Pensions Planning: The NUMBER

savingmore

Hello everyone,
I have just finished reading this thread over the last 2 weeks and have enjoyed hearing everyone’s plans and ideas. I have been focusing on my retirement planning in the last months so I will post up what I have and very open to any input. I also have some questions that I would love answers to!

We are due to retire in October 2023 and happy with this date when we are both 66. We love what we do (we are self-employed) and a good lifestyle with flexibility so unless something fundamentally changes we won’t deviate from this.

We own our own house, average 3 bed semi. We did some major work on it last year and want to keep on top of that before we hit our retirement year.

Our break down of fixed pensions are

£24,400 at age 66. (This is made up of 2 x sp at the new rate of 155 a week and an index linked pension of £8,400).

This is our satisfactory number and we know we can live fine on this as this is currently the equivalent of our income and out of that we pay £800 a month into things we wont be in retirement. I haven’t made allowance for inflation in this.

On top of that we have £250,000 today in a mixture of isas, small pension for me and cash & savings. I am estimating a pot of £319,000 by 2023.

I have used figures of 3% return on investments between now and the future. I feel the 3% is conservative but not taken any account of inflation.

My husbands pension of £8,400 will be paid from end of 2017 and we intend to invest this and not use it at all. There will also be a lump sum of £26,000 in addition, that we intend to invest and not touch. I estimate if we are able to do this, this will give us a figure of £86,000 by end 2023, again assuming 3% growth.

This will then give a grand pot of £400,000 approx.
At 3% drawdown, this would give us £12,000 a year. Obviously we would keep the rest invested (and some savings) so if the return is at least 3% I don’t think this will diminish.

On top of the £24,000 this would be £36,000 a year, which is 50% more than we live on now!

I hope I haven’t missed anything, and very open to comments and advice.

My main question is regarding pensions. I didn’t start a pension until about 3 years ago (long story). I am putting in £2,880 as I am a non tax payer. Is it worth my husband starting one as well to get the tax relief? Would be grateful for comments.

atush

Is your SE in a limited company? would it be beneficial to become one if not?

As the company could pay up to 40K a year into pension for you, regardless of any stated income (as most take dividends over income anyway)?

edinburgher

@savingmore - it sounds like you have got everything thought out pretty clearly, with plenty of upside potential that might see you spending a little more than you're currently planning at some point.

No reason why your husband shouldn't benefit from tax relief with another pension as well. Is he employed? Is there an employer match etc. to consider?

edinburgher

At the moment, I don't know what my number is. It used to be very straightforward when we were living in our last property (a nicely decorated big tenement flat where we had no real CAPEX planned).

Since then, we moved into the most unloved house in the best area that we could afford (and probably overpayed a little for the privilege). As a result, we have been burning money since last November, with no end in sight.

Assuming little and often maintenance/decorating, would 1% of property value/year be a reasonable amount to allow for maintenance in the longer term? Maintenance wouldn't include big ticket items, just day-to-day things.

savingmore

Is your SE in a limited company? would it be beneficial to become one if not?

thanks for the replys. sorry can't think what an SE is unless self employed? if so, no it's not a limited company.

thanks for thought on husband getting pension. I thought it made sense, but our FA didn't seem to think so with such short term to go.

just wondering if there is anything we can do to help?

I had a look at retire easy website as recommended on here, it looks good but am nervous ® of putting so much personal info into a site. how have others felt about that?

have really enjoyed this thread, and marinelifes, have learnt a lot.

jennyjj

Just enrol with a pseudonym, an arbitrary address and an expendable email address

Marine_life

edinburgher wrote: »

Assuming little and often maintenance/decorating, would 1% of property value/year be a reasonable amount to allow for maintenance in the longer term? Maintenance wouldn't include big ticket items, just day-to-day things.

I would start by thinking about putting the spend in two different buckets:

1. Planned.
2. Unplanned

I assume you had a survey done when you bought it? If not then it may be worthwhile having a detailed survey to cover some of the things that will likely need doing in some time frame (roof, chimney, outside painting, drains etc.)

Your planned could also cover those things which are desirable but not essential i.e. you could do them if other expenses don't arise but you don't need to do the work as such (e.g. new kitchens, bathrooms etc.).

I would aim to cover as much of the "unplanned" budget by insurance as possible (e.g. flood, weather damage etc.) and have a contingency for things not covered by insurance. how much contingency you need would depend on size and general condition of the house.

edinburgher

Thanks M_L. I'll make a shamefaced admission and confess that, while we had a (and read thoroughly) the survey, we never actually budgeted for the planned works in any real way.

Still to be done would be some tree surgery, repairs to outside steps and a wall, new soffits and gutters, a bit more plastering, floor coverings, redecorating a few rooms and window coverings. Maybe a small extension/loft conversion and/or a new garage, but those are nice to haves and won't happen for 4+ years when DD is at school.

I think we're sufficiently insured (what appears to be a very complete home and contents insurance policy), no risk of flooding as the nearest river is 5-6 miles away

I suppose when I say maintenance I'm thinking more the dribs and drabs of buckets of paint, replacement tools, small items of furniture/household electronics that become necessary over time, minor improvements by a contractor (something small, like replacing an outside light or similar)...

mgdavid

edinburgher wrote: »

......... minor improvements by a contractor (something small, like replacing an outside light or similar)...

Gulp, you PAY somebody for something like that?
This is MSE after all.......

North4

My number: £24000 net (for a couple).

Hope to 'retire' early next year at 58.

It really is difficult to say whether our number is going to be low/high. We don't have an expensive lifestyle and it looks OK though, so it's a question of how much extra we want to do. It's going to be a case of monitoring our investment returns and modifying our spend if necessary. I have a small business that I plan to expand which should generate some more income. If necessary we'll look for some part time work - we've been watching "Britains's hardest workers" with more than a passing interest!

Our DC pensions should achieve our number, but we're prepared to accept some erosion of capital (up to 20%) over the next 7/8 years before we both qualify for the full state pension.