Pensions Planning: The NUMBER

MrsFingersCrossed

That's a bit like how we worked it out, Kangoora, and came up with the exact same actual cash we need per month figure of £2,000, ie £24,000 a year net income. It's roughly what we spend now, so we think we will be fine with that especially after downsizing to free up a safety net pot of cash to dip into as and when.

saintalban

This thread is great, and I was initially reassured by the £24,000 estimate for a couple, that my projected pension of £17.7k pa and £50k lump sum would be sufficient as I'm single (though with children at home) and no mortgage. However, when I worked out my NUMBER it came to a scary £26k pa! Useful exercise though. I'm 56 and wanted to retire at 60, but state pension isn't until age 66.

kangoora

saintalban wrote: »

This thread is great, and I was initially reassured by the £24,000 estimate for a couple, that my projected pension of £17.7k pa and £50k lump sum would be sufficient as I'm single (though with children at home) and no mortgage. However, when I worked out my NUMBER it came to a scary £26k pa! Useful exercise though. I'm 56 and wanted to retire at 60, but state pension isn't until age 66.

Well, one persons 'comfortable' is another person's 'living like a pauper'. I see people on this thread saying they need £1k/week in retirement. Personally, whilst we've hit that figure as income that would also be whilst paying mortgage, loans, kids etc. £1k/week in retirement for us would enable our definition of extravagant spending

Similarly, I don't see how we could manage on £10k/year but a lot of people do. The vast majority of mine and my wife's family are from a working class background (builder, plumber, factory line work, heavy plant engineer etc) and I believe very few of them have a pension in excess of £15k (including SP) but they seem to be doing OK.

I actually preferred working 'down' from current take-home pay and seeing what our current spending is to see what we will need. I've kept holiday spending the same, working on the principle we are no longer tied down to school holidays rip-off prices and also only funding 2 people instead of 4 = more holidays for 2 people.

robin61

I have a figure of £2,500 per month net between my wife and myself. We have no debts or mortgage and we are currently living on about £400 a month less than that with the occasional dip into savings for holidays etc and managing ok. I am paying a lot into my company pension AVC to build up a decent retirement lump sum which of course impacts our disposable income now but will be well worth it in the long run.
I found the retire easy web site was useful and has helped me to be a bit more confident that my crude workings out were realistic. I am nearly 54 at the moment and my wife is a year younger. Hoping I will be able to get an early retirement package at about 57.

Gatser

Thanks for your feedback and very kind comments

It has been a while since the thread started and I have been semi-retired (part time) since April 2013, but around £25k is still an OK NUMBER for us. (Still have to wait 10 years for my SP)

As predicted by our retired friends (and folks on here) once you have taken the leap of faith (in your spreadsheets!) to retire/semi retire,
the time flexibility allows you to save money on holidays, meal deals etc and if you enjoy "cheapie" interests (walking, cycling, camping) you can have a super time on a light budget.:T

My next challenge is to convince my "Lords & Masters" that I should reduce my work days further...

Keep those comments coming please... I enjoy reading them in my retirement leisure time

enator

Our number is around £80k a year - our average spend over the last 15 years has been £111k a year (I know, I know...) but with our first child off to uni with twins to follow in four years that should reduce to the £80k spend.


Before people get huffy, I should explain that I have a high pay, high stress, high risk job (with a horrible, loathesome American company) that regularly burns people out (and a few end up seriously ill with stress, heart attacks etc) so I think I have earned the money, but there is a chance it's going to do me in early so I am plotting an exit strategy now at 55.


I have invested heavily into VCT's and ISA's so a high proportion of my future income will be tax free, and my pension is nearly fully funded up to the current Lifetime Allowance. If the Govt don't change the VCT rules, then I should be able to withdraw significant lump sums at an equivalent tax rate of 7.5% instead of 40%/45% - this I will pass onto the kids in which ever way is tax efficient at the time.


Enjoy reading about people who have made the jump into retirement early, despite having good jobs & I really hope to be joining them soon.

robin61

enator wrote: »

Our number is around £80k a year - our average spend over the last 15 years has been £111k a year (I know, I know...) but with our first child off to uni with twins to follow in four years that should reduce to the £80k spend.


Before people get huffy, I should explain that I have a high pay, high stress, high risk job (with a horrible, loathesome American company) that regularly burns people out (and a few end up seriously ill with stress, heart attacks etc) so I think I have earned the money, but there is a chance it's going to do me in early so I am plotting an exit strategy now at 55.

Good for you. You've worked hard and have been successful so you deserve to enjoy the money you've earned. I hope your early escape plan works out for you.

Happier_Me

Hi All

Reading this thread has encouraged me to sit down and work out our number (for a couple).

So here goes ( all in today's money):

Food. £6,000
Utilities £5,500
Car. £6,000
Maintenance. £1,500
Clothes. £ 800
Presents. £1,200
Hols/ Entertainment. £9,000

So goal after tax is £30k for a couple. We are late thirties, 2 kids still in primary school and we would like to retire early, say late fifties. We are 18 months away from being mortgage free in a 4 bed house.

The current plan is to downsize to a 3 bed semi, release half the value (£150k approx after fees) of our current home and reduce monthly running costs when we are are near retirement. I think there is plenty of scope to cut our retirement number if we need to but the plan is to have an active retirement that includes some travel each year. The car costs should cover a medium range new car including fuel and maintenance.

This number could reduce as we get older and I am hoping not to rely on the state pension as this will start paying out around 10 years after we retire.

So we have some saving to do. Hubby is on track for a £200k pension pot with scope to save alot more once the mortgage is gone. I am fortunate enough to have 16 years service so far in the LGPS scheme.Last pension statement based my pension on earnings of £41k which may or may not go up or down depending on career choices I make in the future.

I am learning lots on the retirement and pensions forum so when we are in a position to save more for retirement I am hoping to have a clear plan that will maximise our retirement income and minimise tax paid after retirement.

This is a great thread by the way. Still working through all the posts and will be dropping in regularly to have a read.

atush

enator wrote: »

Our number is around £80k a year - our average spend over the last 15 years has been £111k a year (I know, I know...) but with our first child off to uni with twins to follow in four years that should reduce to the £80k spend.


Before people get huffy, I should explain that I have a high pay, high stress, high risk job (with a horrible, loathesome American company) that regularly burns people out (and a few end up seriously ill with stress, heart attacks etc) so I think I have earned the money, but there is a chance it's going to do me in early so I am plotting an exit strategy now at 55.


I have invested heavily into VCT's and ISA's so a high proportion of my future income will be tax free, and my pension is nearly fully funded up to the current Lifetime Allowance. If the Govt don't change the VCT rules, then I should be able to withdraw significant lump sums at an equivalent tax rate of 7.5% instead of 40%/45% - this I will pass onto the kids in which ever way is tax efficient at the time.


Enjoy reading about people who have made the jump into retirement early, despite having good jobs & I really hope to be joining them soon.

We are in a similar situation, and our twins are actually at Uni at the moment. We are also running a big expensive house. While my food budget has reduced, I still cant figure out our 'number' as the house costs so much to run. So will need to downsize first (thinking of next year maybe). I dont think a full state pension would even cover our utility bills at present lol.

PennyForThem_2

atush wrote: »

We are in a similar situation, and our twins are actually at Uni at the moment. We are also running a big expensive house. While my food budget has reduced, I still cant figure out our 'number' as the house costs so much to run. So will need to downsize first (thinking of next year maybe). I dont think a full state pension would even cover our utility bills at present lol.

I am a year off retiring and a widow. I really, really need enough to feel I am ok so my number is something like 20k. As a result I have worked longer than I need to and deferred state pension. I have planned that I will downsize around 70-72 (I am from a very long lived family on both sides and suffer - touch wood - no health problems at 63).

I love food and wine - but not that keen on traveling. I have a big 4 bed house but in a wonderful location - so I want time to enjoy but I know the garden will be too much in my 70's and I would rather move into town.

I can achieve 20k from various pensions which have inflation built in and the deferred sp.

I didn't even think pensions until late 40's - you need to think pensions waaaaay before that!