Pensions Planning: The NUMBER

NormalNorman

The NUMBER is something I've not focused too much as in many senses it is what it is as we have to work with what we have accumulated. Quitting FT work in two odd years is non negotiable although I plan on keeping on the PT role until 67.

I did post the stacked bar chart previously as a guide. Although some figures are out of date or just wrong when trying to normalise data - fortunately all in my favour. Anyway, primarily did this for the wife as she really struggles 'how much'

The way I see it whilst working we see very little of our headline salaries. For example, a very high level of savings from net net income, very high pension salary sacrifice, National Insurance, significant uni costs for DD and wife has commuting costs. There isn't really anything to save from the usual mandatory outgoings as I keep on top of that. Never had any debt either.

So adding all that up and converting it into a gross salary you no longer need to earn is quite inspiring. So I we will actually be much better off then.

mrklaw

that’s an interesting approach. I’ve focused on a number that works for the income we want. But perhaps we’re looking at it wrong. Instead of potentially working an extra year or two we could just be prepared when the time is right and be willing to adjust expectations on income if needed

DT2001

The original post said what you needed to live on comfortably but also what you were aiming for. These could be two different figures.

During Covid I looked at our figures and advised OH we could retire. Lockdown highlighted our necessary spend at about £1500 p.m. (4 children at home/uni). OH enjoys her work and so has continued. Our investments have grown, all bar one children in employment, our funding requirements reduced as fewer years and closer to SPA and so the aim is to pass on excess income which will depend on market performance. The number for a comfortable retirement is about £4K p.m. net (assuming we keep our holiday home as we swap that to keep holiday accommodation costs lower). We have both been self employed for many years and used to fluctuating income so NormalNorman’s approach of working with what you have seems logical.

mrklaw

yep ours are different. 28k is our live comfortably figure. lift and shift what we currently do minus some work expenses, plus a bit more eating out. 40k is our total target which is 12k for travel until 75 if we can still keep it up by then.

NormalNorman

https://forums.moneysavingexpert.com/discussion/comment/82028589#Comment_82028589

I'm sure I've seen you mention travel. Also very important to us. What I've been doing, and I'm sure I'm slow to the party, is before going into [semi] retirement organise/simplify all the financial products wanted/need and bin all the rest whilst I can put down employed with a decent salary. For example, the travel credit card which I've had for a few years. Slowly incrementing the mean credit limit through the app every so often. Also, after the days of stoozing/harvesting every offer time to let the credit report detox as there is nothing I qualify for anyway these days. Bar a recent pension/isa transfer with ii.

WillC999

https://forums.moneysavingexpert.com/discussion/comment/82028589#Comment_82028589

Oh definitely think about adjustment - time is the thing that is absolutely finite, and unknown. There has to be a balance between too much time scraping by and short-lived affluence.

kempiejon

Chatting to a pal of mine recently who has costs of nigh £4k a month. He's done the numbers and 67 will get about that. He spoke about ER with me quite a few years back but our most recent chats he can't see a way to afford it currently. He'll be fine at 67 with good DB and SP. He wants and has more indulgencies than I do but getting out a decade earlier sells it to me. Folks and strokes.

kev2009

Hi all,

Been following this thread on and off and just wondered, what's a good pension calculator to use for a rough guide on what pension income I could have?

My existing pension provider (SW) seems to indicate a much higher sum that moneyhelper, despite even if I change my retirement age.

So just curious what's best to use as SW seems to think I'm going to have a fair bit more per year and unsure how realistic it is. A few years back, SW was predicted the other way and saying I'd have like 10k a year income, knows its come much higher.

I've still got just under 20 years before my official retirement at 67 however I am planning to get out between 60 and 65, ideally nearer 60 if possible but difficult to determine which calculator is more accurate so i know what I'm looking at and if feasible. Planning on taking annuity as opposed to draw down as looks more stable, don't want to be worrying about loosing money or tightening belt due to stock market crashes or worrying how to pay bills due to a crash etc.

Thanks

Kev

WillC999

Pick your NUMBER - 20, 40, 60k or thereabouts depending on expectations (Home - Retirement Living Standards) then setup a spreadsheet with your income streams compared to this over time (years).

Add and DB pensions, your state pension, then look at what is left to fill, from SIPPs or savings. It's pretty simple maths if you exclude inflation (assume today's figures).

michaels

https://forums.moneysavingexpert.com/discussion/comment/82036939#Comment_82036939

Used to be that easy - but now with the tax thresholds frozen that constant real terms income could actually lose 25% or more in real terms over a 40 year retirement just due to fiscal drag.

[As an aside I don't think those Retirement Livng Standards are very realistic in that the 'medium' level puts a household in the top 25th percentile]