1968

zygurat789 wrote: »

Yes it's whatever makes you feel comfortable in life. I feel it is a bit of a shame to die with a large pension pot never having used it.
Why do you think it's sad that people have to rely upon the state pension? I will rely upon it for x% of my retirement income and after all hasn't it been the best value pension available over the last 50 years?

I assume you are asking this because you have researched all the figures surrounding it. Even if it is the best (i know not), it allows only a meagre existence which both my parents live daily. I see them struggle day in and day out. They lost everything in the early 90's, savings etc the lot. Maybe the state pension is the best in growth long term but its benefits remain limited.

Gatser

zygurat789 wrote: »

But you didn't answer my last question

Which was:
the state pension....after all hasn't it been the best value pension available over the last 50 years?

Sorry but how do I answer this?
As the government do not show how much of OUR money they are investing to give us back OUR pension, it is not something that can be accurately assessed for "Best Value"
All I know, as Lemma states, is that it is not enough for a care free existance in retirement and therefore I do not personally value it (much)

I would be interested to know why you think it is such good value?

I an not suggesting that we give the government even MORE money to try and receive a bigger pension.... :eek:

jamesd

zygurat789 the basic state pension has been and remains one of the best pension deals there is. The additional state pension (SERPS, S2P) has often not been the best deal and even now, made deliberately less attractive, for quite a few people it's not the best deal. That's in part because it's not available from age 55 and because it has to be used to buy an annuity that provides a pension for a spouse.

If you're planning on retiring earlier than state pension age, which is currently increasing to 68 depending on when you were born, from April 2010 (and the age 55 minimum for taking most pensions) you currently face having to provide for yourself for up to 13 years after retiring before you get any of the state pension money. That means you can't rely on it but you can plan to deliberately deplete the capital in other pensions, ISA and other investments in the knowledge that if you live long enough you'll get the top up income later.

I know that the state pension age starts after the average lifetime of my parents, so I'm not counting on being alive to collect any state pension money, nor on waiting until state pension age to retire, because I'd like to actually have a retirement. That makes the state pensions almost useless except as a fallback for the me living longer than I have to assume case. I still purchased additional basic state pension years as part of that fallback planning, because that's a good deal for the longer life case.

Gatser

jamesd wrote: »

If you're planning on retiring earlier than state pension age, which is currently increasing to 68 depending on when you were born, from April 2010 (and the age 55 minimum for taking most pensions) you currently face having to provide for yourself for up to 13 years after retiring before you get any of the state pension money.

.... I'm not counting on being alive to collect any state pension money, nor on waiting until state pension age to retire, because I'd like to actually have a retirement. That makes the state pensions almost useless except as a fallback for the me living longer than I have to assume case.

Totally agree with you JamesD.

If we want to have some form of active retirement :j we need to start as soon as we can afford to and not wait for the pittance that is State Pension. This is where the NUMBER is useful, it gives some idea as to what we are aiming for (what we expect) so that we can work out if we can afford to retire yet...