Planning for 37 y/o

SpeedSouth

Hi,

Bit of a long post, having read this back, but looking for more a sanity check, and to check I'm not missing anything major.
Couple of questions as well on the amounts required towards the end..

Currently me 37, missus 34. 3 Kids under 7
Family Home - £60K outstanding
BTL - £90k equity
My Pensions - circa £80K
Missus - circa £16K
S&S - circa £45K
Savings - 6 months ish spending

I'm on sal sac at work, and contribute 62% (£2480p/m) of my salary currently. The majority of this is at BR, so getting a 32% uplift. Some of this is offset by tax credits, so I won't be able to continue with this level of contribution when UC comes into play for us.

Missus puts in the max £2,880 a year that she can, being unemployed.
BTL in her name only so yields 7% on the equity invested, or 3.2% on the property. Just had our first change of tenant in 8 years so it has been hassle free thus far.

Presently we are not contributing to S&S, as building cash back up following car purchase, but hope to start with £300 p/m again soonish.

LISA - Don't currently have any. I will open one before I'm 40, but I think with sal sac, and the tax credits it's not a contender at present.

The aim is to retire at 55 (depending on pension access age) for me currently. Currently I'm working towards a figure of £24k required, which at a withdrawal rate of 3% my sheet says I need £800K pot.
Now where my sheet is lacking, is factoring in state pension, at all, never mind at 67/68/69 when ever it comes, or any type of front loading. How do I factor in those amounts on a sheet?

I know I will need to build up the S&S ISA, to cover the gap to when I can withdraw my pension, but will address this once we've moved to UC, so not to pass up on any free money.

All of my pension is a workplace one, with the figures building up pretty rapidly I think I will need to look to take advice or learn myself where to invest, as mistakes on the pot will be exaggerated the bigger the pot gets.
The S&S is VLS60
Missus pension is VLS80.

Now I realise at a young age, we are doing OK, and probably putting more than is necessary in the pensions, but assume the sun will only shine on this hay making for the next 2-3 years.

After that it will likely have to reduce to around 35% available to split between pension and ISA.

Questions:
1. Anyone suggest I should be doing anything different
2. If I assume I will get SP, my required pot will drop significantly, so how do people factor that, at the various ages.

Thanks
Adam

enthusiasticsaver

Can you get UC with that level of savings?

You can get a state pension forecast by going on the HM government gateway site and do a spreadsheet for each year from age 55 to 68 or whenever you get state pension. Obviously if you intend to retire at least 10 years early you may have a shortfall in NI contributions and/or if your pension is a contracted out scheme (assuming not). You can buy added years though to make up to a full state pension.


Obviously your number will change over the next 18 years so make sure you update the figures annually but usually you would use a combination of s and s isas, pension income and presumably in your case rent from BTL to withdraw the money as tax efficiently as possible and as the state pension will make up a considerable part of your number you can afford to drawdown a good percentage from other investments before your SPA. If you are only needing £24k per year though and you have a 13 year gap until your state pensions kick in (full pensions would be around £17k at todays rates assuming full contributions) £800k sounds very high. Normally you would allow to draw the capital down as well and not expect the yield only to cover the whole of your required income.

Thrugelmir

adam81 wrote: »

The S&S is VLS60

Bonds may well result in a drag on longer term performance. Be a double whammy if equity markets take a tumble. Bull markets eventually run out of steam. To achieve £800k at 55 (though I'm not suggesting that you should) you will need something far more adventurous than VLS60. With adventure comes the unexpected.

Investing is not a gentle incremental ladder when one opts to get off. Timing cannot be forecast a month ahead let alone 18 years. Agitating over spreadsheets is therefore pointless. Save whatever you can and cross your fingers that you meet your objective at some point in the future. .

SpeedSouth

No we won't be eligible for UC when we are transitioned so when that time comes contributions will have to reduce significantly. That is when 35% amount will kick in.

Will get a forecast. No idea about contracted out, however just googling the meaning I'd suggest not given its a DC, but will check.

You're right the £800k ignores all SP, and allows for no capital drawdown.
SP for the sake of the modelling I'm assuming worst case scenario and it won't be there.
The sheet is only an accumulation sheet at present, the target pool is what has geared the contributions the last 5 years or so.

I need to model the withdrawal sheet effectively still, obviously what ever I don't have to draw down from the capital the kids get.

Triumph13

The best way to factor in SP is to start from the sums at SP age and work backwards. Ignoring tax the sums work out for you at something like:
£24k target less £17k for two SPs = £7kpa
At 3% drawdown that gives a required pot of £233k.

Bridging the gap from 55 to SP at say 70 would be 15 x 17 = £255k (assumed invested to just keep pace with inflation). Plus £25k as your wife gets her SP 3 years after you gets you to £513k. Add some voluntary NICs to get those full SPs to bring you to say £530k total - a LOT less than £800k

Those numbers drop further if the BTL income is still coming in, go up if you need some of the the TFLS to pay off your mortgage.