What number are you aiming for - solely DC pot

Mistermeaner

Pile_o_stone said:

I find it interesting to read these pension pot threads, especially posts from people who are aiming for or already have large retirement pots (circa £1m) and whose posts contain sentences like "sacrificed for years", "scrimped and saved for years", "went without for years" etc. etc.
It makes me wonder just what they intend to do with all this money? Someone who spent all their younger days scrimping and doing without is hardly going to change in retirement and start travelling the world and gaining experience. I don't see someone who didn't travel or accumulate experiences when they were young, fit and confident, suddenly start doing it when they're old. They will more than likely stay in that same mindset and continue to scrimp in retirement. Still, they will get to be the richest corpses in the graveyard and I guess their beneficiaries will appreciate the money - perhaps *horror* spending it frivolously on life experiences?

It also depends on how you view a 1mil pot ; while that sounds like loads of money you are perhaps looking at a sustainable income of around 30k per annum from that (index linked to inflate each year) so hardly a millionaire lifestyle !

If you've been earning 50-60k pre retirement you're probably not looking at a drop in living standards 

If you've been used to earning 100k and  drop to 30k that will likely be a noticeable change in lifestyle 

We are aiming for no change in lifestyle so are balancing payments into the pension today with spare money now vs our expected pot and therefore income 

We are also factoring in the kids getting more expensive but things like mortgage falling away 

If we accumulate excess we help the kids out - better that than coming up.short 

crv1963

Mistermeaner said:

Hi all

There was a "what's your number" thread doing the rounds some time ago - lots of useful content generated but from memory an awful lot of contribution was from folk with decent db pensions due 
I'm interested in where people who are solely reliant on dc pot(s) (+ state pension) are aiming in terms of pot size for retirement and their reasoning 
To kick off me and my missus are hoping to hit 1mil (in today's value) between us by the time I hit 58 in 17 years time (I'm 5 years older than her)
At this point we should be mortgage free and looking for a sustainable 3% drawdown at 30k per annum (increasing inline with inflation thereafter) 
State pension will be a nice bonus but not counting on it 

1mil sounds like a huge number and would make us "rich" by many measures but when looking for sustainable income it's not really that much
Those with db generally greatly under value it (teachers nurses etc .... IMO )

I've been following the thread from the start, hands up though me db retired and returned nurse so db pension plus wage which excludes me from the theme. I'm well aware of the value to us of my db pension but agree most NHS workers particularly Nurses are completely unaware of the value of their pension to them when they are due to retire. Most live for the day and don't look too far ahead, indeed had I not had an enforced time off to recover from ill health a few years ago and research then we'd be bumbling along in that number still!

However Mrs CRV, all dc pensions, late to the pension planning party, so we're aiming for her a pot of around 120k, plan to draw down at 10k pa from age 55-67 when she hits 55. Then this income is replaced by her full SP. If we can get more into her "pot" great, if it's a bit less then not so good but not a reason not to retire. We have a combination of pension plans for her- a SERPs pot from the 80s when she opted to open one, her employers NEST pension (probably enough for a couple of cups of coffee a month!) and a SIPP- upping her contributions as high as we can, supplemented from my income. Currently her pots are around the 100k mark.

To help further cushion our retirement we're also saving into a SIPP for me, currently looking to save enough (or more if we can afford it) to take me out of HRT, aim to get 100-120k into it over the next 3 years. Plan is to draw from this from when we stop work at around 10k pa, from age 60-67, then leave it alone once SP starts, to fund old, old age.

I'm well aware that I/we are trading time for money, but am enjoying the work, we're mortgage free but spending on pensions, building works (preparing our home for our retirement), have been supplementing sons furlough wage and spending on vets bills- lesson learnt next pet gets insured! Since lockdown we've not gone mad spending on-line like many colleagues/ friends/ family but have really learnt that i) having a job to go to really helps, ii) we were wasting a lot of money through browsing in shops, iii) our need for holidays abroad is a want not a need!

Tom_Brine

Im 36 and currently have a DC pension pot of £102946.38. Im taking advantage of our current situation (Married, Mortgage, reasonably well paid job, no kids) to make hay whilst the sun is shining by contributing 36% of my salary into my pension via salary sacrifice. This is further topped up by a 10% match from my employer for a total of £2031.67 monthly top up. Id hope to hit over a million by my mid to late fifties. The wife has 12 years db military pension and has recently secured a job in the NHS where hopefully she will accumulate more db pension benefits up to retirement. Theres also money going into tax efficient work share schemes, LISA, ISA and stocks and shares accounts. Its very much a save as much as I can then review in order to work out exact numbers and timing when in my early 50's

AnotherJoe

Novice_investor101 said:

I’m single, 38 years old & will get a full state pension from 68 & also a DB of £3.5k (or that’s what it was about 3 years ago when I asked, will be more now, Index linked) from 65. 

I was a bit late to the DC party as my old employer ran the DBscheme. 

I have just over £20k in my DC now, after 3.5 years, maxing out my works contribution. Invested in 100% equities as I won’t touch it til I’m at least 60-65. 

No idea what it’ll be worth come retirement, hopefully as much as possible! I will start to dial down the risk at about age 55. 

At least you have plenty of time to work out that's probably a bad idea. Dialling down the risk is appropriate if you are going to be buying an annuity and tahst why it was the standard thing to do for many years. But few are buying annuities aged 60-65 now.

If you will be invested for another 20-30 years after 55 then dialling it down would likely provide you substandard performance. If I'd dialled down my risk levels 10 years ago I'd probably have 30% maybe less, what i have now.

Pile_o_stone

Mistermeaner said:

Pile_o_stone said:

I find it interesting to read these pension pot threads, especially posts from people who are aiming for or already have large retirement pots (circa £1m) and whose posts contain sentences like "sacrificed for years", "scrimped and saved for years", "went without for years" etc. etc.
It makes me wonder just what they intend to do with all this money? Someone who spent all their younger days scrimping and doing without is hardly going to change in retirement and start travelling the world and gaining experience. I don't see someone who didn't travel or accumulate experiences when they were young, fit and confident, suddenly start doing it when they're old. They will more than likely stay in that same mindset and continue to scrimp in retirement. Still, they will get to be the richest corpses in the graveyard and I guess their beneficiaries will appreciate the money - perhaps *horror* spending it frivolously on life experiences?

It also depends on how you view a 1mil pot ; while that sounds like loads of money you are perhaps looking at a sustainable income of around 30k per annum from that (index linked to inflate each year) so hardly a millionaire lifestyle !

If you've been earning 50-60k pre retirement you're probably not looking at a drop in living standards 

If you've been used to earning 100k and  drop to 30k that will likely be a noticeable change in lifestyle 

We are aiming for no change in lifestyle so are balancing payments into the pension today with spare money now vs our expected pot and therefore income 

We are also factoring in the kids getting more expensive but things like mortgage falling away 

If we accumulate excess we help the kids out - better that than coming up.short 

It's a reasonable goal to aim for no change in lifestyle when you're retired, however I really don't think you need to have a pension pot that will pay your current net salary amount.
In my case I have the following monthly outgoings that I will no longer contribute to in retirement:
Pension Contributions: £1133
Mortgage Payment: £1319
Life Assurances: £87
Car Loan: £275
--------------------------- 
So I can 'earn' £2814 per month less in retirement with zero impact to my lifestyle. That's £33, 678 per year.
I will also not be contributing to my kids university attendance, I won't be paying for them to come on holiday with us, I will not be paying for their food. I will have cheaper utility bills with the kids not living at home. Most importantly I won't be living in a large family home, so my utility bills (and council tax will be cheaper). Let's say that this shaves another £300pm off my outgoings.  So I now don't need to earn £3114 per month (£2814 + £300) or £37,368 per annum.
------------------
I generally work from home, but a commuter could shave a lot more off that monthly amount as they won't be buying a rail season ticket or petrol/parking. The wear and tear on their car would be less too, so fewer and cheaper services and you can run the same car for a decade without worry.
---------------------
There are an awful lot of costs that we incur just so we can work. It really is a case of "Living to work" instead of "Working to Live". This is why I think people should concentrate on the amount of income they need each year rather than having some vague aim to store away huge pension pot that will most likely be spent by their beneficiaries.

Thrugelmir

Pile_o_stone said:

I find it interesting to read these pension pot threads, especially posts from people who are aiming for or already have large retirement pots (circa £1m) and whose posts contain sentences like "sacrificed for years", "scrimped and saved for years", "went without for years" etc. etc.

Selection of the "right" investments has brought a windfall in recent years. No one foresaw QE being an ongoing exercise either.  

shinytop

Pile_o_stone said:

Mistermeaner said:

Pile_o_stone said:

I find it interesting to read these pension pot threads, especially posts from people who are aiming for or already have large retirement pots (circa £1m) and whose posts contain sentences like "sacrificed for years", "scrimped and saved for years", "went without for years" etc. etc.
It makes me wonder just what they intend to do with all this money? Someone who spent all their younger days scrimping and doing without is hardly going to change in retirement and start travelling the world and gaining experience. I don't see someone who didn't travel or accumulate experiences when they were young, fit and confident, suddenly start doing it when they're old. They will more than likely stay in that same mindset and continue to scrimp in retirement. Still, they will get to be the richest corpses in the graveyard and I guess their beneficiaries will appreciate the money - perhaps *horror* spending it frivolously on life experiences?

It also depends on how you view a 1mil pot ; while that sounds like loads of money you are perhaps looking at a sustainable income of around 30k per annum from that (index linked to inflate each year) so hardly a millionaire lifestyle !

If you've been earning 50-60k pre retirement you're probably not looking at a drop in living standards 

If you've been used to earning 100k and  drop to 30k that will likely be a noticeable change in lifestyle 

We are aiming for no change in lifestyle so are balancing payments into the pension today with spare money now vs our expected pot and therefore income 

We are also factoring in the kids getting more expensive but things like mortgage falling away 

If we accumulate excess we help the kids out - better that than coming up.short 

It's a reasonable goal to aim for no change in lifestyle when you're retired, however I really don't think you need to have a pension pot that will pay your current net salary amount.
In my case I have the following monthly outgoings that I will no longer contribute to in retirement:
Pension Contributions: £1133
Mortgage Payment: £1319
Life Assurances: £87
Car Loan: £275
--------------------------- 
So I can 'earn' £2814 per month less in retirement with zero impact to my lifestyle. That's £33, 678 per year.
I will also not be contributing to my kids university attendance, I won't be paying for them to come on holiday with us, I will not be paying for their food. I will have cheaper utility bills with the kids not living at home. Most importantly I won't be living in a large family home, so my utility bills (and council tax will be cheaper). Let's say that this shaves another £300pm off my outgoings.  So I now don't need to earn £3114 per month (£2814 + £300) or £37,368 per annum.
------------------
I generally work from home, but a commuter could shave a lot more off that monthly amount as they won't be buying a rail season ticket or petrol/parking. The wear and tear on their car would be less too, so fewer and cheaper services and you can run the same car for a decade without worry.
---------------------
There are an awful lot of costs that we incur just so we can work. It really is a case of "Living to work" instead of "Working to Live". This is why I think people should concentrate on the amount of income they need each year rather than having some vague aim to store away huge pension pot that will most likely be spent by their beneficiaries.

I think your approach is shared with many others on this forum including me. No mortgage, no pension, no NI and no kids makes a huge difference. Depends on individual circumstances but a lot of folks will be able to maintain the same standard of living in retirement on 50% or less of working income if they no longer have these big items. 

pensionpawn

shinytop said:

Pile_o_stone said:

Mistermeaner said:

Pile_o_stone said:

I find it interesting to read these pension pot threads, especially posts from people who are aiming for or already have large retirement pots (circa £1m) and whose posts contain sentences like "sacrificed for years", "scrimped and saved for years", "went without for years" etc. etc.
It makes me wonder just what they intend to do with all this money? Someone who spent all their younger days scrimping and doing without is hardly going to change in retirement and start travelling the world and gaining experience. I don't see someone who didn't travel or accumulate experiences when they were young, fit and confident, suddenly start doing it when they're old. They will more than likely stay in that same mindset and continue to scrimp in retirement. Still, they will get to be the richest corpses in the graveyard and I guess their beneficiaries will appreciate the money - perhaps *horror* spending it frivolously on life experiences?

It also depends on how you view a 1mil pot ; while that sounds like loads of money you are perhaps looking at a sustainable income of around 30k per annum from that (index linked to inflate each year) so hardly a millionaire lifestyle !

If you've been earning 50-60k pre retirement you're probably not looking at a drop in living standards 

If you've been used to earning 100k and  drop to 30k that will likely be a noticeable change in lifestyle 

We are aiming for no change in lifestyle so are balancing payments into the pension today with spare money now vs our expected pot and therefore income 

We are also factoring in the kids getting more expensive but things like mortgage falling away 

If we accumulate excess we help the kids out - better that than coming up.short 

It's a reasonable goal to aim for no change in lifestyle when you're retired, however I really don't think you need to have a pension pot that will pay your current net salary amount.
In my case I have the following monthly outgoings that I will no longer contribute to in retirement:
Pension Contributions: £1133
Mortgage Payment: £1319
Life Assurances: £87
Car Loan: £275
--------------------------- 
So I can 'earn' £2814 per month less in retirement with zero impact to my lifestyle. That's £33, 678 per year.
I will also not be contributing to my kids university attendance, I won't be paying for them to come on holiday with us, I will not be paying for their food. I will have cheaper utility bills with the kids not living at home. Most importantly I won't be living in a large family home, so my utility bills (and council tax will be cheaper). Let's say that this shaves another £300pm off my outgoings.  So I now don't need to earn £3114 per month (£2814 + £300) or £37,368 per annum.
------------------
I generally work from home, but a commuter could shave a lot more off that monthly amount as they won't be buying a rail season ticket or petrol/parking. The wear and tear on their car would be less too, so fewer and cheaper services and you can run the same car for a decade without worry.
---------------------
There are an awful lot of costs that we incur just so we can work. It really is a case of "Living to work" instead of "Working to Live". This is why I think people should concentrate on the amount of income they need each year rather than having some vague aim to store away huge pension pot that will most likely be spent by their beneficiaries.

I think your approach is shared with many others on this forum including me. No mortgage, no pension, no NI and no kids makes a huge difference. Depends on individual circumstances but a lot of folks will be able to maintain the same standard of living in retirement on 50% or less of working income if they no longer have these big items. 

Agree 100%. We've brought up three daughters. One has already bought a house and moved out with her boyfriend (and we saw a real drop in our water bill!), another is buying a house with her boyfriend and will be gone by the end of the year. The third is going to university soon and will need supporting for just under three years and then it's just me and the wife, although we'll be empty nest during term time from September. Our plan has been to dump into our pensions sufficiently to enable both of us to be able to draw down our personal allowance each year as a minimum. Coupled with effectively no energy bills, due to a large solar installation,  the reduction in outgoings (which is a net gain) is better than trying to achieve a gross increase above the personal allowances. Also the wife has already qualified for her full SP as will I in 12 months. Our plan is to 'retire' as soon as our daughter graduates and we firmly believe that by minimising our mandatory outgoings we will be quite comfortable on £25k pa tax free, even thought that is much less than we take home now. If we occasional need more for the odd capital cost my pension will be able to accommodate. Of course the more in the pot the more comfortable one must feel, however for us enjoying the journey to retirement, especially with kids, was more important than maximising the pension, as is maximising the time available to enjoy retirement.

[Deleted User]

AnotherJoe said:

Novice_investor101 said:

I’m single, 38 years old & will get a full state pension from 68 & also a DB of £3.5k (or that’s what it was about 3 years ago when I asked, will be more now, Index linked) from 65. 

I was a bit late to the DC party as my old employer ran the DBscheme. 

I have just over £20k in my DC now, after 3.5 years, maxing out my works contribution. Invested in 100% equities as I won’t touch it til I’m at least 60-65. 

No idea what it’ll be worth come retirement, hopefully as much as possible! I will start to dial down the risk at about age 55. 

At least you have plenty of time to work out that's probably a bad idea. Dialling down the risk is appropriate if you are going to be buying an annuity and tahst why it was the standard thing to do for many years. But few are buying annuities aged 60-65 now.

If you will be invested for another 20-30 years after 55 then dialling it down would likely provide you substandard performance. If I'd dialled down my risk levels 10 years ago I'd probably have 30% maybe less, what i have now.

Disagree. You are much more vulnerable to bear markets as you approach retirement even if you plan to invest for 30 years after retirement. Bears and 100% equity portfolios are good for young people who are buying cheaper shares. Youngsters have lots of long term fixed income: its called a salary. 

Those approaching deaccumulation phase are vulnerable if they have zero fixed income.