No idea where to start planning

AlanP_2

cns06 wrote: »

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).

I take your point, and admire the fact, about having a long-term plan that looks at all your assets not just the pension pot but am not convinced about some of your implementation ideas.

If you are in your mid-30s you and want to leave paid employment at 58 you have ~22/23 years to accumulate followed by (hopefully) 30+ years of living off the savings (if you ignore SP as you are for some reason that I am not clear about).

At the moment you are splitting your savings 3 ways - Pension, Property/ BTL and Cash.

Of those 3 the pension is likely to be the most tax advantageous but is locked away until 55 at present (may rise though before you get to access it).

Property / BTL - Will probably increase in value and generates a taxable income stream.

Cash - Will lose value in real-terms over next 22/23 years unless you are investing in higher risk / higher reward options such as P2P where capital is at risk.

If it was me, with 20+ years to go I would be focusing on Pension and BTL to obtain tax relief and growth and not worrying about having 1/3rd of overall pot in Cash (over and above an Emergency Fund).

Slowly build a cash pot that would be enough to live on for 2/3 years that you can make use of if investments and/or property is DOWN when you need to draw your pension, likely to end up as ~10 to 15% of overall pot at most I would think.

As for the "number" taking 2/3rds of pre-retirement income is very rough & ready. Some people are saving 50/60% of their income to retire as early as they can or want to. Do they need 2/3rds of their pre-retirement income to live on in retirement?

cns06

Hi yes I see your point, however we "hope" to stop working at 50 so not that far away.
The cash is for the shortfall between 50 and what ever age the pension opens up. Probably 60. We plan to travel quite a bit and probably spend 75% of the cash pot during those 10 years.

At the moment we "invest" the cash in our business which in turn generates fairly good returns but as with everything you have to be very cautious of the tax situation so we do this on an ad hoc basis when we see an opportunity.