No idea where to start planning

BLB53

How do people decide how much to put aside and decide on a particular age to retire? How much to people aim to have per year in retirement?

It will depend what level of income you will need to retire on so the first thing will be to get a projection of your current DB pension. Deduct this from your estimated spend and multiply the balance by 25.

So, if your company pension will be £15K p.a. and you need £25K you need an extra £250K (£10K x 25) to generate the extra shortfall.

You can then either increase your current contributions or start your own diy SIPP or Lifetime ISA from next April.

This article from diy investor may explain the process better than I can - good luck...you have plenty of time!

http://diyinvestoruk.blogspot.co.uk/2016/08/a-look-at-sustainable-drawdown.html

Thrugelmir

cns06 wrote: »

Pensions have some great advantages, however they are not suitable for everyone and they are rarely a magic ticket to retirement unless you can afford to put large sums in. A £500k pension pot might if you are lucky return around £20k in retirement PA.

Unfortunately accumulating capital is the only way of ensuring a decent standard of living in retirement. Saving is the only guaranteed way of building capital. Normally over many many years. As the effects of compounding that generate the real returns. I wouldn't get hung up on not spending the capital either. The income is only one facet.

AnotherJoe

cns06 wrote: »

Pot 2 - pension. Impossible to access the money until the state permits. Tax rules are risky, plus growth has been poor the last 5 years. Stock market crashes are risky esp 2-3 years from retirement.

What are you invested in within your pension? The stock market has been pretty good the last 5 years so growth should have been good.

A stock market crash just before or near to retirement shouldn't be an issue if you have planned well, which you seem to have done, eg you have your other 'pots' to drawdown from, you can withdraw from those until the market-based one recovers.

cns06

Thrugelmir wrote: »

Unfortunately accumulating capital is the only way of ensuring a decent standard of living in retirement. Saving is the only guaranteed way of building capital. Normally over many many years. As the effects of compounding that generate the real returns. I wouldn't get hung up on not spending the capital either. The income is only one facet.

It is but the OP must understand that comes with rules for pensions and those rules cant be bent. If you have 30,40,50 years then yes pensions might be ok but maybe not - needs to get specific advice. IMHO.

cns06

Thrugelmir wrote: »

Unfortunately accumulating capital is the only way of ensuring a decent standard of living in retirement. Saving is the only guaranteed way of building capital. Normally over many many years. As the effects of compounding that generate the real returns. I wouldn't get hung up on not spending the capital either. The income is only one facet.

AnotherJoe wrote: »

What are you invested in within your pension? The stock market has been pretty good the last 5 years so growth should have been good.

A stock market crash just before or near to retirement shouldn't be an issue if you have planned well, which you seem to have done, eg you have your other 'pots' to drawdown from, you can withdraw from those until the market-based one recovers.

40% US, 20% UK and 10% EU plus a load of other guff, emerging, japan, bonds etc for other 30%.

This year was the first good year c.+15%.

Last 3 or 4 years lucky to see a few %. If you take inflation into consideration its basically done zip.

Now I am not saying that should concern the OP but a lot of people assume pensions just make money regardless but IME that's not the case.

You are correct in what you say that you can move the funds to a safer position maybe 3-5 years prior to retirement for some protection however in my case I need to get maximum returns if possible right until the last day as I will (probably) miss out on 10 years of contributions / gains if I get to draw it at 58.

That said its looking unlikely which is why I have pot 1 and 3. If my LTD was not paying into the pension I am not sure I would continue.

cns06

Sorry also meant to say fees need to be taken into account also.

Its easy to lose 2%+ PA in fees. If you have a larger pot that can be a lot of money..

Thrugelmir

cns06 wrote: »

40% US, 20% UK and 10% EU plus a load of other guff, emerging, japan, bonds etc for other 30%.

This year was the first good year c.+15%.

Last 3 or 4 years lucky to see a few %. If you take inflation into consideration its basically done zip.

Was that because you thought that you could beat the market. By buying and holding individual active funds.

cns06

No that's just what it did.

atush

Pensions have some great advantages, however they are not suitable for everyone and they are rarely a magic ticket to retirement unless you can afford to put large sums in.

Patently UNTRUE.

In the new world of flat rate pensions (once everyone is on the new regime) and no pension credit uplift- it will pay to have a pension over not having one.

Thru both the tax relief, and thru being able to retire before SPA if yo have saved enough to do so.

cns06

Its always paid to have one over not having one IMHO, but there are other ways to invest and also pensions are 100% not a fit all investment.

What I am saying to the OP is you already have a pension, investigate it and learn about it and then decide if that's the right vehicle for you, or do you want to maybe have other options, some people collect stamps... others work a second job and put that income into cash savings. Its never simple.

As for the number, again why these threads are so difficult - everyone is different.

However the best way to take about 2/3rds of your expected income at retirement age, so if you are on £33k at RA then you will be looking for an income of roughly £22k PA from your pension / investments / whatever. Multiply that by a factor of 25 (ish with SF) and that will get you to the pot size (550k).