Whats your magic number?

edited 30 November -1 at 1:00AM in Pensions, Annuities & Retirement Planning
52 replies 6.7K views


  • NoMoreNoMore Forumite
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    That's essentially the same thing tho, just a different expression of it.
  • atushatush Forumite
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    This one is slightly different, and now the other one is getting a bit confused. The "Number" thread was about annual income needed to live "comfortably" in retirement, whereas this one asked what is the total level of wealth people feel comfortable with before they can retire.

    Same thing
  • kev2009kev2009 Forumite
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    232607 wrote: »
    Any default fund is likely to be very causious for your age & probably won't produce the best result. May be have a read of a book...Tim Hale, Smarter Investing. It's the principles of the books that you need to understand not the techy stuff. It is written in simple terms.
    It will probably give you the confidence to do something different, if not nothing lost (other than the cost of the book).


    Thanks, i'll take a look for the book and see, ye I understand investing in higher risk funds can be more rewarding but also carries a higher risk of loosing some or all of your money. My view has always been, i'm not really in a position to be able to replace any lost funds so want to it to be reasonably safe so that i don't loose 1/2 my fund over night etc and at the moment I have 20 odd years to go so maybe I could run the chance of my fund regaining the losses but i'm not sure the markets will do this. Also i believe my fund @ 55 will change my investments into more safe investments from 55 so as to not runt he risk of getting to say 60 and there being a market crash and suddenly i'm looking at a very low pension like what has happened to people in the last crash.

  • kev2009kev2009 Forumite
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    cns06 wrote: »
    When talking about SIPPs in many cases compounding plays a massive part. Then what funds etc that SIPP is in can also play a part. Lastly fees, again they can vary a LOT.

    Add all that up, over 30+ years and you can get to quite serious sums of money. For every 100 paid in per month over 35 years you should in theory end up with, very roughly £100,000. So invest £300 a month and after 35 years it should be at least £300,000.
    If you did pay in £300 a month you will have paid around £130k. The rest of the pot is growth!

    The reality is as people age their contributions go up. Kids move out, they downsize or pay off the mortgage, they don't need as much money so they invest. I remember being 18 and my boss paying 100% of his income into his pension the year before he retired. I just found it totally weird and did not understand how he was even doing that or what the advantage was. 20 years later I get it!!!


    Thanks for your reply. From memory my total contribution each month (employee and employer) is around £500. I Started a personal pension (with-profits) at 24.5 years old, i paid a fixed sum into this every month for approx 10 years. I never increased the amount so hence towards the end I was getting estimate of 5k a year income. Also about 4 or 5 years into this, I joined a company and they auto added me to there pension to which I didn't need to contribute so they just paid into it each month and I paid into my personal one. However, when i was around 34/35, the company was moving the pension to a different provider and we had meetings with them and they advised that whilst the company % they paid in was good, most people were not contribution and so wouldn't' actually benefit from it at the end. So it was then that I got to thinking and decided to move my personal pension into my company pension, which went through all ok and then I started to pay in a %. We were then moved to another company and I am now paying the rates I mentioned before which works out to around £500 a month I believe total.

    My property is only a small place so I don't foresee me ever downsizing as its already small :) However, I will at some point (hopefully not for a long time yet) inherit my parents property.

    I am working ok trying to pay my mortgage off sooner and then I am considering increasing my pension contributions but i'm also wondering is this worth it or should i pay into something else such as a ISA etc as at the moment i have a bit of money to cover any unexpected bills or situation and i'm trying not to go below this amount and am also saving a bit each month.

    I guess when i do inherit my parents place, if i choose to sell it which is possible then yes, i would no doubt reach the 750k total be it a large amount of cash from the property and then my pension pot.

  • kev2009kev2009 Forumite
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    Doshwaster wrote: »
    Don't forget that your pension pot isn't the only source of money to fund retirement. For example there will also be savings and any equity built up in property. If you take a combination of these then a figure of £750,000 is more realistic.

    I'm 45 and was my pot is currently only about £125,000 (I didn't start doing pensions properly until my early 30s) so the predictions I see in my annual statement are very depressing but I also have about £150,000 in property equity and £50,000 in cash/shares. That's total assets of £325,000 which makes £750,000 within the next 20-odd years achievable.


    Yes, i see what you mean, as mentioned when i do inherit my parents place that would be money int he bank possibly although I might buy a slightly bigger property then and then sell mine, not sure yet, would have to see, only purely because of soo much stuff to store. But yes inheriting would give a substantial cash injection into my bank if i sold it so yeah could then see 750k with my pension pot also as a total i suspect plus as you say any cash I may have saved by then.

  • edited 1 August 2018 at 9:05PM
    JoeEnglandJoeEngland Forumite
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    edited 1 August 2018 at 9:05PM
    I hadn't considered my "magic number" until a couple of years ago. Up to that point, I just assumed I would keep working until about 63/64, a couple of years before SP age, and then call it quits. I didn't give much thought to what I needed, I just kept saving.

    However, a couple of things changed my attitude completely. The first, and most important, was work. It got increasingly stressful and I realised that at 58, I could not last until 63/64, as it was starting to damage my health. The second was the change in the tax regime that meant as someone affected by tapering, I could only save £10K per year into a pension.

    These reasons combined made me look at what I had in the DC pot (and other savings) and if retirement before 63/64 was practical. I decided it was, based on what I had 2 years ago, and where it would be in 2 years time (ie now). I retired 6 months ago and so far all is going well, despite several unexpected expenditures.

    A few years ago I had to quit a job that wasn't working out. For various reasons I was concerned about whether I could get another job and so worked out how much savings and pensions we had. This turned out to be more than I thought, so the prospect of not trying to work until at least 60 became a reality because we can live modestly. Now I'm planning to give up FT work in 2 years on my 54th birthday if a health issue doesn't stop me getting that far. I was going to go until 55 but have realised that mentally I cannot stick more than 2 years doing groundhog day in the office.
  • Anonymous101Anonymous101 Forumite
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    fraserkerr wrote: »
    I would like to reach a fund of approximately £750k. I'm 34 and only have an existing DC value of £110k so still a long way to go. Not sure if £750k is an unrealistic expectation though.

    I wouldn't say so. I'm almost 37 and have a pot around the same value.
    I'm hoping to get mine to around £500k by 50. I'll finish then if thats the case. Granted I've increased my contributions significantly this last year or two.
  • [Deleted User][Deleted User] Forumite
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    With no dependents, will these friends inherit the cash if you die before them??

    Haha no in fact one of them has circumstances like me and that's why the suggestion .
  • edited 2 August 2018 at 9:53AM
    OldMusicGuyOldMusicGuy Forumite
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    edited 2 August 2018 at 9:53AM
    NoMore wrote: »
    That's essentially the same thing tho, just a different expression of it.
    atush wrote: »
    Same thing
    Not for me they are not, which is why I said they were slightly different. Two reasons why this is a different discussion from the "Number" thread IMO. First, you don't know how long you are going to live, so pulling the trigger on retirement means you have to make some assumptions about the length of retirement and thus the total size of your DC pot. Second, do you build in any buffer for things like later life care or dealing with you and/or your partner getting dementia and other health problems?

    In my case, our total net worth (pensions, savings, assets) is 2 to 3x what we would need to fund a 30 year retirement based on my "Number". I just wouldn't feel comfortable basing my retirement solely on an annual income number without any buffer to deal with health issues and other unforseen problems. And I'm not talking about a few k emergency buffer here. But I am very risk averse and cautious, other people may take a different view.

    Of course, if you have lots of income from DB pensions it's probably a different discussion and closer to the "Number" discussion.
  • AnotherJoeAnotherJoe Forumite
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    kev2009 wrote: »
    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?

    Read some financial independence early retirement (FIRE) blogs. The Escape Artist is a good one, Mr Money Mustache another, though a bit extreme and also very North American-centric.

    Its a combination of multiple things.

    -Reduced spending.
    -Increased saving.
    -Increased income and more to the point, not increasing spending when income increases.
    -Take advantage of employer contribution to your pension, and put in, as aminimum, whatever the maximum you can to have your employer match it.

    -Take advantage of tax breaks - high rate tax relief is a huge one, not your issue i guess but that can make a massive difference (squandered by many of the folks in the Mortgage Free Wannabee forum, a pet peeve of mine :D )
    -Taking control of your investments including your pension - you may not have much ability to manage where your investments are, but most people dont even have a concept of how and in what their pension is invested, if you go with the default option it will be in a "safe" fund that will have pretty poor returns compared to what you could have got.
    -Understand investments. If you will have £450k pension fund, thats a lot of money invested, its your money, find out how to manage it yourself, you have plenty of time, and that can save you many tens of thousands of pounds, maybe hundreds of thousands.
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