Pensions Planning: The NUMBER 14 December 2009 at 2:44PM in Pensions, annuities & retirement planning 2.3K replies 622.9K views

zygurat789

jamesd wrote: »

zygurat789 the basic state pension has been and remains one of the best pension deals there is.

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.

Both my parents are still alive and well into their 90s, they brought me up with the strong protestant work ethic which made this country great. I retire soon and still play an active game of tennis beating many younger than myself and losing top some older than meas well as lots of swimming regular walking at least 8-10 miles I plan on contiuing in the same vein indefinately.

zygurat789

Gatser wrote: »

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...

Ah but the state pension qualifies you for so much more. Free bus (and sometimes train travel), significant discounts at many large retailers, free prescriptions, eye tests etc, free swimming and in the case of our corporation, discounted other leisure activities and other charges These are only the ones I use, there must be lots of others.

The young are relatively ignorant of what it is like to be old

jamesd

zygurat789, seems as though the likely value of the state pensions greater for you than for me. Good for you!

zygurat789

jamesd wrote: »

zygurat789, seems as though the likely value of the state pensions greater for you than for me. Good for you!

The point is none of us knows are date of death.

Live long and prosper

jamesd

I can certainly hope. I'm still planning for a long life, just considering the shorter life alternative and planning for that as well.

Gatser

...the NUMBER?

Looking at my calculation of my NUMBER, I was wondering how much life insurance I should include over the coming years.
I know its a personal decision...but there must be a decreasing need to pay increasing premiums as we get older and nearer DEATH! :eek:

Not sure when I should plan to STOP paying for life cover.
Thinking about 65....

What's your view?

Debt_Free_Chick

Gatser wrote: »

...the NUMBER?

Looking at my calculation of my NUMBER, I was wondering how much life insurance I should include over the coming years.
I know its a personal decision...but there must be a decreasing need to pay increasing premiums as we get older and nearer DEATH! :eek:

Not sure when I should plan to STOP paying for life cover.
Thinking about 65....

What's your view?

Depends on what you want the life assurance to do, who it is to benefit and what the value of your estate is likely to be.

In my case, I have no dependants and no-one to leave anything to, so LA is not a priority for me now or ever. Having said that, I get death in service benefits (4 x salary) with my job, so I don't bother with extra LA.

ERICS_MUM

Manual_Reversion wrote: »

......For me, 2/3rds final salary would see no drop in standard of living, assuming mortgage paid off as pension begins/employment finishes. I guess there's a reason why mortgage payments being 1/3rd salary is a good rule of thumb.....

Spot on. I've just retired due to ill-health aged 54 and I have a 2/3rds final salary pension, paid off mortgage with lump sum. Actually I am slightly better off because I don't have the costs associated with working - clothes, dry cleaning, train fares, the expensive cappucino and almond croissant that I could not resist every morning on the way to the office etc etc

But, how many people will actually end up with a 2/3rds pension in the future ?


Linda xx

Gatser

ERICS_MUM wrote: »

But, how many people will actually end up with a 2/3rds pension in the future ?

Mr X with salary £24,000 2/3rds = £16,000
Mr Y with salary £120,000 2/3rds = £80,000

The NUMBER is a better indicator of what you should be aiming for in retirement rather than just 2/3rds of salary.
Mr X probably needs every penny of his £24,000
Mr Y probably could still have a very happy existance on far less than £80k

chris_m

ERICS_MUM wrote: »

But, how many people will actually end up with a 2/3rds pension in the future ?

Very true, but also consider - how many people actually NEED a 2/3rds pension. Bear in mind that the deductions will be less (no NI, less tax, no pension contributions, etc) so, depending on circumstances, one can end up "taking home" more from less. Also, as you say, the expenses associated with working cease and it's likely that large expenditures like the mortgage will also be finished.

I "could" work till 65 and get a 2/3rds pension but I have no intention of doing so. My needs are fairly simple, the mortgage will be cleared and my desires for retirement don't involve large expenditure. I'm single so have no need for a pension to support two people. My plan is that as soon as my forecast of savings, pension and state pension project that I will be able to quit and live the way I want, I'll be off to enjoy doing what I want to do whilst I'm still fit enough to do so.