Where to start re pensions and retirement?

ChrissieJames

Husband is thinking of retiring in the next 5 years. He has built up a good amount of savings but we currently have high outgoings. These should reduce significantly when the kids leave school/home within the next 5 years.   He is 58, so over the pension age and I am 52.  Some basic questions (and apologies that these are so basic!).  Trying to work out things like when he can retire, whether we would need to sell our property, etc and finding it very confusing.  Have read lots of positives and negatives about IFAs and cashflow planning, but would like to get more of a basic understanding before deciding whether I need to pay someone to help.  So a couple of initial questions:
1.  When working out how much income we might get in retirement, do I add up all his and my ISAs and pension pots together? (I don't currently have a paid job).
2.  Do I then just google a pension calculator to work out how much this can give as an annual income? Is there one that is particularly good?
3. Is there a basic guide which anyone recommends which would be a good starting point?

Many thanks
CJ

p00hsticks

1. You'll also need to get a state pension forecast for each of you https://www.gov.uk/check-state-pension (and then consider if you can improve it further by making voluntary NI contributions)

BritishInvestor

ChrissieJames said:

Husband is thinking of retiring in the next 5 years. He has built up a good amount of savings but we currently have high outgoings. These should reduce significantly when the kids leave school/home within the next 5 years.   He is 58, so over the pension age and I am 52.  Some basic questions (and apologies that these are so basic!).  Trying to work out things like when he can retire, whether we would need to sell our property, etc and finding it very confusing.  Have read lots of positives and negatives about IFAs and cashflow planning, but would like to get more of a basic understanding before deciding whether I need to pay someone to help.  So a couple of initial questions:
1.  When working out how much income we might get in retirement, do I add up all his and my ISAs and pension pots together? (I don't currently have a paid job).
2.  Do I then just google a pension calculator to work out how much this can give as an annual income? Is there one that is particularly good?
3. Is there a basic guide which anyone recommends which would be a good starting point?

Many thanks
CJ

2. Whichever tool you use it's key that you understand the assumptions that are used to create the projection
3. This book is an easy introduction into creating your own financial plan. 
https://www.amazon.co.uk/gp/product/B01N64B38N/ref=dbs_a_def_rwt_bibl_vppi_i0

Albermarle

One thing to check is that not all pensions are the same . If they are all simple DC pensions , then you can can just add all the amounts together and also add any money in Stocks and shares ISA's. Assuming that the pensions and ISA's are invested in medium risk funds , you should be able to safely withdraw 3.5% of this total pot pa ( rising with inflation) and in theory it should not run out before you die.
Separately you should have cash savings for emergencies and to help fund your income during market downturns .
This is a very simplified version and as suggested above more reading will help . Also this site might be of use.
https://www.pensionsadvisoryservice.org.uk/
Also you can have a free discussion here
https://www.pensionwise.gov.uk/en

NedS

As retirement is a few years off yet, I would start by recording a detailed record/spreadsheet of all your income and expenditure. Knowing what you currently have coming in and what you spend it on will help you plan and give you a good starting point for how much money you will need in retirement. As you've highlighted, some of that expenditure will change (like kids leave home) but it gives you a starting point. You can then start to plan how your assets may meet your expenditure needs, and if you have accumulated enough assets (pensions, ISAs, savings etc). Once the numbers add up, hopefully you are good to go.

MEM62

ChrissieJames said:

Trying to work out things like when he can retire, whether we would need to sell our property, etc and finding it very confusing.  

That very statement it telling you that you need an IFA. 
Financial planning is like anything else in life, if you have the skills you can DIY, if you don't then you need to get an expert in.  With respect, it is clear that you knowledge is limited and in situations like yours an IFA will benefit you far more than he costs you.  Ignore the horror stories relating to IFA's - these belong in the past and we now live in a different world.       

crv1963

I agree with all the above! It is daunting at first, so to give my view in answering your points-

1) Work out your starting point, what have you got, where is it and when does it pay out? List all of the different pensions/ savings/ get up to date values- write or ring to request them if you don't get annual statements. Check your State Pension Forecasts.
2) The answers to (1) will inform you of the answer to this.
3) I'd read through several of the threads on here to learn a bit more about the different things people save into, suggest and avoid. I also would recommend a couple of books by John Edwards= DIY Pensions and DIY Simple Investing, easy to read and understand. Also don't be put off by some of the large figures banded about here, or some of the savings slaves, there are some eye watering figures but we just concentrated on our needs - which to some are large and to others modest, it really is an individual process, following a common defined set of current rules (tax law).

When you know what you have and when, work out how much you think you will need in retirement in todays money. We looked at three figures- i) Basic survive and live, ii) Comfortable which includes a couple holidays abroad and iii) Luxury- as (ii) but with a couple long haul holidays and possible help out children. We aimed for (iii) but will likely land in the upper part of (ii) when we pull the earnings plug.

Then once you know what you want/ need and what you have you can plan to make up any shortfall, using a number of tax efficient vehicles be that Pensions, ISA or other. Don't forget in your calculations to also work out what each other will get as the survivor of the other- no good all the assets being in one persons name as that is unlikely to be tax effective. We're putting money into Mrs CRV SIPP to try to balance our retirement income.

There is a place for an IFA if you feel that you really can't decide, understand or want individual tailored advice, they are good at getting you to put enough money into whatever is the best vehicle to meet your goals, but a clear knowledge of where you are and what you want to go to are important. You also don't have to have ongoing advice but it may have a place in your plans. Only you can answer that I'm afraid. If you research and read up at least you'll have an understanding of what they are suggesting if you use one.

From our viewpoint the accumulation stage is quite straightforward, we're saving as much as we can as effectively as we can, for Mrs CRV the drawdown stage is what concerns her if I'm deceased or incapacitated, at that point she may need an IFA. However it is each to their own, some swear by IFAs some don't. I don't get put off by others negative views but form my own view.

Hope this helps.