It's time to start digging up those Squirrelled Nuts!!!!

hugheskevi

I'm another who should have far more than needed in retirement. It didn't entirely happen by accident though, but rather as a result of risk-aversion due to plans to retire early, pension policy instability and good investment returns.

The main cause was pension policy uncertainty, between about 2010 and 2016, when changes were being made almost every year and more radical change constantly speculated. This made planning difficult, and meant I chose to prioritise pensions above other financial priorities (ISA, mortgage, debt repayment) to gain from the tax incentive to contribute to a pension whilst they were still on offer.

Both my wife and I are in good quality DB schemes which is of great help, especially as we can voluntarily contribute toward Defined Benefit extra pension. This cost a lot due to no employer contribution, but was still good value. Particularly with higher rate tax relief for both of us, it was a great help as we want to retire very early, so we have increased our DB pensions by about £14K p/a through voluntary contributions.

My guess is that our DB pensions will be about £40,000 p/a from age 50 (inclusive of actuarial reduction for early payment, with a protected minimum pension age), with another £17,000 or so from State Pensions at about age 68.

We have also saved about £225K in DC pensions. That was again prioritised due to policy instability, and is likely to be largely unnecessary as I expect our financial need will be about £30,000 p/a in retirement. Nonetheless, it will mean our resources across retirement can be smoothed from standard minimum pension age (whether that be 55, 58 or some other age).

Given we wish to retire around age 45, I wanted to have a very cautious approach and ensure we would have plenty in any scenario (including rapid average earnings growth, and that we could maintain our income relative to average earnings until at least age 68), with as much DB pension as possible and DC pension to smooth income for the period between minimum pension age and State Pension age. Ideally this would have been done much later and so better able to target outcomes, but at least the early contributions have meant good gains from investment returns.

I expect our DB pensions to come to an end, or at least be reduced significantly going forward, from 2022, so expect to either retire or go part-time at that point. Full retirement will come as soon as the period between age 45 to 50 (when we plan to travel extensively, probably continuously for 3 years) is funded, as well as having the funds to purchase our ideal retirement property.

shinytop

For the far future, our MF house is worth approx. £360k, so there's always the option to downsize eventually.

MF? I can think of something but probably not what you meant
All these acronyms, can't keep up!

BoxerfanUK

shinytop wrote: »

MF? I can think of something but probably not what you meant
All these acronyms, can't keep up!

Mortgage Free

shinytop

I'm another who should have far more than needed in retirement. It didn't entirely happen by accident though, but rather as a result of risk-aversion due to plans to retire early, pension policy instability and good investment returns.

Same for me (I hope) although in my case it was mostly by accident. My knowledge of pensions even three years ago was almost non-existent other than a vague notion that they were a good idea. When my DB pension closed 12 years ago I thought I'd better put a bit more its DC replacement. I kept doing this for a few years, upping the amount each year - this was partly due to the very low projections on my annual statements. When when my mortgage was payed off I diverted that cash into my pension. Then three years ago I started taking more notice and planning a bit. I now realise I probably could have retired a year or two earlier if I'd planned it better but, realistically, wouldn't have done so.

So at 58 and with a month left at work I think we'll have more disposable income when I leave than ever before. I can't see us acquiring tastes for expensive cars, restaurants, clothes and other chattels but we'll spend on our home (upsizing probably), family and travel. Maybe a round the world cruise - but only if I can find one where there aren't any other people.

cloud_dog

shinytop wrote: »

So at 58 and with a month left at work I think we'll have more disposable income when I leave than ever before. I can't see us acquiring tastes for expensive cars, restaurants, clothes and other chattels but we'll spend on our home (upsizing probably), family and travel.

This was looking to be our situation but, fortunately or unfortunately, the OH has now got another job and we will have a reasonable uplift in our disposable income.

I'm happy with our current plans and amounts allocated in to retirement vehicles, and being honest we are leaning towards using most of the uplift in 'living'. I'm ok with that but, am now wondering that from this elevated disposable income level to our planned 'Our Number' level might feel like a step backwards (after having a number of future years of enjoying 'life' more).

We shall see. Onwards and upwards.

Audaxer

Sea_Shell wrote: »

Luckily neither of us are really spenders. We don't have a taste for the high-life and have never been bothered about what others are doing, or what they have. We enjoy the simple things, like an 8 mile walk in the countryside, with our sandwiches and a flask of (shock horror) instant coffee!!!!

Rather than eat out, we'd rather have a nice meal and a bottle of wine at home, in the peace and quiet!!!

I guess, because we didn't have children, we did lots of the things that people say they're going to do "in retirement" whilst we were working. We sometimes had 3 foreign holidays a year. We've been to numerous gigs, shows and festivals. Although our spends back then were more than now, we still saved hard, but I bet we still didn't spend more than £20k.

There are a few things left on our "bucket list", but nothing too radical. In the short term DH is just going to be glad of a hand with the jobs round the house!!! I may even have to start doing the ironing again!!!! :eek:

9 working days to go!!!

Looking at this thread again, unless I'm missing something, you are so well covered for your anticipated spending needs, that there is absolutely no chance of anything going wrong. Your two SPs alone when received, will nearly cover your anticipated annual spend. There is also DB pensions to come eventually and a pot of £536k to get by on meantime. I can't recall if you said what ages you were and when your SPs are due, but I would think the pot of £536k would more than cover your annual spend up until SP and DB pensions are received, even if none of the pot was invested?

Sea_Shell

We turn 53 and 48 by the end of the year.

Unless they change the rules, further, we'll both have to be 67 for our state pensions. I'm on the cusp of it being 68!!

DH's DBs payout at 65, with a 50% spousal provision.

Audaxer

Sea_Shell wrote: »

We turn 53 and 48 by the end of the year.

Unless they change the rules, further, we'll both have to be 67 for our state pensions. I'm on the cusp of it being 68!!

DH's DBs payout at 65, with a 50% spousal provision.

Thanks, so a fair while to go till SPs and DB pensions kick in, but I think you are still well covered as you can access DC pots at 55. From ages 55 I would draw up to the maximum of your Personal Tax Allowance each year from your DC pots, even if you don't need to spend it all, by putting the excess into similar investments in S&S ISA or cash accounts. I would think that will mean you have less of a tax liability when drawing on your DC pot once your SPs and DBs kick in?

Suffolk_lass

shinytop wrote: »

Maybe a round the world cruise - but only if I can find one where there aren't any other people.

If you are serious about this a number of cargo ships offer accommodation and there are worse ways to explore the world - particularly on some of the more interesting routes.

OK there are no DJs and posh frocks involved but it appeals to me more than being on a vessel with 3000 passengers :eek:

Sea_Shell

Audaxer wrote: »

Thanks, so a fair while to go till SPs and DB pensions kick in, but I think you are still well covered as you can access DC pots at 55. From ages 55 I would draw up to the maximum of your Personal Tax Allowance each year from your DC pots, even if you don't need to spend it all, by putting the excess into similar investments in S&S ISA or cash accounts. I would think that will mean you have less of a tax liability when drawing on your DC pot once your SPs and DBs kick in?

That is exactly our plan!!!

Just need to do the maths for DH. 25% TFLS, then personal allowance, or take the 25% uplift as we go along??

Which gets it out quicker, before DBs start, with no tax payable. Will depend on the growth of the remaining funds I think?!

I'll transfer the max of my tax allowance too!!