What are you aiming for as an annual pension for you?

MaxiRobriguez

I'm not too bothered about "the number" because a lot can change in a decade or two, including my own perceptions of what I need.

Instead I'm trying to shimmy as much of my income into my salary sacrifice as I possibly can to take advantage of the higher rate tax avoidance, whilst still leaving enough to have a holiday a year, being able to upgrade from tesco value occasionally and popping a bit in a S+S ISA to try and bridge retiring before allowed access to pension.

I expect to be able to draw down £20k gross (assuming no state pension then), starting from 50. This is based on salary sacrifice and ISA contributions which equate to about £25k per year. I expect to draw the pension for up to 50 years so that's roughly £1m of living costs to account for, which will be covered by what I expect to be an £750k pension pot mostly, which will get converted into mostly lower risk investments.

I expect £20k to live off will be fine for me. This plan also covers off my wifes financial security should I go earlier than planned.

I think I'm all sorted, I worry for those who say they want £30k post retirement and are on a defined contribution scheme. To get that sort of income you're talking putting in over £1,000 a month into your pension from earlier 20's through to 60's. I get the impression people massively under-forecast just what they need to do to get to such decent sums nowadays without a DB pension. 

frugal90

We are front running our DB pensions now, using SIPPS. As a couple we are on £30K per year then once my DB kicks in at 60 it will be £22K plus 66K lump and my wife will be on £18K per year with her SIPP so £40 K per year gross. Then when he DB kicks in it will be £22K plus £18 K and the £54K lump sum then there will be full state pensions further down the line. Also have £80K cash and £260K isas of today. 
We are actually living off less than £30K per year more like £24 K per year, yet doing everything we want. Own house, with veg plot, only one car but loads of bikes. Holidays are cycle touring, treking at the moment until not fit enough and on hold a bit just now. Stay safe all.

Thrugelmir

ratechaser said:

Silvertabby said:

When calculating your pensions, please do consider how much the survivor will have to live on when the inevitable happens.

Not so much nowadays ( I hope) but I've heard of far too many cases whereby the husband's single life annuity (taken out because it gave the highest monthly pension on retirement) ceased on his death, leaving the widow on nothing but means tested State benefits.

Very valid point of course, but that said, how many people actually buy an annuity these days? I can understand the attraction of knowing you have a guaranteed income for life, but the rates are hardly attractive...

I'd much rather take on a degree of investment risk and go the drawdown route.

Where are you intending to invest the fixed interest element of your pot to achieve a reasonable return? 

michaels

frugal90 said:

We are front running our DB pensions now, using SIPPS. As a couple we are on £30K per year then once my DB kicks in at 60 it will be £22K plus 66K lump and my wife will be on £18K per year with her SIPP so £40 K per year gross. Then when he DB kicks in it will be £22K plus £18 K and the £54K lump sum then there will be full state pensions further down the line. Also have £80K cash and £260K isas of today. 
We are actually living off less than £30K per year more like £24 K per year, yet doing everything we want. Own house, with veg plot, only one car but loads of bikes. Holidays are cycle touring, treking at the moment until not fit enough and on hold a bit just now. Stay safe all.

So you spend 24-30k per year and you are carrying on working so you can have 58k pa year in retirement - you must really enjoy your jobs....

frugal90

michaels said:

frugal90 said:

We are front running our DB pensions now, using SIPPS. As a couple we are on £30K per year then once my DB kicks in at 60 it will be £22K plus 66K lump and my wife will be on £18K per year with her SIPP so £40 K per year gross. Then when he DB kicks in it will be £22K plus £18 K and the £54K lump sum then there will be full state pensions further down the line. Also have £80K cash and £260K isas of today. 
We are actually living off less than £30K per year more like £24 K per year, yet doing everything we want. Own house, with veg plot, only one car but loads of bikes. Holidays are cycle touring, treking at the moment until not fit enough and on hold a bit just now. Stay safe all.

So you spend 24-30k per year and you are carrying on working so you can have 58k pa year in retirement - you must really enjoy your jobs....

we ain't working anymore we are drawing down our SIPPs to zero in advance of taking our DB pensions then SP later. Been doing it since I turned 56 nearly two year in now and it's great!

ratechaser

Thrugelmir said:

ratechaser said:

Silvertabby said:

When calculating your pensions, please do consider how much the survivor will have to live on when the inevitable happens.

Not so much nowadays ( I hope) but I've heard of far too many cases whereby the husband's single life annuity (taken out because it gave the highest monthly pension on retirement) ceased on his death, leaving the widow on nothing but means tested State benefits.

Very valid point of course, but that said, how many people actually buy an annuity these days? I can understand the attraction of knowing you have a guaranteed income for life, but the rates are hardly attractive...

I'd much rather take on a degree of investment risk and go the drawdown route.

Where are you intending to invest the fixed interest element of your pot to achieve a reasonable return? 

I'm not sure I understand the question. I currently have the majority of my DC pots in lower risk investments, and I will probably rebalance towards equities at some point. Right now though I'm content with performance.

But apart from a very recent small deposit into a new Vanguard SIPP, I have no pension funds sitting as cash (which is what I'd interpret as being 'fixed interest'). Closer to retirement, we will move towards having a reasonable float in money market funds, as is generally suggested for drawdown, but I'm not going to be overly concerned about the rate that they earn given they will be used for short term income.

Paul_Herring

I currently have the majority of my DC pots in lower risk investments, and I will probably rebalance towards equities at some point.

If you're not in 'equities' - would you mind me asking what these 'lower risk investments' are?

ratechaser

Paul_Herring said:

I currently have the majority of my DC pots in lower risk investments, and I will probably rebalance towards equities at some point.

If you're not in 'equities' - would you mind me asking what these 'lower risk investments' are?

I do have some equities,  and also a small amount in a commodities fund (need to play the long game there) but the rest was moved into long dated gilts at the back end of last year - I was getting concerned that equities were overpriced.... at some point I do intend to dive back in, but for now this works for me...

bigfer

frugal90 said:

michaels said:

frugal90 said:

We are front running our DB pensions now, using SIPPS. As a couple we are on £30K per year then once my DB kicks in at 60 it will be £22K plus 66K lump and my wife will be on £18K per year with her SIPP so £40 K per year gross. Then when he DB kicks in it will be £22K plus £18 K and the £54K lump sum then there will be full state pensions further down the line. Also have £80K cash and £260K isas of today. 
We are actually living off less than £30K per year more like £24 K per year, yet doing everything we want. Own house, with veg plot, only one car but loads of bikes. Holidays are cycle touring, treking at the moment until not fit enough and on hold a bit just now. Stay safe all.

So you spend 24-30k per year and you are carrying on working so you can have 58k pa year in retirement - you must really enjoy your jobs....

we ain't working anymore we are drawing down our SIPPs to zero in advance of taking our DB pensions then SP later. Been doing it since I turned 56 nearly two year in now and it's great!

We are in a similar fortunate position of having a combine DB pension of 36Kpa plus some SIPP. However we have been advised to take the DB early at 58yo with the associated annual reductions first and leave the SIPP till last as it has value if left for inheritance to offspring. Given the current financial situation, we decided to go for the guaranteed income first with the DB pensions.............but either way I agree with you, so long as you can live on less than 24Kpa as a couple....it's great.

camelopardis

BLB53 said:

We are all going to have to make big adjustments to lifestyle to avoid climate crisis.

So, no big cruises or Winter skiing trips, no hopping on a plane at the drop of a hat, maybe a modest electric car, low carbon activities such as walking and holidays closer to home.

It will be a virtue to live simply so, for me, I would suggest £12K incl state pension should cover it. Maybe a bit more in London...

Well, I guess you called this correctly, except it came rather sooner and wasn't climate crisis