What number are you aiming for - solely DC pot

MallyGirl

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!

Same here - I don't factor the house in to my figures as I want to continue to live in it during at least the early years of retirement. At a later point we could downsize and liberate funds but I have no idea when that might be.

[Deleted User]

Mistermeaner said:

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

You don’t give up, I’ll give you that.  To answer your questions:
- I don’t know when I will retire from my job. As soon as I get bored.
- My farming income does not stop when I retire from engineering/management. Its going up every year from 0 four years ago. There is honey, duck eggs and trees (nursery). And I am investing in setting up a craft meadery. 

- You forgot to count DB income. 

- Yes, I am still investing into my liquid and farming assets.
- Nobody needs the same income in retirement as before retirement to keep the lifestyle.  Nobody. That’s a crazy assumption. Like as of next year I no longer have to pay for my kids’ education and that’s just one issue with your assumption. And by the way, my marginal tax rate is over 50% right now. It will be down to around 30% with the possibility of income sharing the second I retire. 

Mistermeaner

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 think this would be a mistake ; saving as much as you can might imply a “let’s see what’s left over after x y z” ....  I would say that proactively deciding to save for retirement should be up there with “how much mortgage can I afford” etc 

in simple terms if you save half your wage every year in 30years of work you can expect roughly your savings to last 30years of retirement (gross simplification )

or another way if you put just 10% of your annual salary into a pension how many years of retirement will that approximately buy you ? 

[Deleted User]

“simple terms if you save half your wage every year in 30years of work you can expect roughly your savings to last 30years of retirement (gross simplification )“

Simple terms, if you jump really high, you will end up in space. In real life, its bo**ocks. 

DairyQueen

Deleted_User said:

“simple terms if you save half your wage every year in 30years of work you can expect roughly your savings to last 30years of retirement (gross simplification )“

Simple terms, if you jump really high, you will end up in space. In real life, its bo**ocks. 

Not sure how this helps the OP.  Seems that this thread has become all about you and, without wishing to sound rude, I doubt your plans/assets are remotely relevant to OP's posting.

Mistermeaner

You don’t give up, I’ll give you that.  To answer your questions:
- I don’t know when I will retire from my job. As soon as I get bored.
- My farming income does not stop when I retire from engineering/management. Its going up every year from 0 four years ago. There is honey, duck eggs and trees (nursery). And I am investing in setting up a craft meadery. 

- You forgot to count DB income. 

- Yes, I am still investing into my liquid and farming assets.
- Nobody needs the same income in retirement as before retirement to keep the lifestyle.  Nobody. That’s a crazy assumption. Like as of next year I no longer have to pay for my kids’ education and that’s just one issue with your assumption. And by the way, my marginal tax rate is over 50% right now. It will be down to around 30% with the possibility of income sharing the second I retire. 

Hi mordko 

Thanks - you're proving my point 

You are clearly in an excellent position : not only do you earn well you are well diversified and have a clear understanding of tax etc and you also have a plan ; recognising that your income requitements will drop as expenditure calls away 

You have and are continuing to invest and appear to have very little debt

The original point of discussion was about whether having a number to aim for : e.g. A plan was relevant - I say it is , you i believe were saying it's not and advocating amore laissez faire approach : despite in actual fact it turns out doing the exact opposite with your own affairs 

Mistermeaner

Deleted_User said:

“simple terms if you save half your wage every year in 30years of work you can expect roughly your savings to last 30years of retirement (gross simplification )“

Simple terms, if you jump really high, you will end up in space. In real life, its bo**ocks. 

No that's incorrect : you would need to jump at a fast enough velocity to exceed the escape velocity of earth which is about 7 miles per second : being as the acceleration required to reach this speed must be applied in one virtually instantaneous moment (the initial jump as you are not able to accelerate continuously like a rocket)  then the energy expended would not only snap all of your bones... you and much of the surrounding earth would be instantly vaporized in a huge explosion

This simply won't work 

Filo25

Started taking pensions seriously belatedly about 3 years ago at the age of 45 at which stage I had £210k in a DC pot (not lucky enough to have a DB pension anywhere).

Been lucky enough to have a few payrises since then which have enabled me to put more in the pension, and have taken a more active interest in asset allocation myself, rather than just sitting in the default work fund although the AA may become a factor going forwards.

So am now sitting at about £400k at 48, which still leaves my ideal target of hitting about £1m at current prices by my early 60's looking possible (my wife is unlikely to have a large pension pot, so mine will have to do most of the heavy lifting in retirement), but I think on balance probably unlikely.

I have had to deal with a significant COVID paycut this year and that will roll into next year (assuming I keep my job at all), and I suspect at some stage higher rate tax relief on pension contributions will either go or be significantly curtailed, and the tax environment in general is likely to be more negative in the aftermath of COVID.

I can hardly complain though I would have been able to acheive it a lot more easily had I started taking pensions more seriously earlier, and I'm under no delusions that I'm in a much better position than most people I know on DC schemes in real life.

[Deleted User]

Mistermeaner said:

Deleted_User said:

“simple terms if you save half your wage every year in 30years of work you can expect roughly your savings to last 30years of retirement (gross simplification )“

Simple terms, if you jump really high, you will end up in space. In real life, its bo**ocks. 

No that's incorrect : you would need to jump at a fast enough velocity to exceed the escape velocity of earth which is about 7 miles per second : being as the acceleration required to reach this speed must be applied in one virtually instantaneous moment (the initial jump as you are not able to accelerate continuously like a rocket)  then the energy expended would not only snap all of your bones... you and much of the surrounding earth would be instantly vaporized in a huge explosion

This simply won't work 

Ignoring market returns, the delta between a young family and an old git expenditure and a whole bunch of other major factors isn’t going to give you a working approximation of how much you need to save. 

[Deleted User]

Mistermeaner said:

You don’t give up, I’ll give you that.  To answer your questions:
- I don’t know when I will retire from my job. As soon as I get bored.
- My farming income does not stop when I retire from engineering/management. Its going up every year from 0 four years ago. There is honey, duck eggs and trees (nursery). And I am investing in setting up a craft meadery. 

- You forgot to count DB income. 

- Yes, I am still investing into my liquid and farming assets.
- Nobody needs the same income in retirement as before retirement to keep the lifestyle.  Nobody. That’s a crazy assumption. Like as of next year I no longer have to pay for my kids’ education and that’s just one issue with your assumption. And by the way, my marginal tax rate is over 50% right now. It will be down to around 30% with the possibility of income sharing the second I retire. 

Hi mordko 

Thanks - you're proving my point 

You are clearly in an excellent position : not only do you earn well you are well diversified and have a clear understanding of tax etc and you also have a plan ; recognising that your income requitements will drop as expenditure calls away 

You have and are continuing to invest and appear to have very little debt

The original point of discussion was about whether having a number to aim for : e.g. A plan was relevant - I say it is , you i believe were saying it's not and advocating amore laissez faire approach : despite in actual fact it turns out doing the exact opposite with your own affairs 

A plan is relevant. A good plan has an objective: I do not want to die poor. A good plan has a strategy: maximize savings while living a decent life, remove unnecessary expenditure, stay invested, minimize investment costs, etc.  Note how all of these are things you can control. Hoping for a number by a date is only really meaningful within a couple of years of leaving work. But we are going in circles.