Whats your magic number?

jamg21

I was just interested to know of those considering their retirement options/approaching retirement whether they had considered what their magic number is? Meaning do they believe their accumulated wealth will sustain their desired retirement lifestyle?

westv

https://forums.moneysavingexpert.com/discussion/2146737/pensions-planning-the-number&highlight=number

lisyloo

I'm aiming for £750K at age 55.

ex-pat_scot

I'm aiming for LTA, whatever and whenever it may be.

Drp8713

I would like £450k at age 45. That should yield me £18k a year until my DB scheme kicks in at SPA.

Need to average 8% returns for that so age 50 is more realistic.

Aegis

ex-pat_scot wrote: »

I'm aiming for LTA, whatever and whenever it may be.

Ditto. Not because it's a good figure for my retirement plans but because I don't yet have retirement plans so I might as well aim for the maximum and see where I end up!

lisyloo

ex-pat_scot wrote: »

I'm aiming for LTA, whatever and whenever it may be.

I am probably confused, so please correct me.


If you go all the way to LTA, isn't there a risk that your fund will grow faster than you can drawdown (if you don't want to pay higher rate tax), so you exceed LTA later on (at BCA event at 75 say).
So I'm thinking
LTA is £1,000,030
Lets suppose you draw down £45K per annum wanting to stay below higher rate tax.
That means any annual growth above 4.5% will take you above LTA.


Please correct me, I'd be delighted to be educated and be shown the error of my ways.

Audaxer

I think the magic number is meant to be the amount of annual income you need to live on in retirement rather than accumulated wealth.

Rheumatoid

I was looking for 36k after tax from a DB pension and investment income along with 500k in cash/investments at age 58. I have already exceeded my income target and just need another 60k to make the 500k. Looks like another 12-18 months work to 58 or voluntary redundancy payment which may be on the cards - unless I just decide to call it a day! I have a SIPP to fund me to NPA. State pension when it comes will offset reduced investment income from the reducing balance.

These numbers will make me better off in retirement than when working as I fritter away the 500k over 20-25 years and no longer commit income to savings - but I have plans to do a lot until I get too old to do so much

kev2009

hi, wow interesting read, makes my pension look insignificant/not enough... I'm 41, single, paing into a works pension and there online portal predicts I would have approx £450k pension pot at 68 and then goes on to prodict what I would get as 25% tax free and as a income.

I'm wondering how people get to 750k etc... is it simply you have very well paid jobs, high tax bracket and can afford to put more in to prevent you paying higher rate tax? but then surely not everyone is higher rate tax payers? or perhaps these figures are combination of husband and wife's total pension pot?

Kev

bostonerimus

After doing a detailed budget and with good estimates of your retirement age, your life expectancy, inflation and investment return you can come up with a number.

If we assume a 30 year retirement and an income close to the UK median of say 25k, then with ~ 9k coming from SP you will need to generate 16k so your number should be about 400k. Of course if you have sources of retirement income like DB pensions or rental income your number could be far lower. Personally I get my retirement income from a DB pension and rental income and when the state pensions start I should have a sizable excess so my number is zero.