Am I on track.

Pikeman1

Just wondered what peoples thought are on my chances are of having a decent retirement.
62 married on course for full state pension in 3 and half years
No mortgage and no debt.
Around £48000 in s&s isa with hl. Around £47000 in f&c isa. Around £25000 in pensions. £80000 in cash in Marcus. Another £20000 in cash.
Have a flat I rent out worth £75 to £80000 giving £495 a month less estate agent fees service charges repairs etc.
Working and able to save around £600 a month.
My thoughts are I should be paying more into my pension. Open to any criticism on my plans to retire in around 3 years time.
May decide to work part time I still fit and active.

JoeCrystal

How much income do you need and want is the first thing you need to consider. Otherwise, we have no idea if you are on track.

bowlhead99

Pikeman1 wrote: »

Open to any criticism on my plans to retire in around 3 years time.

JoeCrystal is right. You will clearly have some income. But we have absolutely no idea how much you are currently happy to live on or how much you would like to live on when retired.

Some people have simple needs and would be happy with the state pension plus the rental income, while others would think it to be relative poverty compared to what they earn from their jobs. You mention you don't have debts or mortgage, but you don't mention actually owning a property to live in - if you don't, that would probably be the biggest thing that would make it hard to be comfortable on a relatively low income.

My thoughts are I should be paying more into my pension.

Pension contributions are good because they give you tax relief - £8000 contributed becomes £10,000 in the pension with basic rate relief (more for higher rate taxpayers), and when you draw the money out you can take a chunk of it as a tax free lump sum before paying tax on the rest (though you would have the capacity to get some of it at 0% if you had given up work and only had your rental income profits with a lot of space in your personal allowance before the state pension kicked in). So, it would be a net 'win' to make more contributions, get tax relief, and then get the money back and pay tax.

How much you can put into pensions depends on how much you earn (as you can't contribute more than your employment income or self-employed business profits in any year). But for example if over the course of 2019/20 and the following 3 tax years you earn £100,000 in total, you could move £80k of your ISA and Marcus money into a pension and have it grossed-up to £100k. If you earn more than that, you may also be able to put much of your spare £600pm into the pension too.

Pikeman1

Many thanks for the replies. I'm a basic rate tax payer and own my own house mortgage free.
Not really extravagant couple of holidays a year down Devon do like a few beers on a weekend. My main hobby is fishing and do travel a few miles in pursuit of specimen pike. I suppose £30000 a year would keep me pretty happy. So would most likely need to work part time to achieve this. The pension I have is with Scottish widow. Have recently opened a sipp withe hl. Intend to put more into this within the limits.can also use the wives annual allowance for isas. Lots to ponder on.

Gary1984

If you include two full state pensions then you're probably just about there. Total assets (excluding the house you live in) of £300k. Using the 4% rule of thumb you could expect £12k a year from these if you're willing to use up the capital over time. However, you'd probably need to switch some of your cash into assets that would give you growth or an income to achieve the 4% over the long term. Then two full state pensions add another £17.5k bringing you up to £29.5k. Has your spouse checked their State Pension forecast?

To maximise your chances of reaching your target I'd focus on adding as much to your pension in your final years of work as you can. Does your employer offer salary sacrifice? If so use it to bring your salary down to the personal allowance of £12.5k putting everything else into your workplace pension. Then use some of your cash reserves for day to day living.



At the very least make sure you're contributing enough to your workplace pension to maximize the employer's contribution.

Consider opening a SIPP for your spouse and putting in the maximum amount. If they have no earnings you can still contribute £2880 and get the 25% government uplift. Again fund this from the cash reserves.

Other posters will give much better advice about the actual assets you hold but you don't want to hold too much cash in the longer term as inflation will erode the value. You should consider a higher proportion of equities, bonds and other funds in line with your risk appetite. Perhaps consider seeing an IFA about what would be suitable investments to fund your retirement.

If it were me I'd consider selling the property and reinvesting the proceeds elsewhere. The thought of having to deal with tenants, repairs and so on in my retirement is something I could do without!

Linton

What about your spouses pensions?


Assuming there are none other than a full state pension here is a very very rough assessment:
When you both reach State Pension Age you together will have say £17K of SP income + £5K of rental income making £22K. So you need to find £8K/year assuming your £30K was before tax. £8K/year inflation linked income til death (which could be in your 90s)from investments would cost about £200K-£250K.


Your current assets excluding the rental amount to £220K. But this would mean putting all your money into investments - cash would not give you the returns you will need. I think you need another £50K-£80K of assets to be reasonably safe with an adequate cash emergency and buffer fund. Your £600/month over 3 years is not going to make enough difference, so you may have to reduce your income expectation by a few £K.



If your spouse has pensions or savings you havent mentioned and/or you can get a few £K/year in part time work after retirement the picture could look very different.

Pikeman1

Many thanks gary. Yes my wife will get the full state pension but not for another seven years she's younger than me. I'm self employed so no works pension.
My wife works part time and does pay a small amount into a pension. I haven't put her earnings into the equation because I never see it. Lol. She does spend most of it on the grand kids though.
Not sure about the flat it is a bit of hassle to be honest but have a son who still lives at home and it's always some where for him to live when me and the wife have gone.
I think I hold to much in cash so will be topping up the sipp and s&s isa. Been putting some in vanguard la 60

atush

Pikeman1 wrote: »

Just wondered what peoples thought are on my chances are of having a decent retirement.
62 married on course for full state pension in 3 and half years
No mortgage and no debt.
Around £48000 in s&s isa with hl. Around £47000 in f&c isa. Around £25000 in pensions. £80000 in cash in Marcus. Another £20000 in cash.
Have a flat I rent out worth £75 to £80000 giving £495 a month less estate agent fees service charges repairs etc.
Working and able to save around £600 a month.
My thoughts are I should be paying more into my pension. Open to any criticism on my plans to retire in around 3 years time.
May decide to work part time I still fit and active.

Yes you should be whacking into your pension everything you can at this point (and maybe before). 25K is very low.

What is your OH's pension situation?

Pikeman1

She's only part time so only a very small amount. Gets a full state pension but that's about 7 years away. As you say need to start banging in as much as I can. Never really liked pensions until rules changed on pension freedoms. Big mistake on my part. Thanks for your input.

atush

Pikeman1 wrote: »

Many thanks gary. Yes my wife will get the full state pension but not for another seven years she's younger than me. I'm self employed so no works pension.
My wife works part time and does pay a small amount into a pension. I haven't put her earnings into the equation because I never see it. Lol. She does spend most of it on the grand kids though.
Not sure about the flat it is a bit of hassle to be honest but have a son who still lives at home and it's always some where for him to live when me and the wife have gone.
I think I hold to much in cash so will be topping up the sipp and s&s isa. Been putting some in vanguard la 60

Speak to your wife about a budget to blow on the grandkids each month. As if she earning more than 3600/yr, she can put her entire earning in a pension.

Say she earns 5K per year. She can put in 4K, and it gets topped up to 5K with TR. She keeps the 1K (her budget to splurge?).

Does she give you 1K of her PA per year?

She will have a PA in retirement, and her SP wont tke it all up so she should have more pension. How much is hers worth now?

I wouldnt worry about your son, he can live in your house when you are gone or sell it and buy a flat. If the flat is too much bother, sell it later on when you are retired .

Pikeman1

Thanks atush she earns around £10000 a year but no way will she put it into a pension that's left upto me.lol. Yes I am using her pa have savings in her name.
I do have another son who has his own place with a partner and 2 kids.
The house will be sold and split between the two sons plus any money. Just want to make sure the one at home has somewhere to live. I suppose I could sell it and invest the money for him
Lots to think about.