Pensions Planning: The NUMBER

k6chris

michaels wrote: »

Suggesting the number is fixed and the other two will change in order to meet the number is surely artificially simplistic.

Yes and no, you need something to build a plan around and 'the number' is better than 'the wild guess' or 'the hope and pray'. I could now retire and meet my 'number' but I need to get my head around not having a 9-5 job to distract me from working out what I want to achieve. Odd, but I've been avoiding that question for years!

atush

gadgetmind wrote: »

My wife has a lady who comes to the house and who charges £20 for a cut and around £40 for "the works" including colouring.

I have a 3mm buzz cut all over, head and chin, and that's free using a trimmer at home.

OTOH our tap water around here is so bad that we have to drink Prosecco instead and that adds up.

HUGE difference in going to a salon and not in home- esp when you need a wash ie color/treatment etc. getting a wash in hole isnt easy nor stress free.. A dry haircut fine-- i've used them a lot esp for the 3 boys when could line them up like sheep for the shearing.

TBF, you re like in the sheep shearing category lol

atush

michaels wrote: »

I thought this thread would be an interesting discussion about how people came up with their numbers so I read the first few pages....

Anyway I am now wondering if 'the number' makes sense as a concept. Surely in reality there is a trade off between:
- how much of current income you are willing to forgo,
- how many years you are willing to work and
- how much you are willing to live on in retirement (the number)

Suggesting the number is fixed and the other two will change in order to meet the number is surely artificially simplistic.

The number isnt fixed at all.

Think you need to re read the thread instead of picking out bits and pieces.

Gatser

Estimating our individual NUMBER is probably the easy part.


Some of us are happy with £25k (or less)
Some of us are fortunate enough to set it at £50k+
There is no correct NUMBER ... it should be whatever each of us is happy with...

michaels

Gatser wrote: »

Estimating our individual NUMBER is probably the easy part.


Some of us are happy with £25k (or less)
Some of us are fortunate enough to set it at £50k+
There is no correct NUMBER ... it should be whatever each of us is happy with...

How much I want to live comfortably on in retirement also depends on how long I would have to work to achieve it and how much I have to live on whilst working. It is not absolute.

Linton

You need a number to start off the process, but there s nothing to stop you changing it when you see the results:

1) Determine how much you need per year to live on at an acceptable standard of living. A good starting point is how much you are living on now minus any expenditure that won't apply when you retire such as mortgage or children plus any extra expenditure you may want because of your extra free time.
2) Decide on a retirement date.
3) Decide on a contribution %
4) Calculate whether your savings, State Pension and db pension if any at your chosen retirement date can provide your required income taking into account inflation. If not change required income, retirement date,or contribution and recalculate.
5) Repeat the exercise regularly, your priorities may well change as you get older.

The objective is that the three requirements of income, retirement date and contribution are always consistent. You then have both a goal to aim for, the basis of a plan for the rest or your working life and the means to measure how well you are progressing to achieving your objectives.

Marine_life

Linton wrote: »

You need a number to start off the process, but there s nothing to stop you changing it when you see the results:

1) Determine how much you need per year to live on at an acceptable standard of living. A good starting point is how much you are living on now minus any expenditure that won't apply when you retire such as mortgage or children plus any extra expenditure you may want because of your extra free time.
2) Decide on a retirement date.
3) Decide on a contribution %
4) Calculate whether your savings, State Pension and db pension if any at your chosen retirement date can provide your required income taking into account inflation. If not change required income, retirement date,or contribution and recalculate.
5) Repeat the exercise regularly, your priorities may well change as you get older.

The objective is that the three requirements of income, retirement date and contribution are always consistent. You then have both a goal to aim for, the basis of a plan for the rest or your working life and the means to measure how well you are progressing to achieving your objectives.

Agree with all that.

In addition, you need to think about how to generate the income you need which is a factor of how much risk you are prepared to take on. And then think about how much of a capital buffer you need and how much you are prepared to deplete your capital to meet retirement expenses.

Planning the number is the easy bit.

vivatifosi

Gatser wrote: »

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.

My Number? (for a couple)
I calculated: £22,000
based on
Food £5,000
Car/transport £5,000
Bills/Utilities £4,500
Holidays/Leisure £4,500
Clothing/Cash/Xmas/Other £2,000
Repairs/replacements £1,000

This is the first time I've come across this thread, what a great idea! It doesn't matter if it's over simplistic, if it gets an easy to grasp concept over to people who don't do pensions conversations.

My number is:
Food. £5000
Cars/transport £6000
Bills/utilities £6000
Holidays/leisure £8000
Clothing/cash/other £3000
Repairs and replacements £2000
Non NHS medical care £4000

Total. £34000

Thankfully between us we are on target to achieve a bit more than that.

The numbers for holidays, replacement and health will fluctuate from one year to another, whereas the rest should be there or thereabouts. Numbers subject to inflation, as over ten years out currently.

I am planning to retire at 65 and have never wanted to retire early. DH will probably retire a bit before that. Mortgage will be paid off in two years, which will help a lot.

michaels

vivatifosi wrote: »

This is the first time I've come across this thread, what a great idea! It doesn't matter if it's over simplistic, if it gets an easy to grasp concept over to people who don't do pensions conversations.

My number is:
Food. £5000
Cars/transport £6000
Bills/utilities £6000
Holidays/leisure £8000
Clothing/cash/other £3000
Repairs and replacements £2000
Non NHS medical care £4000

Total. £34000

Thankfully between us we are on target to achieve a bit more than that.

The numbers for holidays, replacement and health will fluctuate from one year to another, whereas the rest should be there or thereabouts. Numbers subject to inflation, as over ten years out currently.

I am planning to retire at 65 and have never wanted to retire early. DH will probably retire a bit before that. Mortgage will be paid off in two years, which will help a lot.

So it appears you are choosing to work longer than you need to to achieve your number. I'm not sure what that means - is your number actually higher than you think? Should you be thinking about working part time so you are not just earning money you don't actually expect to spend? Should you be spending more now as you have 'spare' income?

vivatifosi

It actually means that I like my job and don't want to retire earlier. However I may go PT at some point once mortgage paid off. I'm still retiring a couple of years before state pension, as that's what I've always planned for.

Being able to work in a job i like and without financial concerns once the mortgage is paid off will be great. I'm not ready to retire.