What number are you aiming for - solely DC pot

Anonymous101

Deleted_User said:

You can do, and saving, investing, paying off mortgage, minimizing fees - all of it is important. I am just not sure if having any “retirement date” or “number” in mind is much use when you are 34. Focus on family and career. Keep increasing your earning power, enjoy your work and you’ll be fine. At least that’s my theory. 

Agree with the principle. However if that 34 year old is of the mind that they might like to step away from full time work at say 50 rather than a traditional 68, that should drive them to make different choices around how much of their income to invest and how much they might want to spend.

cfw1994

Robwales said:

..just on a side note - does the phrase "net worth" include property?  Does it inc pension?  i guess there are a lot of millionaires in the SE with high house prices on the back of 30 years of property?

It's a good question!
I do NOT especially include that in our planning - I prefer to view that asset as something that we could strip if care costs became an issue....which is always nearly impossible to properly cater for, IMHO.
But in terms of "net worth", sure, add it in.....we'll all be millionaires, Rodney!

[Deleted User]

cfw1994 said:

Robwales said:

..just on a side note - does the phrase "net worth" include property?  Does it inc pension?  i guess there are a lot of millionaires in the SE with high house prices on the back of 30 years of property?

It's a good question!
I do NOT especially include that in our planning - I prefer to view that asset as something that we could strip if care costs became an issue....which is always nearly impossible to properly cater for, IMHO.
But in terms of "net worth", sure, add it in.....we'll all be millionaires, Rodney!

I think its an important part of the picture. When I had a mortgage, net worth would be “minus the debt”.  If you only count debt but not the asset, buying a house makes you bankrupt in an instant.  You could borrow against the house and invest.  You can also move your money between asset types. And yes, you can sell to move to something cheaper or rent. Has to be counted to understand where you stand. I also use the rule of 90 to ensure my illiquid assets are not excessive. 

[Deleted User]

Anonymous101 said:

Deleted_User said:

You can do, and saving, investing, paying off mortgage, minimizing fees - all of it is important. I am just not sure if having any “retirement date” or “number” in mind is much use when you are 34. Focus on family and career. Keep increasing your earning power, enjoy your work and you’ll be fine. At least that’s my theory. 

Agree with the principle. However if that 34 year old is of the mind that they might like to step away from full time work at say 50 rather than a traditional 68, that should drive them to make different choices around how much of their income to invest and how much they might want to spend.

As the great man once said: “You were given the choice between focusing on retiring at 50 and focusing on your family and career. You chose early retirement, you’ll get neither”. 

barnstar2077

Hopingforthesimplelife said:

A comment on the “must plan for every finite detail” vs “what will be will be” view.

Isn’t there a half way house where you plan (I.e contribute) as much as you can with a target goal (retirement date on a flexible scale / pot value etc) and then after that - what will be, will be. A lot of what happens globally is out of our control and feeing as though you can control it/plan for it must be somewhat depressing when the next unseen disaster occurs. 

To answer the question, I’m 34 with a £40k dc pot (although wife is a teacher).

I certainly did not mean to suggest that everyone should plan down to the very last detail, only that the more you leave it up to the fickle fingered hand of fate the worse off you generally will be.  Some people will always do well no matter what, just as some people will fail terribly due to horrible luck / divorce ;  )

Personally I enjoy planning and financial education.  Love me some spreadsheets too! :   )

Thrugelmir

Deleted_User said:

Anonymous101 said:

I’ve shared this, or something like it, many times with younger posters. Again the investment amounts or growth rates aren’t the main information. I think it illustrates the key take away that compounding is incredibly powerful and by investing whilst you’re letting time do most of the hard work.

Nice table but optimistic and constant growth rate assumption. Crucially, $100 invested in year 59 is worth a fraction of that in year 25. Half, assuming 2% inflation. Even less as a fraction of salary  between a 25 year old graduate and a 59 year old director. So, not a full picture

Rather like tables that show straight linear growth. Be an investor for enough years you'll realise that the reality is very different. 

Thrugelmir

kinger101 said:

Pile_o_stone said:

Prism said:

Pile_o_stone said:

If I’m understanding this correctly, it’s not feasible to expect more than 4% return on investments but this thread seems to be full of pension pot millionaires. Unless MSE is full of lottery winners or people earning £+200k a year, then how did these people acquire DC pensions of £1m plus without huge gains?

I have seen between 7-8% rather than 4% over the last 25 years or so, and a chunk of that was in a old fashioned high fee (by todays standards) default multi asset fund. Going forwards, who knows.

Investors on forums always seem to make huge gains, always seem to be out if the market just before a corona crash or a banking crash and always seem to be millionaires by the time they’re in their 40s. It’s amazing really, I just wish I knew their secret.

I suspect there's a bias on these forums to people who've made a point of saving early and heavily for retirement.  Someone with a good job able to put £1000 a month away for over 3 decades could be hitting the £1M figure.  So would someone who came into capital via inheritance and diverted it into a pension via salary sacrifice.  I'll be happy with half that figure, though SP+DP will be more than half my requirement.

I think most posters on here are genuine, but I've definitely come across blatant BSers.

When I first started paid work at 17. My father told me to start a pension plan. The princely sum of £10 a month.  Was advised to transfer the policy to Equitable Life some years later.  :'(    In 2004 received mis-selling compensation of over £10k. 

All younger people need do is downsize their must have iPhone contracts to something which fulfills the job. If they aspire to a decent pension income.

Acorns eventually grow into oak trees. You cannot beat time in the markets. 

rickenbacker330

We’re piling money into my wife’s supplementary DC pension in addition to her DB pension. The DC target is £50,000 at 55 (three years time) when she’ll retire. The plan is to draw down the DC pension over three years tax-free after which she’ll take her DB pension.

Mistermeaner

Deleted_User said:

Appreciate the offer. My assets are in Britain, Canada and the US. About a third is illiquid - its a farm and a house with a pond where we live with our dogs and ducks and bees, and which (surprisingly) gives us roughly 20k worth of income a year.p (in gbp) 

The rest is in a 70/30 worldwide portfolio with 70 in passive ETFs and 30 in government bonds in various countries. 150k Cad is in cash (counted as part of the 30% in fixed income).  Some of it in a SIPP, some in RRSP, some in TFSA, and about half of liquid assets is in a non-registered investment account.

My income is a bit over 200K Canadian. My wife’s income is irregular, always under 50K CAD.  Plus the farm, like 40k or so. Obviously a resident in Canada for tax purposes. 

Look forward to your advice on my liquidity and how I should sort out my tax affairs and life in general. 

Thanks, man! 

Hi Mordko

Based on this limited data;

Your networth is £1.6mil (GBP right?) and about 1/3 is illiquid being tied up in your home so that leaves approx £1mil (jst for easy rounded numbers) as your liquid funds. I assume your home is mortgage free 

This £1mil appears to be well diversified split variously across the globe in a reasonable mix of equiities and gilts and some cash - this distribution looks sensible

Your current income is £20K from your home (i presume by leasing some of your land or selling eggs & honey?) + £140K  GBP (roughly) so total £160K GBP per annum

My main observation would be that your £1mil of liquid investments would not be sufficient to sustain your current income levels - you would require a 14% yield which is highly unlikely to be sustainably possible.

It's not clear how much you continuing to save into £1mil pile from your present income and how much of your present income is 'excess' (i.e. more than you need for the lifestyle you enjoy and therefore available for saving).

Its also not clear when you are planning to retire 

You are certainly in a very good position but you may need to focus on either saving more or spending less in order to put yourself in a position of sustainability after you stop work such that you don't have to drastically alter your lifestyle

kinger101

Thrugelmir said:

kinger101 said:

Pile_o_stone said:

Prism said:

Pile_o_stone said:

If I’m understanding this correctly, it’s not feasible to expect more than 4% return on investments but this thread seems to be full of pension pot millionaires. Unless MSE is full of lottery winners or people earning £+200k a year, then how did these people acquire DC pensions of £1m plus without huge gains?

I have seen between 7-8% rather than 4% over the last 25 years or so, and a chunk of that was in a old fashioned high fee (by todays standards) default multi asset fund. Going forwards, who knows.

Investors on forums always seem to make huge gains, always seem to be out if the market just before a corona crash or a banking crash and always seem to be millionaires by the time they’re in their 40s. It’s amazing really, I just wish I knew their secret.

I suspect there's a bias on these forums to people who've made a point of saving early and heavily for retirement.  Someone with a good job able to put £1000 a month away for over 3 decades could be hitting the £1M figure.  So would someone who came into capital via inheritance and diverted it into a pension via salary sacrifice.  I'll be happy with half that figure, though SP+DP will be more than half my requirement.

I think most posters on here are genuine, but I've definitely come across blatant BSers.

When I first started paid work at 17. My father told me to start a pension plan. The princely sum of £10 a month.  Was advised to transfer the policy to Equitable Life some years later.  :'(    In 2004 received mis-selling compensation of over £10k. 

All younger people need do is downsize their must have iPhone contracts to something which fulfills the job. If they aspire to a decent pension income.

Acorns eventually grow into oak trees. You cannot beat time in the markets. 

You're being unfair with your iPhone stereotype.  It is mostly middle-aged people who buy the latest iPhone.  The youngsters are all using hand-me-downs on giff-gaff PAYG.  They can't afford £40 a month after they've spent it all on avocado on toast.