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Pensions Planning: The NUMBER
in Pensions, annuities & retirement planning
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As I wrote in POST #001:
The NUMBER is how much income you need to "live comfortably"
So What's your number?
Very important for pensions planning, to know what you are aiming for.
The amount that your retirement plans generate is your PENSION.
The whole point of knowing your NUMBER, is to plan ahead so hopefully your pension (and any other income) will provide that.
I agree that if you are putting in (to your pension funds) as much as you wish to, then that may give a shortfall against your NUMBER...
but that is your decision and at least you will expect it rather than having a nasty shock in retirement.
It's a personal decision at the end of the day.
I have had many people say to me, "....but I cannot afford to save for my retirement".
Those same people smoke, drink, holiday abroad, run new cars etc .... it's their decision NOT to save, which is the reality.
However, there is no point in "Maxxing out" pension contributions, if it means a meagre existance...
everyone has a different view on what is a comfortable existance though....
Even with the incentive of 20% tax relief and 39% rebate via Tax Credits it is also very difficult to increase my pension contributions as I still have to 'give up' the remaining 41% of the contribution now. I am contributing as much as I can but it is probably not enough to see me comfortable, certainly not before state retirement age which is 68 in my case, even with a generous employer scheme (NHS).
I therefore cannot see much use my working out the amount I would need to live comfortably as I would have no way to achieve it.
DS9074, I do understand and see your point.
If your income is extremely low and only covers basic survival costs, I have to say I would find it difficult to be motivated to save in a pension too.
So what would need to happen to increase your income now? If you cant do anything now is there anything you can do to increase your income in the future?
It is a function of retirement planning that the lower income anyone has while 'working', the lower is the percentage savings/pension contributions required to maintain the same standard of living in retirement.
This is simple mathematics. State Pension (that everyone gets) forms a more significant percentage of 'working wage' for the lower paid.
However, whatever one's wage, it is clear that many have not recognised the need to live sufficiently 'below income' to provide for full maintenance of it after retiring at normal age.
It seems to me that the choice in these cases boils down only to two options. 1. To retire and seek to drop standard of living, or 2. Continue working after normal retirement age until enough of a retirement fund has been saved.
Neither option is attractive, but there is very little else that can be done.
My income is around £10k + a bit of Working Tax Credit. I've got 33 years until I am 60 but 41 years until State Pension age which is 68 for me.
I would like to be able to retire at 60 (or as soon as possible) as work is hard enough to maintain now, let alone going on to 68.
Unfortuntely with an already low income I have little room for taking a cut in income in retirement from my current level. I am contributing to my employer NHS pension and have been for 3 years. As I posted in another topic I am thinking of trying to increase this if I can but will not be easy, even with the rebate within tax credits (which looks as if it will be cut under Universal Credit).
I have also been contributing the minimum £20 to a stakeholder since I was 18 and did so through uni years. I have maintained this but its only ever going to give a very small pension at that rate.
Hopefully you can see why for me a Number is a bit of a theoretical. Without wishing to tangent someone elses thread all ideas on what I should do gratefully received of course .
I guess thats why I do what I do and you did what you did.
Of course there are other things that can be done. Granted they may not be easy and may require a completely different outlook on life for some people, but surrendering is pityful. There seems little point in lying on your death bed thinking if only, better to at least tried to improve your lot rather than accepting "there is very little that can be done".
I understand what you are saying, but you do have an awful long time to retirement. Is there no chance that you may be able to retrain/increase your qualifications over the years which will enable you to earn more ( and perhaps work less) even taking into account your medical condition?
I am aiming to do this through the following:
Pension & AVCs - 550,000 pension pot (circa 100k lump sum and 450,000 pension pot = circa £16k pa pension (pre tax)
ISAs - 200,000 in real terms - interest @7% = £14k pa
Investment properties - rental yields - Circa 15k pa (pre tax)
Not anywhere near retirement yet but this is the plan/aim... (at least assuming no major life upsets/changes...)
I have not included the State Pension in this as I have serious doubts as to whether it will exist as it does today for those with private pension provision.
But have you considered inflation?