The Piano Diary

edinburgher

That is interesting 🤔 

Also along PLSA lines, I read a bit of an article on the Charles Stanley? Site this morning saying that inflation for retirees was 4x higher than the general population last year. Sobering, there's no real way to avoid the pain from 15%+ inflation unless you're minted to begin with

glass_half_full

edinburgher said:

That is interesting 🤔 

Also along PLSA lines, I read a bit of an article on the Charles Stanley? Site this morning saying that inflation for retirees was 4x higher than the general population last year. Sobering, there's no real way to avoid the pain from 15%+ inflation unless you're minted to begin with

Thanks, interesting, I haven't seen that piece. Inflation is the big issue. Its ok if your pension is index linked, but for DC pension funds it is a real issue. In the model I am using inflation is set at 2.5% but this idea of a personal inflation rate is thought provoking.

glass_half_full

Dear diary and all,

I do hope this recent check on this site that you are not a robot isn’t a sign that the site is about to be hacked or already has been. Oh well, perhaps our identities will be revealed as people who are trying to live within our means and be financially responsible  .

I have tried to work out what might be our outgoings in retirement. Basically I’ve gone through YNAB and estimated what the monthly outgoings have been. These figures are average actuals so are about right. I have then modified in various areas eg debt repayments gone, less money supporting DS. Not really gone through it trying to economise though because I would rather have a realistic budget. I’ve noticed over the last few years that its swings and roundabouts ie you can save in some areas but other unexpected costs come at you and in the end there is a base level that you settle into which is where you are going to be or thereabouts. It might be possible to reduce a bit but major savings would probably only come from downsizing (thus reducing council tax, utilities etc). So for us it looks like around £3000 per month, of course it could be less and it could be more. So this would equate to an annual income needed of £36000 after tax. What I haven’t included is holidays.

So what would the holiday budget look like? Well maybe one main holiday a year with a budget of £5000 and then 5 trips away of £600 each would be £3000 giving a total annual budget of £8000. So maybe a range of £8000 to £10000 per year. So this would then equate to a total budget of £44K to £46K. Which is around the moderate PLSA standard (£44K for a couple).

[font=courier new][b]Statement of Affairs and Personal Balance Sheet[/b][b]

Monthly Income Details[/b]

Monthly income after tax................ 3000

Partners monthly income after tax....... 0

Benefits................................ 0

Other income............................ 0[b]

Total monthly income.................... 3000[/b][b]

 

Monthly Expense Details[/b]

Mortgage................................ 0

Secured/HP loan repayments.............. 0

Rent.................................... 0

Management charge (leasehold property).. 0

Council tax............................. 273

Electricity............................. 100

Gas..................................... 150

Oil..................................... 0

Water rates............................. 50

Telephone (land line)................... 0

Mobile phone............................ 20

TV Licence.............................. 0

Satellite/Cable TV...................... 0

Internet Services....................... 64

Groceries etc. ......................... 600

Clothing................................ 150

Petrol/diesel........................... 50

Road tax................................ 0

Car Insurance........................... 41

Car maintenance (including MOT)......... 30

Car parking............................. 0

Other travel............................ 0

Childcare/nursery....................... 0

Other child related expenses............ 0

Medical (prescriptions, dentist etc).... 85

Pet insurance/vet bills................. 70

Buildings insurance..................... 25

Contents insurance...................... 0

Life assurance ......................... 0

Other insurance......................... 0

Presents (birthday, christmas etc)...... 50

Haircuts................................ 105

Entertainment........................... 60

Holiday................................. 0

Emergency fund.......................... 100

Dining out.............................. 150

TV licence.............................. 15

Books................................... 10

Pharmacy................................ 11.45

Netflix................................. 12.99

Music lessons........................... 100

Beauty.................................. 60

Fitness events (races etc).............. 60

YNAB.................................... 8

Charities (various)..................... 70

Gym membership.......................... 50

Gas boiler servicing and breakdown...... 30

Cash miscellaneous...................... 100

Car replacement fund.................... 125[b] (Buy a car for £15000 and run for 10 years)

Total monthly expenses.................. 2825.44[/b]

[b]

 

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 3,000

Expenses (including HP & secured debts). 2,825.44

Available for debt repayments........... 174.56

Monthly UNsecured debt repayments....... 0[b]

Amount left after debt repayments....... 174.56[/b]

 

[i]Created using the SOA calculator at www.stoozing.com.

Reproduced on Moneysavingexpert with permission, using other browser.[/i][/font]

savingholmes

Congrats on the promotion. Love all your plotting and planning and financial modelling. 

glass_half_full

Dear diary and all,

Beautiful day so out on the patio. Done some chores this morning so have a bit of time to think MSE thoughts. 

Having decided on the income needed in retirement, I have been using guiide.co.uk to model the finances. I hope its ok to mention the site here, it is free. What I like about it its that you can enter different sources of income in retirement that come in at different years. It allows for a mix of DB, DC and state pensions. At the moment it is for a single person, apparently the couple option is on its way. I have included OH’s numbers in this to make it a household income calculation. In this case I am assuming we retire at the same time.

It starts with completing the Main Journey. Screens 1 and 2 capture the basics, age when you want to retire, your health. Screen 3 is about wants, what income do you want, do you want it to increase, for how long. Screen 4 is about haves, what pension pots do you have, what DB pensions, state pensions etc, when will they pay out. Do you have any other savings. Screen 5 is about how much risk you are willing to take, growth assumptions. It gives you an initial view on whether your plan can work.

 

 

Screen 6 runs a series of tests to check how robust the plan is to various changes and disruptions. It allows you to adjust your plan eg reduce income if one or more of the tests fails. Final screen 7 gives you a final summary including cashflows over 30 years.

AgathaSquirrel

So, nothing is red. Does that mean you are on track?

edinburgher

That sounds really cool. Keep in mind that the tax calculations will be off (if it calculates tax)?

In their assumptions, does it say if total return is after inflation? I see it specifically mentions fees.

glass_half_full

AgathaSquirrel said:

So, nothing is red. Does that mean you are on track?

Yes, should be ok based on these assumptions 

edinburgher said:

That sounds really cool. Keep in mind that the tax calculations will be off (if it calculates tax)?

In their assumptions, does it say if total return is after inflation? I see it specifically mentions fees.

Thanks! Its definitely worth having a play with it. Good point about the tax. I think this will have calculated tax assuming a single person whereas as a couple we would pay less tax I guess. When the couples version comes out it will have to account for this. There are a number of assumptions listed on the final screen 7 which I didn't copy but amongst which are the ones below.

• Inflation (both CPI and RPI) are assumed to be equal at 2.5% a year in your design.
• State Pensions are assumed to increase at 2.5% a year.
• ...
• Estimated tax figures have been calculated assuming the current full tax free allowance of £12,570 and current known tax bands, increasing at inflation in future years over each year. These are intended as estimates only and not as accurate tax calculations or advice.
• Actual tax bands may differ in future from our estimates. If you are a Scottish tax payer then current and future tax bands will differ slightly (Scottish tax calculations are coming soon). Our tax estimates are calculated annually based on income taken over the year, not over the exact tax year. This may mean actual tax payable differs slightly, even if the tax bands increase in line with our estimates.

edinburgher

The tax consideration should be to your advantage, anyway, so your numbers look good 😊 

South_coast

I like the bit about assuming tax bands will increase with inflation each year 🤣