What is a GOOD pension Pot to retire on??

fatpiggy

Blimey, I don't take home anything like £2K a month now. I live alone, have a mortgage, run my house, my car, my hobbies entirely on my own. I have no debts. I have some savings, even more once I've disposed of my mortgage which I hope will be within the next 5 years. I spent many years living on fresh air and going without and now I don't have to I find I don't want to change much. £1200 would keep me VERY comfortably and yes, living alone is mind-blowingly expensive compared to being half of a couple. We can't take advantage of BOGOFs for a start for things like meals out, or entry fees to things. I pay 50% more than my neighbours for council tax even after my 25% rebate, and their house is bigger than mine!

Pennysmakepounds

p00hsticks wrote: »

You may also need to consider what happens when the first of that couple dies, to ensure that the second doesn't see a significant drop in income as result. The saying "two can live as cheaply as one" is exaggerated but there is an underlying truth to it.

You mean no 'Ball and Chain' to carry around:rotfl::rotfl::rotfl:

redmalc

well guys been to see the IFA and was there 2 hours sorting the bits and bobs out.
I have sold a lot of funds which have increased massively over the last year and decided to hold in cash for the time being.
Also restructured a lot of the other funds by moving out of the UK into emerging markets,Japan,America and Infrastructure.
I think the market is do for a correction and then i will be ready to go again one more time before the cautious head engages.
I have kept approx 100K in very racy funds and will continue to monitor on a regular basis,the IFA leaves those to my judgement because he thinks i am taking to much risk,hey o life is a risk.

gadgetmind

p00hsticks wrote: »

You may also need to consider what happens when the first of that couple dies, to ensure that the second doesn't see a significant drop in income as result.

That can happen for state pension and annuities in one name, but with drawdown pensions and for ISA the tax situation has improved and the surviving partner shouldn't be much worse off.

Triumph13

Pennysmakepounds wrote: »

I was thinking couple, but having thought about it again I think the figure should be 3K to ensure the quality of life is maintained and any unplanned expenses can be managed.

I use £3k per month as my baseline target as a couple, because it translates nicely (in my head at least) into £1k for bills, £1k for living and £1k for having fun. I would regard each of those three budgets as having plenty of fat in them, particularly as we are currently averaging nearly 10% below that as a family of four.
The good news is that my spreadsheets tell me I should be able to go now and meet that target. The awkward bit is that the same spreadsheets tell me another 3 years work should translate into another £1k per month which is hard to turn down - so I'm still stuck working. I realise most people would regard this as a very nice problem to have, but it's frankly doing my head in a lot of the time.

jerrysimon

In all honesty 3K/month ?

So £43,200/ per year in tax ? so a pot size of £864000!

For most that would be completly unattainable without making huge sacrifices in existing living standards whilst in work.

As you state the biggest challange is when to retire knowing a few more years will always increase overall pension. As I said before I think few work out how long it would take to "catch up" if pension is taken two or three years earlier at a reduced rate. I often tell people at work who have reached retired age at work enough to get half salary, that they are working for half pay!

I guess at that stage they are working for different reasons.

Jerry

gadgetmind

jerrysimon wrote: »

For most that would be completly unattainable without making huge sacrifices in existing living standards whilst in work.

OK, it's a pretty big pot, but people are likely to have 45 years to build it up. And TBH I'd rather make the sacrifices up front than "live it large" and then live to regret it.

Also note that pot size is lower for those 1) planning to retire later in life, 2) not needing as much above what state pension provides.

jerrysimon

Agreed, but having to put that much in you would be living like a pauper. In todays climate I would guess that people on 42K plus retirement pensions are likely to be final salary pension owners. I am one of those myself but unfortuanetly my salary is no where near 80K + and I am planning to leave at 56/57 so despite having almost 40 years will take the hit on the reduction. Having said that, if both my wife and I reach state pension age we will signifcantly increase our pension income at that point unless they change the rules again.

From my perspective thinking I had to work 45 years to gain that would never be worth it. For youngsters who now start working much later they would be in their 70s before they retired.

I guess we all have different reasons for retiring when and with different amounts. It interesting to see all the different expectations and reasons on this forum since I began reading it 6 months ago. Wish I had come here earlier maybe 2 years ago.

Jerry

gadgetmind

jerrysimon wrote: »

Agreed, but having to put that much in you would be living like a pauper.

It's down to balance. Do you want to live like a lord now but be a pauper in old age or if you fall ill?

In todays climate I would guess that people on 42K plus retirement pensions are likely to be final salary pension owners.

I've never had a whisper of FS but have always put 30%-50% of my income into pensions and ISAs. We earn a decent crust but live on the income thatb a school teacher or two could pull in. As a result, we can retire on same.

Having said that, if both my wife and I reach state pension age we will signifcantly increase our pension income at that point unless they change the rules again.

We're close to 100% personal pensions, so it's all about drawdown percentages Before SP we're at over 4.5% (scary!) but after at sub 4% (not risk free but OK) so it's all down to sequence of returns.

Triumph13

jerrysimon wrote: »

In all honesty 3K/month ?

So £43,200/ per year in tax ? so a pot size of £864000!

Jerry

That would be a 5% withdrawal rate which I would see as overly aggressive, but actually the numbers aren't quite as bad as that. For a couple with two personal allowances £36k pa post tax is only £39,500 pre tax. Take off two state pensions of £8k each leaves £23,500 to fund, which on a 4% withdrawal rate would be £587,500. Still an awful lot of money I admit.


Fortunately we will be lucky enough to have about £10k each of DB pensions at 63 / 65 which makes funding a whole lot easier. Unfortunately we want to go at least 10 years before that which means the sums do indeed get huge.