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Pension Forecasts
datlex
Posts: 2,252 Forumite
I have been looking out of interest a pension forecasts. It is a way off yet, so I have time to add to my pensions. What I find strange is the figures they base required income on as well as their logic to how much you would require.
Why is it based on your current gross salary not your current take home pay for example?
Why does it not ask if you will have paid off your mortgage or whether you will be renting?
Why is it based on your current gross salary not your current take home pay for example?
Why does it not ask if you will have paid off your mortgage or whether you will be renting?
Paid off the last of my unsecured debts in 2016. Then saved up and bought a property. Current aim is to pay off my mortgage as early as possible. Currently over paying every month. Mortgage due to be paid off in 2036 hoping to get it paid off much earlier. Set up my own bespoke spreadsheet to manage my money.
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I have been looking out of interest a pension forecasts. It is a way off yet, so I have time to add to my pensions. What I find strange is the figures they base required income on as well as their logic to how much you would require.
Why is it based on your current gross salary not your current take home pay for example?Takes tax relief on contributions into account
Why does it not ask if you will have paid off your mortgage or whether you will be renting? Some forecasts do
Which forecasts are you using?0 -
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hat I find strange is the figures they base required income on as well as their logic to how much you would require.
The assumptions used would be published with the statement projection. A number of those assumptions are set by the FCA and likely understate reality.
They are not forecasts. They are projections. Big difference.Why is it based on your current gross salary not your current take home pay for example?
How would they know that? What difference would it make to a crude projection?
Statements are not doing the role of an adviser. They are there to give you cold raw data. That is all.Why does it not ask if you will have paid off your mortgage or whether you will be renting?I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
Just what can see online: Aviva, Standard Life, Money Advisory service: What ones are you aware of that take into account home owning ?Which forecasts are you using?
Yes but the forecast suggest how much you will "need" as a % of gross income. Which given that your take home is already depending on salary only 78% of gross means they actually expect you not to need that much less in retirement.p00hsticks wrote: »The answers to those questions may well influence how much pension you need, but they make no difference to how much pension you will actually get from a given potPaid off the last of my unsecured debts in 2016. Then saved up and bought a property. Current aim is to pay off my mortgage as early as possible. Currently over paying every month. Mortgage due to be paid off in 2036 hoping to get it paid off much earlier. Set up my own bespoke spreadsheet to manage my money.0 -
Just what can see online: Aviva, Standard Life, Money Advisory service: What ones are you aware of that take into account home owning ?
So, these are just raw data projections then. Not shortfall planning.Yes but the forecast suggest how much you will "need" as a % of gross income.
They are not forecasts.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
The rule of thumb is usually stated as that you need two thirds of your pre retirement net income to be comfortable. This probably means you need approx. 55 to 60% of your gross income , as you will not be paying NI and probably less % tax overall.
I think this assumes that you have not got any large debts/mortgages to pay.
However this is only a one size fits all guideline and you could question it in a few ways:
Such as does it mean just personal or household income ?
Also I think it is mainly based on middle/higher income earners. If you had a low income in work you could barely live on , then you would need the same in retirement . On the other hand if you were earning a few Million a year , you could probably live on a lot less than two thirds.
Of course depends on what kind of retirement you envisage.0
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