Retirement Planning

Marine_life

Rich1976 wrote: »

The other thing I would be interested in your views on is what plans do you have for your retirement? This is a conversation I frequently have with OH and people at work - just what would we do all day? There is only so much house work, gardening ( urgh!), holidays etc you can do. Part of me thinks I may cope ok with retirement for 6 months but then may climb the walls out of boredom. we do have interests etc but nothing curently which would take up an extra 40 hours a week. the OH says she may want to continue doing something P/T either paid or voluntary and she may have a point. But if I think like that now what's the point of throwing as much as possible into my pension/ISA now and having a reduced life ( so to speak) when I may not ever want to retire 'full time'. If i was continuting to earn on a p/t basis then that would plug the gap hopefully.

But another part of me thinks 'why would I not want to retire and surely it is better to save as much as possible and make that choice later on in life and when i get there hope that there are lots of other interests i want to pursue?'

Scary and very confusing don't you think?

There are a couple of things here.

At the moment I want to retire becasue it is something which is not in my control i.e. I don't really have enough money to retire. Whereas there are times when the job is enjoyable and there are some things i would like to do but have not asked my employer because I don't want to damage my potential earnings over the next 3-4 years. However, after that - once I have the freedom of no financial constraints - I might not want to retire if I can find a niche that I enjoy more. Does that make sense? i.e. its all about choices.

In addition, I would like to give something back when I retire which may involve some part time teaching or coaching. something I have always enjoyed but not been allowed to do.

Finally, there are lots of things I want to do in retirement and most of them are to do with having more time available e.g. I like to eat good food but because of work I don't have the time to search out rare ingredients or to spend lots of time preparing. In addition, there are things I don't do but would like to e.g. playing golf - because I simply do not have the time.

Loughton_Monkey

Rich1976 wrote: »

The other thing I would be interested in your views on is what plans do you have for your retirement? This is a conversation I frequently have with OH and people at work - just what would we do all day? There is only so much house work, gardening ( urgh!), holidays etc you can do. Part of me thinks I may cope ok with retirement for 6 months but then may climb the walls out of boredom. we do have interests etc but nothing curently which would take up an extra 40 hours a week. the OH says she may want to continue doing something P/T either paid or voluntary and she may have a point. But if I think like that now what's the point of throwing as much as possible into my pension/ISA now and having a reduced life ( so to speak) when I may not ever want to retire 'full time'. If i was continuting to earn on a p/t basis then that would plug the gap hopefully.

But another part of me thinks 'why would I not want to retire and surely it is better to save as much as possible and make that choice later on in life and when i get there hope that there are lots of other interests i want to pursue?'

Scary and very confusing don't you think?

I am told there are lots of people who feel 'bothered' about having all day to occupy themselves and wonder how they will cope without their employment. And yet I've never met anyone in retirement who shows any desire to go back.

Over the 5 years I have been (early) retired, I can honestly say that there is not one single day when I have woken up wondering what I will do that day.

There are so many possible interests - inside or outside it's untrue! And a two month holiday, I find, is wonderful and doesn't cost an awful lot more than living at home. I had initially had a 'fallback' plan in which I would pitch for some consultancy work. 3 months here. 3 months there. Perhaps pay for even more holidays. But in actual fact, I never gave that a moments thought - and it's far too late now anyway, 5 years after leaving work.

I must say, though, that my own views are tainted by having had quite a well paid, busy, interesting but stressful job. Leaving behind that stress with enough money for a good lifestyle was wonderful. I guess there are circumstances in which if I enjoyed the job so much I would simply have continued - but at that level you won't last long unless you 'battle'. The concept of doing an 'ordinary' job at 20% of the salary would be out purely on financial grounds.

So in a sense, you can look at retirement as a 'job'. In my case, the 'job' is to spend our money before we die!

Rich1976

Loughton_Monkey wrote: »

I am told there are lots of people who feel 'bothered' about having all day to occupy themselves and wonder how they will cope without their employment. And yet I've never met anyone in retirement who shows any desire to go back.

Over the 5 years I have been (early) retired, I can honestly say that there is not one single day when I have woken up wondering what I will do that day.

There are so many possible interests - inside or outside it's untrue! And a two month holiday, I find, is wonderful and doesn't cost an awful lot more than living at home. I had initially had a 'fallback' plan in which I would pitch for some consultancy work. 3 months here. 3 months there. Perhaps pay for even more holidays. But in actual fact, I never gave that a moments thought - and it's far too late now anyway, 5 years after leaving work.

I must say, though, that my own views are tainted by having had quite a well paid, busy, interesting but stressful job. Leaving behind that stress with enough money for a good lifestyle was wonderful. I guess there are circumstances in which if I enjoyed the job so much I would simply have continued - but at that level you won't last long unless you 'battle'. The concept of doing an 'ordinary' job at 20% of the salary would be out purely on financial grounds.

So in a sense, you can look at retirement as a 'job'. In my case, the 'job' is to spend our money before we die!

This echoes comments by people who I know who retired within the past few years - parents, previous work colleagues etc and all of them say retirement was one of the best decisions they ever made and it is this reason that motivates me to save whatever I can reasonably afford so that when I get to 60-62 provided I have enough saved up I can make the choice of 'getting out' of the rat race completely rather than be a wage slave which most people of my age and younger will inevitably be until they are forced to give up.

jem16

Rich1976 wrote: »

is that the same for Sipps though as according to the HL website you are only covered upto 50k for investments?

I have no idea if the rules have changed but only insured funds within SIPPs were entitled to the full protection. Uninsured funds were only entitled to £48,000.

http://www.telegraph.co.uk/finance/personalfinance/investing/sipps/6204780/Sipps-scant-protection-from-the-FSCS-if-your-money-goes-missing.html

Perhaps someone else knows if this has changed?

lottiespop

Seems there is a new tool to help planning coming soon - www retireeasy co uk

jamesd

If it's like the global site at .com it'll be low quality blog-equivalent teaser content.

gadgetmind

I didn't see the tax question being answered, so please see this page regards age related personal allowances.

http://www.hmrc.gov.uk/incometax/personal-allow.htm

All income from ISAs is tax exempt, so ignore it. Income from other investments (perhaps as a result of pension lump sums?) will be taxed, so get it into NS&I and/or ISAs as fast as possible, and meanwhile consider moving into investments that generate dividends rather than income.

nookey_bear

Seems there is a new tool to help planning coming soon - www retireeasy co uk

retire? easy? should they REALLY be in the same sentence? Looks like nothing more than I do already, perhaps I should market my own spreadsheet -retirementplanstodealwithmovinggoalposts.co.uk

I didn't see the tax question being answered, so please see this page regards age related personal allowances.

http://www.hmrc.gov.uk/incometax/personal-allow.htm

thanks gadgetmind, mucho appreciano

nookey_bear

Due to a recent major change of the work front and therefore my pension arrangements, I have been checking my current fund forecasts and comparing against my target retirement income to see if I’m still on track. Think I am but just wanted to stick the detail down and see what people think. Obviously I can have little influence over the pensions that I don’t contribute to (apart from moving into more/less riskier funds but I am happy with those for now) but I have listed them all for my own purpose more than anything.

1. Clerical Medical Flexible Pension Plan – 60% Balanced Managed, 30% UK Growth, 10% UK Special Situations. AMC is 1.49% for 1st 5 yrs, not entirely sure the charge after that.

This is an amalgamation of several smaller pensions. No current or future planned contributions.

Fund value = 2008 £10716, 2010 £13874 (up 14% yoy)

Estimated value at NRD (in 22 yrs) = £35700, Estimated pension = £1329 pa

2. Final Salary Pension –
Estimated pension at NRD(in 27 yrs) = £4210 (or lump sum £19,000 & £2,800 pension)

3. Money Purchase (Defined Contribution) Pension – 50% Mixed Lifestyle, 50% L&G Global Equity.

Left scheme after 2yrs in mid 2011 as moved to 100% self-emplyed/commission-based income role with same company so had to set own pension up. During those 2 yrs, I contributed 6% and work put in 8% of salary

Fund value = 2010 £4375, 2011 £9005 (up 7% yoy after contributions)

Estimated value at NRD (in 22 yrs) = £unsure
Estimated pension = £5220 pa (based on 7% growth)

4. Current Stakeholder Pension – recently set up.

50% Managed fund, 50% Mixed fund. AMC 1.5% for 1st 10yrs, then 1% from yr 11.

I have chosen to pay in £200 per mth, £250 with tax relief. My ‘employer’ will match my contributions providing I put in 8% of expected salary, so max. annual contribution could be 16% of salary = around £5600

Estimated fund value at NRD (in 22 yrs) = £126,000
Estimated pension = £5,100 (or lump sum £31,500 and ann. pension of £3,800)
(based on 7% growth)

My target pension is £20,000 pa, based on various calculations, assumptions etc. Current pension projections = £15860 pa, and together with state pension (who knows?) of £5000 then I hit my target figure. I also contracted out with a few pensions and my latest state pension forecast says my Additional State Pension ‘may be’ around £3000, so that will help to balance out any shortfalls in my other pensions. I have other ‘pots’ on the boil (ISA’s, other savings etc)

Anyone spot anything ‘not right’?

gadgetmind

nookey_bear wrote: »

Anyone spot anything ‘not right’?

Given you're 22 years off, all you can do is tweak funds, try and minimise fees, and try and maximise current contributions.

Regards income, do bear in mind that you won't have NI in retirement, won't be contributing to a pension, and can also make things pretty tax efficient, so you might need less gross that you expect.