I'm an idiot.

NoMore

You've got to stop thinking of working out your outgoings as 'scary stuff'


Working out a budget is vital to your financial health in lots of ways not just in retirement planning. Not having a handle on how much you spend can easily lead to too much debt for example.

Silvertabby

1. Yes I mean LGPS and yes the £2700.00 per year is as at August 2018. I'm not sure if I should take this at 60 and squirrel it away....it seems that if I defer taking it til I'm 67 it doesnt increase much. Posted by Kmh120

First thing is the check your normal retirement age. If you post your dates of service (just whole years will do) I should be able to check that for you.

If your normal retirement age is indeed 60, then deferring beyond that point will lose you money.

Ignoring cost of living increases (which apply both in deferment and payment) then deferring payment for 7 years could cost you £18,900 in unpaid pension. The increase in deferment (NOTE which is only payable from 65, even if your Rule of 85 NRA is 60, won't match that).

Anonymous101

Kmh120 wrote: »

You guys are the best and you're SO good for me. :beer: THANK YOU!

I have taken the plunge and worked out what my yearly outgoings are. Scary stuff!!

Council tax, water, gas & electric, tv licence, home and contents insurance, b/band, mobile phone, car tax, RAC, MOT & service, car insuarnce, food, personal bits ( hair....I'm a girlie girl!)

I've added it all up and I get to around £8500.00 per year

I havent included dentist, specs and scripts....nor holidays....who has money for holidays??!!:j

Can anyone think of anything else I need to factor in?

1. Yes I mean LGPS and yes the £2700.00 per year is as at August 2018. I'm not sure if I should take this at 60 and squirrel it away....it seems that if I defer taking it til I'm 67 it doesnt increase much.

2. My Auto Enrolment SIPP is taken as a salary sacrifice from my gross pay. I'm coming to the conclusion (what do you all think??) that I should just add as much as I can to this SIPP which is run through Black Rock something or other. Rather than take out another pension somewhere else.

Again thank you all....I am feeling MUCH less scared now. And whilst I'll never ever be rich, at least I'm not letting my Dad down too much ( by not having listened to him earlier!);)

Well done for making a start, how about:
- House maintenance and redecoration costs.
- Car purchases? Perhaps not a monthly repayment but you would perhaps need a new one or two during your retirement years?
- Car maintenance
- Fuel
- Leisure money or at least some budget for discretionary spending on nights/meals out, coffee etc, books, going out the the movies etc Whatever you do in your spare time.
- Any magazine subscriptions?

Perhaps look back over old bank statements and see what and how much you're spending on?

With regards the further saving Salary sacrifice is generally thought of as the most efficient way to save since you save both tax and NI on any contributions.

I also think its worth looking into the funds you're investing into with each pension too. Investing doesn't have to be overly complicated and you can start by looking at what the fee's each of the funds you have are. You'd ideally want to have fee's around 0.2%. Anything up around 1% is more than you'd want to be paying.

cloud_dog

Kmh120 wrote: »

2. My Auto Enrolment SIPP is taken as a salary sacrifice from my gross pay. I'm coming to the conclusion (what do you all think??) that I should just add as much as I can to this SIPP which is run through Black Rock something or other. Rather than take out another pension somewhere else.

As a basic rate tax payer you will save (or not contribute) an additional 12% (national insurance payments) of your earnings by doing it via SS.

atush

4. I have 6 months emergency fund saved up - I havent yet done the 'how much do i need to live on in 2028' calculation - that scares me

Dont be scared. And add the things in post 15 and 24.

I started at first taking current salary and stripping out all that wont be spent in retirment incl pensions, and NI, commuting costs and clothing etc.

Kmh120

Thank you all again. Its lovely to have people who 'know stuff' to stand alongside me on my journey

So, naturally, I'm still a bit confused. :shocked:

1. CRV1963 mentions me having tax to pay (when I retire?)....could someone explain this please? I assumed that when I retired all my income (SRP, SIPP, LGPS) is not taxable.

2. My local Government pension - the £2700.00 a year pension which is a defferred pension. Its payable on 15.12.2021. But I'm still a bit unclear as to whether I should take it from then or not?

3. Regarding my Auto Enrolment SIPP which is invested with Black Rock Consensus 85 Class 1 GBP....should I just chuck as much money as I can into that? Or should I put some money in there and also into a Stocks and Shares ISA?

4. Also when my annual SIPP illustration says ' this could provide you with an annual annuity income of £555.00'....what does this mean? Are annuities good or bad? Is it best just to take the lump sum on retirement?

Thank you all again. :T

Sophie :hello:

JoeCrystal

Kmh120 wrote: »

1. CRV1963 mentions me having tax to pay (when I retire?)....could someone explain this please? I assumed that when I retired all my income (SRP, SIPP, LGPS) is not taxable.

Hello Sophie, Pension income paid to you is generally treated as earned income for income tax purpose. However, your SRP is paid to you gross, but you do have Personal Allowance, (£11,850 atm). If your pension income added up over your allowance, then one of your pension will likely to see income taxes deducted. Let say your income during the tax year was £12,000 then £28 or so per year will get deducted. If you are under your allowance, then yes, you most likely won't be paying any income taxes.

I hope this makes sense.

OldMusicGuy

Kmh120 wrote: »

4. Also when my annual SIPP illustration says ' this could provide you with an annual annuity income of £555.00'....what does this mean? Are annuities good or bad? Is it best just to take the lump sum on retirement?

Annuities are neither good nor bad. They are one way of taking income from a SIPP pension. As I advised in my earlier post (;)), you need to understand the options you have to take money out of a SIPP. Go to the Pensionwise website, read up on the different choices you have. This link takes you to the options page on that website: https://www.pensionwise.gov.uk/en/pension-pot-options. Get that appointment with Pensionwise and they will explain more.

Annuities are one of the options you have. They provide a guaranteed income, and there are various different types of annuity available. Most people regard them as poor value for money because annuity rates are pretty low right now, but they can form part of a retirement strategy.

From what you have posted so far, your SIPP is something you can use to provide additional income on top of your SP and LG pension. You need to decide how you will need to use the that money, and thus the financial planning we have advised is very important.

PS I wanted to add (like other posters have) you are not an idiot for asking these questions. It's good that you are trying to get to grips with these now.

System

In regards to annuities and whether or not to...

The Aviva pension calculator assumes an age of death of 91 so we'll go with that as how long you expect to live. You plan to retire age 67 and at age 67 you have a pension pot of £24000.

Option 1: You can get an annuity for £600 a year. You'll continue to get that £600 every year until you die so if you go past age 91 it'll continue to pay out.

Option 2: You can use income drawdown. You could take out £1000 a year from the £24000 making you £400 a year better off than the annuity but by age 91 you run out of money.

Third option to mitigate the above is you leave the money invested which many people choosing option 2 would. You still draw down £1000 a year but as long as you can get at least 4% interest on your money it should allow you to withdraw £1000 a year for the rest of your life long past 91.

Ultimately though which is best depends on how much the annuity will pay when you want one and your risk tolerance at the time.

Silvertabby

2. My local Government pension - the £2700.00 a year pension which is a defferred pension. Its payable on 15.12.2021. But I'm still a bit unclear as to whether I should take it from then or not? Posted by Kmh120

15.12.2021 is your 60th birthday? As long as your pension won't be reduced for early payment (depends on your dates of LGPS pensionable service) then there is really no benefit in deferring payment beyond that date.