Pensions Planning: The NUMBER

atush

AndyAdams wrote: »

Thanks for the response. I'm 52 so 3 years to go and have a split of around 50:50 in ISAs and pensions so I shouldn't have to pay too much tax.

The problem is the closer I get to the retiring the more apprehensive I become about taking money out of any accounts. I will have to break a habit if a lifetime and I'm not comfortable with it!

To help with your apprehension, look at living on your post retirement income level in your last year of work (stripping out ongoing pension payments).

This will tell you if the level you have set is correct, and will have the added benefit of topping up your savings.

Triumph13

atush wrote: »

To help with your apprehension, look at living on your post retirement income level in your last year of work (stripping out ongoing pension payments).

This will tell you if the level you have set is correct, and will have the added benefit of topping up your savings.

I went a bit crazy and took an even more extreme approach to both ramp up the savings and check the feasibility of my number. As well as working out what I'd expect to have at my planned retirement date, I worked out what I'd have if I went 1, 2 or 3 years earlier. I then set out to experiment with living each year on what I'd have if I retired at the end of that year. Given that I came in 10% under my 3 years early number with no real effort, I really should JFDI, but I know that I will sleep much happier if I know I have a big buffer so I'll try and stick it out on the original plan.

ianthy

ex-pat_scot wrote: »

Excuse morbid thoughts, but why the life assurance after you are retired?
Broadband of £120 pm / £60pm looks awfully high.
TV licence fee is £12ish but stops (75?)
You note hair cuts in the credit card info. I would expect you to be completely bald by 70, and hence to reduce your outgoings.
Mobile phone bills are high when you are expecting to be retired.
Remember Council Tax is payable in 10 instalments, not 12.

Well done on the details.. Have you included anything for home maintenance/repairs. I can tell from my 85 years MIL that she spends a fair bit on odd jobs around the house that she can no longer do or prefers to get someone in.

CFrog

ianthy wrote: »

Well done on the details.. Have you included anything for home maintenance/repairs. I can tell from my 85 years MIL that she spends a fair bit on odd jobs around the house that she can no longer do or prefers to get someone in.

Ex-Pat Scot / Ianthy. Thanks for the comments. :j

Broadband costs - I live in a rural 'not-spot' so get wireless B.Band beamed off a hill c. 15 miles away. I have to bear the cost which (I know) is excessive compared to BT.
TV licence. Forgot about that one.
Hair. Bald at 70; :eek: eeek, I hope not. I may have to pay for a Rooney transplant !
Mobiles. Dunno about that. We don't have a BT line so the costs may stay relatively high.
Council Tax. Forgot about that one too.
Repairs. I'd sort of factored that into the monthly incidentals as I'd plan on doing as much as I can myself (for as long as possible). I'm not sure I'd be too bothered at 85 and anyway would hope the Grandchildren would do them for me gratis ... well maybe.

fabsaver

ex-pat_scot wrote: »

Remember Council Tax is payable in 10 instalments, not 12.

For the last few years it has been possible to pay Council Tax in 12 monthly instalments. It makes it easier to budget and manage the number of direct debits for bank accounts etc. Just contact your local council and request the change.
http://www.moneysavingexpert.com/news/protect/2013/02/council-tax-bills-can-be-spread-over-a-year-from-april

chiefie

My water bill is £67 a month but I'm on a meter ��

Northamptonblue

I am shamelessly writing this in order to bump the thread to the front page of the forum. When I first contemplated early retirement, the biggest issue for me was how much income people enjoyed in retirement and if it was enough. The answers gave me the confidence to go for it and I retire this summer. So my request is, post your number and help out fellow money savers with their dilemma. My number is:

Couple - three tiers but starting at £32K per annum and rising to £40K when state pensions both kick in. £200K in savings to pay for the flashier holidays, replacement car and unexpected expenses. Have no idea how comfortable this will be but will post back after a year.

Shedman

After working through the figures and making assumptions on major expenditure items (e.g. cars replaced every 5 years, major house maintenance and replacement furniture/white good items) likely to be needed over next 20 years and a discretionary allowance of £8k a year for holidays/ cruises etc (to appease the missus) the number I felt comfortable with is £45k net per annum for a couple (obviously not all being spent in an even pattern).

Having been made redundant at 58 I 'retired' for a year but with my DB pension not kicking in til 65 (and SP at 66) this meant drawing on savings/SIPPs until that point. I got a bit nervous about seeing the pot diminishing rather than being topped up on a monthly basis so I went back to work (with a plan to do 3 years and add maybe £80k to the savings pot) but I hate the job so am giving up again after just a year. Hopefully even that little extra boost will have helped a fair bit (potential inflation concerns me given the caps on indexation on the pension).

We don't live an extravagant lifestyle (happily use Lidls and Poundland ) so I am surprised and I guess somewhat encouraged by some of the much lower figures on this thread and yet still living a good lifestyle so hopefully I will be pleasantly surprised and find that I have been too pessimistic about what we need.

frugal90

Working on £35k per year until state pension added later. Will stop summer 2018( decision made) . Will front run final salary pen with sipp and savings for 4 years. I'll be 56.25 and wife 50. Wife also has sipp from age 55 then final salary pension. Final Sal pension will be £35k in today's money and we'll get 3x pen as lump sum. Also have isas of 200k between us. Looking forward to the run on in, now the decision is made. If we really get fed up we'll stop earlier. Yippee��

hugheskevi

the number I felt comfortable with is £45k net per annum for a couple...I am surprised and I guess somewhat encouraged by some of the much lower figures on this thread and yet still living a good lifestyle

It is interesting to look at National Statistics on average pensioner income, which I find surprisingly high.

Looking at couples who have reached State Pension age but are still within 5 years of State Pension age (age based on head of household):

• Annual combined gross income is £40,386 (presume mean, but unstated)
• Earnings contributes £10,227 to the gross figure above
• Net income (including earnings) is £33,029 (mean)
• Net income (including earnings) is £26,246 (median)

Source: Pensioner Income Series 2014/15, table 2.5.
(Note: weekly amounts converted to annual figures by multiplying by 365.25 / 7)

Looking at the statistics for couples aged over 75 the figures are all quite similar, except for earnings which have unsurprisingly declined to just £1,409 p/a. Looking at gross income figures excluding earnings gives gross income of £30,159 for couples within 5 years of State Pension age compared to £28,124 for couples aged over 75.

There are however some pretty strong headwinds which might depress future growth in pensioner incomes:

• The decline of Defined Benefit pensions in private sector which accelerated in the 1990s but was mostly done by closing DB pension to new joiners means occupational pension income is probably going to wain - I've seen various analyses which suggest Defined Benefit pension income is probably at its highest now and will start to decline in future years.
• Increasing State Pension age will probably depress earnings in the figures above as younger (eg those aged 62-65) people drop out of the analysis, unless there is a strong impact of people working longer due to rising State Pension age.
• Triple lock is widely speculated to be something which should be removed (although not until 2020), although that will be a political decision.