How much should i have at 55?

gadgetmind

de1amo wrote: »

İm still wondering where the '55' comes from?--the state pension which is being added into the ball park figure wont start til the Op's late 60s so 55 would be unrealistic?

55 is (now) the earliest at which you can touch a private pension, so a reasonable age to aim for. You then draw harder on pensions and other savings for the decade or so until state pension(s) kick in.

Those with more non-pension savings could retire even earlier, but it gets exponentially harder as you reduce the number of working years, and the years of investment growth, while all the time adding on more years in retirement.

jamesd

I have some disadvantages and advantages: no wife or daughter. Also I was used to living at benefit levels for many years so a nice high regular income means I have far more money than I'm used to spending and that's been rising quite rapidly over the years. Harder for other people with lower income and/or more commitments.

At the moment the total value of my savings and investments from that six years ago start is a bit over 100% of the total of net pay plus gross pension contributions over the years.

I have a PHI-type policy and private medical cover as well as critical illness and life assurance. Small mortgage, haven't moved into the place, still slowly doing it up. Trivial cost - mortgage is only a bit more each month interest only than council tax. Pension/ISA backed interest only offset mortgage because that's the cheapest way for me to clear it, getting tax relief on the 25% lump sum and at the same time accumulating pension income with the 75%. Nice bit of double duty and there's not much bad about getting 40% tax relief on the money used to clear a mortgage.

These days I get pension contributions with higher rate tax relief, though a few years ago I used salary sacrifice down to minimum wage in 2008/9 to buy lots at the depressed prices that started early in 2008 and got lower during the year - worked out well, that pot is still more than 20% up after a few more years of regular contributions. Putting lots of money in while markets are down can really pay off, if you can stomach the news headlines.

Also use the ISA limit each year and some non-ISA investing.

I continue to live far, far below my income level and will for a few more years at least.

de1amo

with a health policy like that would the premiums rocket as pension age comes? and would they cover long term care--i dont see the state covering this by the time i hit 66--im a baby boomer!-

-my wife will pay the family policy through the business we have--my wife is 10 years younger than me and we pay the state maximum for healthcare that entitles us to full private health coverage for life as long as we pay--we live in turkey and the premimium is 120 quid a month!(my wife will also get a pension from it)--its Nİ paymernts

i belive in different strands to investing towards a pension--cash is notoriously devaled in high inflationary periods(with low interest rates or poor returns on investment funds)- my focuses are on business building- property and any cash i am left over after enjoying a good life!i convert excess cash to gold.

i receive a occupational pension from a previous employer-its cpi linked(now)

jamesd

The private health policy is via work so it'd cease if I stopped paying for it that way. It would probably be considerably more expensive bought outside work already and definitely will be if I purchase it outside work after retirement. Seems that you have a good pension deal.

de1amo

But if you retire wont the cover stop??--i am 47 and right in the middle of the baby boom and cant see any form of cover if you have assets from the state for prolonged care.

i was paid 34 years of my pension when i left the company in 1997- it provided me with a decent lifestyle while i recouped and sought a new direction-the lump sum paid my mortgage off.--my current mortgage is cheap money used to buy abroad and start a business.

bradburm

Agree, 60% is a huge amount though jamesd. Presumably you earn a high salary?

gadgetmind

de1amo wrote: »

But if you retire wont the cover stop??--i am 47 and right in the middle of the baby boom and cant see any form of cover if you have assets from the state for prolonged care.

I can't see why either insurance or the state should pay for your long-term care, or mine.

Catapa

The amount you need depends on if you want to work until you are 77 or 67 or only 57 (hundreds of thousands).

gadgetmind

bradburm wrote: »

Agree, 60% is a huge amount though jamesd. Presumably you earn a high salary?

I know a couple of people who slam in this percentage and get close to minimum wage as a result. Some people would rather tighten their belts now while they are young rather than freeze to death on a diet of baked beans while old.

I don't really care what people contribution to their pensions as long as they have thought it through, have done the modeling, and are prepared to live with the consequences of their decisions.

jamesd

bradburm wrote: »

Agree, 60% is a huge amount though jamesd. Presumably you earn a high salary?

Base spending of around £12,000 was a big part of the picture, though I don't need to be strict about it and I'm not extravagant after years on benefit level income - though I do happily splurge on things that I value now I can - just not often. I did earn well above median income after the first year and am now quite thoroughly into the higher rate tax region if you count the taxable value of my benefits - worth more than £12k a year to me. The low spending is a big part of the picture but he combination does greatly reduce the time it takes. Mostly it's not spending a lot and being determined.

For me what pushed me to do it was spending many tens of thousands of savings while doing full time but unpaid voluntary work and in a couple of years before it. The voluntary work was very successful for me, got me my current wonderful job where I'm making far more than I've ever made before as well as working from home at hours that work well for me. Having spent so much I wanted to accumulate enough so that I'd be able to live on income from investments instead of having to spend them.

de1amo wrote: »

But if you retire wont the cover stop??--i am 47 and right in the middle of the baby boom and cant see any form of cover if you have assets from the state for prolonged care.

Yes, it'll stop. At 47 you're near the end of the baby boom - the peak danger area because state pensions for you will start at around the time of peak demographic pressure when younger people are most likely to be upset at the cost and pressuring for cuts in everything from health care to pensions.

For other people, cutting back when younger than I was and letting compound interest/investment growth do more of the work is good. It would be a lot cheaper than it has been for me.