How cash rich should we aim to be at retirement?

BritishInvestor

scdandem said:

molerat said:

I look at it as having enough for a new car + new boiler + new roof in easily accessible, not necessarily instantly accessible, liquid funds that are not subject to the whims of the market tanking on the day you need them which covers you for all those emergencies that could happen.

Thanks! That's the sort of thing I was looking for. I found the Which? survey really helpful to show what a basic, moderate and comfortable retirement would look like in terms of changing the car every X years, holidays abroad (or not), clothing, replacing white goods, leisure, food etc. I know it's very broad but it does give a sense of direction and whether you're on track or not. I just wondered if anyone had seen any articles/advice along those lines relating to what cash savings pot to aim for.

Was the Which report based on this or separate?

https://www.lboro.ac.uk/media-centre/press-releases/2019/october/retirement-living-standards/

squirrelpie

BritishInvestor said:

A diversified portfolio will contain more than just equities and if the equity market falls it may well be that you are buying equities (as well as taking withdrawals from the non-equity part of the portfolio) to ensure you remain aligned to your desired asset allocation.

It would probably help if you were clearer about the point that you seem to want to make.

But if you have a diversified portfolio and part of the markets you are invested in fall, then as and when it comes time to rebalance and if the same condition persists, then you may need to sell some of the well-performing assets and buy some of the poorly-performing ones in order to rebalance the portfolio. Always assuming that you have determined the reason for the imbalance is not due to an inherent weakness in part of the market as an asset class. If you are also taking withdrawals from the portfolio then that will complicate the decisions further, but these are all well-understood principles.

It really doesn't matter whether we are discussing equities, bonds, gold, classic cars, fine wine or what. All can go up and all can come down.

scdandem

Albermarle said:

If the majority of income is guaranteed ( DB + state pensions) the need for a cash buffer is reduced so maybe you have enough.
However cash is cash and  apparently low risk investments are not the same as cash. Unless they are very low risk like Gilts but then you get a better return in a savings account/premium bonds anyway 

Thank you. So I currently have a sum of about £12k sat in my current account and regularly have a few thousand every few months and struggle with what to do every time. I currently have have options of DC fund, S&S Isa and Cash ISA and have recently thought about adding premium bonds into the mix. We're always being told that tax relief on pensions is a no brainer and to put as much as possible in there, but I'm nervous of doing that and ending up with insufficient cash access. 
I think "a little bit of knowledge is a dangerous thing" definitely applies here! 

scdandem

BritishInvestor said:

scdandem said:

molerat said:

I look at it as having enough for a new car + new boiler + new roof in easily accessible, not necessarily instantly accessible, liquid funds that are not subject to the whims of the market tanking on the day you need them which covers you for all those emergencies that could happen.

Thanks! That's the sort of thing I was looking for. I found the Which? survey really helpful to show what a basic, moderate and comfortable retirement would look like in terms of changing the car every X years, holidays abroad (or not), clothing, replacing white goods, leisure, food etc. I know it's very broad but it does give a sense of direction and whether you're on track or not. I just wondered if anyone had seen any articles/advice along those lines relating to what cash savings pot to aim for.

Was the Which report based on this or separate?

https://www.lboro.ac.uk/media-centre/press-releases/2019/october/retirement-living-standards/

I believe it was based on that, yes

Albermarle

scdandem said:

Albermarle said:

If the majority of income is guaranteed ( DB + state pensions) the need for a cash buffer is reduced so maybe you have enough.
However cash is cash and  apparently low risk investments are not the same as cash. Unless they are very low risk like Gilts but then you get a better return in a savings account/premium bonds anyway 

Thank you. So I currently have a sum of about £12k sat in my current account and regularly have a few thousand every few months and struggle with what to do every time. I currently have have options of DC fund, S&S Isa and Cash ISA and have recently thought about adding premium bonds into the mix. We're always being told that tax relief on pensions is a no brainer and to put as much as possible in there, but I'm nervous of doing that and ending up with insufficient cash access. 
I think "a little bit of knowledge is a dangerous thing" definitely applies here! 

Pension is a no brainer if you are employed to get the free employer contributions . It is also mainly a no brainer if you are a higher rate taxpayer . Otherwise basic rate taxpayers see a minimum 6.25% tax benefit from a pension but it is not accessible until 55 at the earliest . If you are close to 55 then hard to argue against pension .Remember though that with pensions and S&S ISA's what is also very important is the actual investments your money is in within the Pension/Isa.
I would not bother with cash Isa, Premium bonds are better at the moment .

scdandem

Albermarle said:

scdandem said:

Albermarle said:

If the majority of income is guaranteed ( DB + state pensions) the need for a cash buffer is reduced so maybe you have enough.
However cash is cash and  apparently low risk investments are not the same as cash. Unless they are very low risk like Gilts but then you get a better return in a savings account/premium bonds anyway 

Thank you. So I currently have a sum of about £12k sat in my current account and regularly have a few thousand every few months and struggle with what to do every time. I currently have have options of DC fund, S&S Isa and Cash ISA and have recently thought about adding premium bonds into the mix. We're always being told that tax relief on pensions is a no brainer and to put as much as possible in there, but I'm nervous of doing that and ending up with insufficient cash access. 
I think "a little bit of knowledge is a dangerous thing" definitely applies here! 

Pension is a no brainer if you are employed to get the free employer contributions . It is also mainly a no brainer if you are a higher rate taxpayer . Otherwise basic rate taxpayers see a minimum 6.25% tax benefit from a pension but it is not accessible until 55 at the earliest . If you are close to 55 then hard to argue against pension .Remember though that with pensions and S&S ISA's what is also very important is the actual investments your money is in within the Pension/Isa.
I would not bother with cash Isa, Premium bonds are better at the moment .

Thanks so much for that. I'm 55 next and own the company that pays the contributions, so (I think that means) I save on CT and gain the tax relief too? I have £50k in a balanced portfolio with True Potential which has bounced back well after the March dip, and £25k in an instant access cash ISA which is basically shrinking! 
I've been reading about premium bonds and am tempted to move the £25k funds from my Cash ISA into them (on the thinking that cash ISAs are not that important these days with the £1000 interest allowance?) and split the £12k and other regular surplus 70/30 between my (Royal London) DC and S&S ISA. Am I on the right lines?

Prism

scdandem said:

Albermarle said:

scdandem said:

Albermarle said:

If the majority of income is guaranteed ( DB + state pensions) the need for a cash buffer is reduced so maybe you have enough.
However cash is cash and  apparently low risk investments are not the same as cash. Unless they are very low risk like Gilts but then you get a better return in a savings account/premium bonds anyway 

Thank you. So I currently have a sum of about £12k sat in my current account and regularly have a few thousand every few months and struggle with what to do every time. I currently have have options of DC fund, S&S Isa and Cash ISA and have recently thought about adding premium bonds into the mix. We're always being told that tax relief on pensions is a no brainer and to put as much as possible in there, but I'm nervous of doing that and ending up with insufficient cash access. 
I think "a little bit of knowledge is a dangerous thing" definitely applies here! 

Pension is a no brainer if you are employed to get the free employer contributions . It is also mainly a no brainer if you are a higher rate taxpayer . Otherwise basic rate taxpayers see a minimum 6.25% tax benefit from a pension but it is not accessible until 55 at the earliest . If you are close to 55 then hard to argue against pension .Remember though that with pensions and S&S ISA's what is also very important is the actual investments your money is in within the Pension/Isa.
I would not bother with cash Isa, Premium bonds are better at the moment .

Thanks so much for that. I'm 55 next and own the company that pays the contributions, so (I think that means) I save on CT and gain the tax relief too? I have £50k in a balanced portfolio with True Potential which has bounced back well after the March dip, and £25k in an instant access cash ISA which is basically shrinking! 
I've been reading about premium bonds and am tempted to move the £25k funds from my Cash ISA into them (on the thinking that cash ISAs are not that important these days with the £1000 interest allowance?) and split the £12k and other regular surplus 70/30 between my (Royal London) DC and S&S ISA. Am I on the right lines?

Saving on corporation tax is the tax relief. There is no payment of income tax or national insurance on pension contributions.

scdandem

Prism said:

scdandem said:

Albermarle said:

scdandem said:

Albermarle said:

If the majority of income is guaranteed ( DB + state pensions) the need for a cash buffer is reduced so maybe you have enough.
However cash is cash and  apparently low risk investments are not the same as cash. Unless they are very low risk like Gilts but then you get a better return in a savings account/premium bonds anyway 

Thank you. So I currently have a sum of about £12k sat in my current account and regularly have a few thousand every few months and struggle with what to do every time. I currently have have options of DC fund, S&S Isa and Cash ISA and have recently thought about adding premium bonds into the mix. We're always being told that tax relief on pensions is a no brainer and to put as much as possible in there, but I'm nervous of doing that and ending up with insufficient cash access. 
I think "a little bit of knowledge is a dangerous thing" definitely applies here! 

Pension is a no brainer if you are employed to get the free employer contributions . It is also mainly a no brainer if you are a higher rate taxpayer . Otherwise basic rate taxpayers see a minimum 6.25% tax benefit from a pension but it is not accessible until 55 at the earliest . If you are close to 55 then hard to argue against pension .Remember though that with pensions and S&S ISA's what is also very important is the actual investments your money is in within the Pension/Isa.
I would not bother with cash Isa, Premium bonds are better at the moment .

Thanks so much for that. I'm 55 next and own the company that pays the contributions, so (I think that means) I save on CT and gain the tax relief too? I have £50k in a balanced portfolio with True Potential which has bounced back well after the March dip, and £25k in an instant access cash ISA which is basically shrinking! 
I've been reading about premium bonds and am tempted to move the £25k funds from my Cash ISA into them (on the thinking that cash ISAs are not that important these days with the £1000 interest allowance?) and split the £12k and other regular surplus 70/30 between my (Royal London) DC and S&S ISA. Am I on the right lines?

Saving on corporation tax is the tax relief. There is no payment of income tax or national insurance on pension contributions.

Ah yes of course. I'm getting mixed up with the tax relief on the personal contributions I make.

Sea_Shell

scdandem said:

molerat said:

I look at it as having enough for a new car + new boiler + new roof in easily accessible, not necessarily instantly accessible, liquid funds that are not subject to the whims of the market tanking on the day you need them which covers you for all those emergencies that could happen.

Thanks! That's the sort of thing I was looking for. I found the Which? survey really helpful to show what a basic, moderate and comfortable retirement would look like in terms of changing the car every X years, holidays abroad (or not), clothing, replacing white goods, leisure, food etc. I know it's very broad but it does give a sense of direction and whether you're on track or not. I just wondered if anyone had seen any articles/advice along those lines relating to what cash savings pot to aim for.

Sorry, i think the heat must be getting to me.   I made a badly researched post. 

scdandem

Sea_Shell said:

scdandem said:

molerat said:

I look at it as having enough for a new car + new boiler + new roof in easily accessible, not necessarily instantly accessible, liquid funds that are not subject to the whims of the market tanking on the day you need them which covers you for all those emergencies that could happen.

Thanks! That's the sort of thing I was looking for. I found the Which? survey really helpful to show what a basic, moderate and comfortable retirement would look like in terms of changing the car every X years, holidays abroad (or not), clothing, replacing white goods, leisure, food etc. I know it's very broad but it does give a sense of direction and whether you're on track or not. I just wondered if anyone had seen any articles/advice along those lines relating to what cash savings pot to aim for.

But just think how many permutations of "comfortable" different people would consider out of those categories?

Is that new car a Ford or a Mercedes?
Are those holidays Europe or Long Haul?
Are those clothes Primark or Designer?

Someone could have a very "comfortable" retirement on the first items, and for some, they would definitely want everything in the second item list!!

Absolutely, it's very subjective, but the report does state how much they have allocated to each category, so at least it gives you a starting point to work things out more closely to your own requirements.