Pensions Planning: The NUMBER

Grumpy_chap

So, the BBC is reporting what "the number" needs to be (after tax) for various standards of retirement:

https://www.bbc.co.uk/news/articles/c3928m30v89o

RetirementStandard	Single	Couple
Minimum	£13,900	£22,500
Moderate	£32,700	£45,400
Comfortable	£45,400	£62,700

It occurs to me that the "minimum" in the above will be met by SP alone in very many cases, yet the article suggests 82% would reach the minimum standard. That means 18% would fall short of that level.

It also occurs to me that a good number of people never reach that "comfortable" level at any point in their life-times. Indeed, not everyone will reach the "moderate" level at any any point in their life-time.

michaels

https://forums.moneysavingexpert.com/discussion/comment/82021473#Comment_82021473

I guess all singletons only on the state pension or pension credit won't reach that level, also couples who rely on pension credit? (Although pension credit in reality is a gateway to a lot of other goodies that almost certainly lower the requirement)

In general I find these numbers very unsatisfactory as I think they suggest people should be aiming for a higher standard of living in retirement than many have in employment, expecially if factoring the reduced expenses in retirment.

Grumpy_chap

https://forums.moneysavingexpert.com/discussion/comment/82021602#Comment_82021602

Indeed - for a couple of working age to have £62.5k after tax would require them to both be earning £39k or thereabouts. Joint salaries £78k. If the salary split between the couple is unequal then the total combined salaries will need to be rather higher still.

For many retired people, housing expense is much lower then when working as the mortgage has been cleared down (not applicable for renters). To counter that reduction in required income, a retired couple with comfortable income and the extra time afforded by not working might well spend rather more on leisure activities and holidays than they did whilst working. Could very easily be more than the mortgage was costing them.

MarriedWithKids89

https://forums.moneysavingexpert.com/discussion/comment/82016204#Comment_82016204

With reference to what I referred to as "Non-discretionary CAPEX" (irregular, but usually expensive unavoidable expenses like new windows, new boiler, replacing car, car/household repairs, etc.) we decided to average it out over our expected lifetime. However, some people prefer to just set aside a lump sum. Do whatever works best for you, just don't forget to take this type of potentially expensive expenditure into account.

For what it's worth, £28K is pretty close to what we budgeted for subsistence (essentials) and "Non-discretionary CAPEX", so your total number (£40K including discretionary) looks reasonable but, of course, everyone's retirement looks and costs different.

GenX0212

So with Mrs GenX having retired at Christmas and myself having retired one week ago here are our 'final' figures.
But before we get into them let's take a quick look back at our original figures from one of my very first post on this forum: https://forums.moneysavingexpert.com/discussion/6504692/what-to-expect-from-an-ifa/p1

Me:

• Age 55
• A deferred DB pension available from age 55 approx £14k a year
• A current workplace DC pension current value > £400k.
• A couple of other private pensions, total about £100k.
• A Full State Pension due.

Her:

• Age 55
• A deferred DB pension available from age 55 approx £4K a year
• A small robopension pot of about £18k.
• A Full State Pension due.

This was the first point at which we seriously started thinking about retirement and we decided to defer a while longer but also to commit what savings we had in order to maximise our pensions. This included paying in 2 years equivalent wages for Mrs GenX into her robosipp; me paying in annual bonuses, doubling AVC's up to £1.5k a month and in the final last six months salary sacrificing down to minimum wage. Total additional input somewhere in the region of £100k.

Me:

• Age 57
• A deferred DB pension, min £14.5k a year but expecting this to improve slightly as have asked for inverse commutation of £40k lump sum and now awaiting the scheme actuaries to respond
• A DC pension current value £745k
• A Gilt ladder of £120k in a pension wrapper, spread over the intervening years to State Pension age
• A Full State Pension due.

Her:

• Age 57
• A deferred DB pension available from age 55 approx £4.5k a year
• A robopension pot of about £56k.
• A Full State Pension due.

So in just over 2 years the total position has improved by £400k ! Absolutely insane and all despite Trump tariffs and the ongoing Iran conflict.

I appreciate we have been very lucky in this regards and that many wouldn't be in the position to be able to do what we have. I hope however that it can also be inspiration for anyone thinking about retirement in the next couple of years.

Now have the nice problem of trying to optimise withdrawal to avoid higher rate tax but if pot performance continues as it has then that will probably become academic and unavoidable.

I just want to give a massive thankyou to everyone on this forum for your knowledge, insight and patience over the last few years. What an incredible lot you all are!

NoMore

https://forums.moneysavingexpert.com/discussion/2146737/pensions-planning-the-number

Just quoting the first post of this thread as it seems from the last few posts people are misunderstanding what the thread is about. Its about your assumed number you will need in retirement, not what you actually have or how to drawdown efficiently.

If you want help and advice on that, I would suggest you start your own thread as individual detail is crucial for that and its easy to get lost and hard to follow in a pinned thread such as this one.

GenX0212

https://forums.moneysavingexpert.com/discussion/comment/82026627#Comment_82026627

Fair enough!

Our target was to get as close to our existing joint disposable income as possible.That's the ideal isn't it being able to retire without any drop in income or living standards? So in our case about £60k net and it looks like we have managed to do just about that. The number will probably drop slightly lower later on in life as things slow down but if performance is maintained then who knows we might need a different outlook!

Slightly ironically it is only because many years back my DB scheme was closed to further accruals that I even have a DC pot, if it hadn't been for that then there is every chance that I would have just carried on with the DB final salary alone. That would have given me a very good pension but certainly not anywhere near what we have now.

NoMore

https://forums.moneysavingexpert.com/discussion/comment/82026676#Comment_82026676

wasn't specifically aimed at you (but at no point in your post do state what your number is) but rather there seems to have been a spate of people asking in this thread for help over the previous pages, (tbf you don't seem to be asking for help either), which isn't really the point of the thread

MarriedWithKids89

So, what is everyone's latest number? Here is ours for 2026 (retired couple 59/60, MCOL, No mortgage, 1 car, no dependents, no pets): 

- Subsistence (day to day living costs including utilities and insurances): £20K
- Non-Discretionary, irregular spending (e.g. replace car every 4 or 5 years, car/house repairs, home improvements, white goods, furniture, etc.): £10K*
- Discretionary Spending (e.g. holidays, short breaks, days out, meals, takeaways, etc.): £24K

*I've averaged this type of spending out over the rest of our lifetime but some people prefer to just set aside a lump sum for these things. As I've said previously, do whatever works for you, just don't forget to take these occasional (but usually expensive) things into account. Good luck everyone.

Nebulous2

I've finally retired completely and have always been very relaxed about budgeting. I keep control of costs, shop around on renewals and expect 'value' for the things we buy. I monitor the state of play of all capital and cash accounts on a monthly basis. Typical MSE behaviour on expenditure, not so much so on budgeting.

I looked back this thread recently to see if I had done any sensible work on a budget - and found two finger in the air estimates. The first said £2500 net a month, and then I revised it some time later to say I now expected to need £3000 net a month.

This year has been quite light on holidays to date - as we've had a lot going on at home. Two weeks abroad and about 15 nights staycation so far. We have some family things to deal with in the next couple of months, so we are unlikely to have another foreign holiday until September.

It looks as though that £3k net a month still covers us - although I do pay £240 net / £300 gross into a SIPP from that. It will cover most holidays except big long-haul bucket-list type ones. We have at least one of these planned - possibly next year. In addition a splurge on a new vehicle or major renovation work would have to come from capital.

So £36000 net with a fallback available if needed.

That puts us short of the moderate level on the retirement living standards, but with 9.5 weeks abroad in 2024, and 7.5 in 2025, plus another 40 or so nights a year away in the UK, it doesn't feel like it….