How much to live on

PennyForThem_2

Yes, feel the same as BooJewels.  Luckily my pensions and my dead husband's pension are DB and annuity - so I don't have to think about them.  I could not deal with the stress of a SIPP I had to manage to survive - and big kudos to those that do manage their own SIPP.

So Kim1965 has a solution - as long as his brother is able to do that - and, Kim1965, what happens when he cannot?

BooJewels

I don't actually have any pensions or an annuity - I don't even know what one is.  I'm self employed and got my late husband's pensions back as lump sums - they wouldn't retain them as a pension or let me transfer or re-invest the pot.    I have however sorted my state pension and paid all the missing years that I could and as long as I pay three of the last remaining years before I reach age, I'll get a full state pension - plus some protected payment of my husband's.

My mortgage was paid off a little while ago with a critical illness policy when my husband was diagnosed and my living costs are pretty low now - as I have no borrowing outstanding, everything is paid off.  The only worry really is inflation - it was something like 2.2% when I did all my working out, so those plans are totally blown out of the water now.

Albermarle

I could not deal with the stress of a SIPP I had to manage to survive -

Maybe you have an idea that managing a SIPP means studying the FT everyday, in between shouting 'buy' or 'sell' down the phone. 

In reality for most people, it means picking an off the shelf investment, or two or three very simple ones, and then leave them alone for 20 years, apart from adding new contributions regularly, which are automatically allocated to the existing investments.

Then maybe a few years from retirement, some tweaking of the investment balance. It gets a bit more complicated when you actually start taking the pension, but that is as much down to admin/process/tax than the actual investments. 

In fact most peoples DC ( almost same as a SIPP ) pension are with their employer, and here you do not even have to choose an investment if you do not want to, as it will default to a standard one. The vast majority of these workplace pensions are not managed at all. Although remaining completely ignorant of what is going on with ones' pension is not ideal of course !

So it needs some thought/reading, but it's not rocket science.

I have a DB and DC/SIPP, so I can see the pros and cons of both.

Kim1965

PennyForThem_2 said:

Yes, feel the same as BooJewels.  Luckily my pensions and my dead husband's pension are DB and annuity - so I don't have to think about them.  I could not deal with the stress of a SIPP I had to manage to survive - and big kudos to those that do manage their own SIPP.

So Kim1965 has a solution - as long as his brother is able to do that - and, Kim1965, what happens when he cannot?

I am trying to bring myself up to speed. But if he could no longer manage them i think i could. I could certainly pick a suitable off the shelf product. 
 Having read the many threads i am aware of safe withdrawal rates, sequence of return risks, the need for cash buffers. I am prepared to retire and then go back to part time work in the event of a stock market crash rather than blindly drawing down my sipp. I also have smallish db pension. 
 Im always telling my bro to drink in moderation and watch his salt intake lol. 
 I dont think yiu need to be an investment expert (it would help tho) but a person with dc pensions must have some basic knowledge to avoid making howlers. As dc pensions vis auto enrolement become more numerous the public in general require more knowledge. 

PennyForThem_2

Pandemic - SIPPs went down fast about 20-25% ish - stress!  (I know that most are back to pre pandemic levels and also increasing in value)

Inflation 10%+ - SIPP may or maynot be keeping up and if retired do you increase your drawdown???

How long am I going to live and will my SIPP last?????  Stress again.  Yes, spending MAY go down as get older but there are other calls - instead of holidays, care packages, people to do basic cleaning, gardening.

Just my take on SIPPs and DC pensions when get to age you need to access them.

sunnyflower

[Deleted User] said:

Good morning all. Just a little update from me. This will be the last for a little while as I have decided to visit these boards far less often in the coming months.

As for the 'upgraded me' the cosmetic dental work is complete and my wardrobe sorted and updated! I have also ordered a further two pairs of spectacles (One pair being subscription sunglasses) both pairs at half price. I now have several pairs to suit my mood and dress!

My outfit for the family wedding in October is now complete . I have paid for the cruise in October. I will arrange hotel. accommodation and trips for my week n Vancouver next March early in January. I have already paid for the flight. Final payments for the Cyprus villa next May and the cruise in September 2023 are not required for months yet. I will also book the flights to Paphos when BA makes them available.

On a more practical note I have also spent time arranging a funeral plan, buying a burial plot and updating my will. Sounds a bit morbid but with all that sorted I can concentrate on living!

Finances are fine even though my savings will have taken a big hit as the result of my recent 'upgrades' and putting recent plans into action. However it is all manageable. I have a part-time teaching contract until December 31st. I will then make a decision about making retirement full or continuing with the semi-retirement. The extra-income will provide a further buffer, although not essential.

Outstanding plans for the summer holiday include painting one spare room, keeping  the garden as tidy as possible.(the long period of dry weather has left me with a brown patchy lawn but it will return when the rain finally comes!)

Plans for spare time activities include increased amount of reading, to finally get around to doing my Art, French and German courses for which I have  had the books and DVDs for nearly 2 years! On top of all this  doing some exercise,(I may return to the swimming pool 3 or 4 times a month, not been since pre-Covid times!), keeping the house clean and tidy and likewise for the garden. Along with my part-time contract, I will be busy but happy.

For years I was someone who never seemed to have a lot of spare money and who made some foolish financial decisions.
However, I did manage to buy my house and keep fairly solvent.
I am very fortunate that I paid into an index linked DB pension(although for most of the time I had no idea what that meant!). I will also have paid enough NI to ensure an almost full (bar a few pence!) new state pension from 2024. 

So now to the future with a few thousand spare in the bank and a future retirement income that should be fine.

Thank you all for your past comments and inspiration. As I said, I will occasionally check-in, but now want to concentrate on the future and avoid the 'what ifs' and 'if onlys' as well as the occasional 'envy' that reading these boards can sometimes cause in myself.

To all of those who worry about retirement don't let those worries hold you back. Budget and plan. You really don't need the huge amounts sometimes suggested by the 'other place'. Remember maximising financial gain should not be the be all and end all of everything.

Best wishes to you all!
 

Kim1965 said:

BooJewels said:

Thanks @Albermarle - what you suggest makes sense, but you'd need to know what you're doing to manage it yourself - or even start the process. I don't, nor do I especially want to learn either. I don't need the stress.

My own thinking is that I'd rather put energy into earning more pennies now, so that I don't have to dib into my funds as much. But that's my choice, not financial advice.

Luckily my brother does my dc pots, one for passive income, one for growth. 
However I understand there are many "off the shelf product", pick your risk profile and away you go. Just got to make sure the fees are reasonable.
 The point about final salary schemes is made well, if your not financially savvy then gaureteed income is the best and helps a person sleep well at night. 
 Like you i feel the need to work a bit longer during the present turmoil. 
 With annuity rates climbing they become more attractive, especially if inheritance is not a consideration and inflation settles down. 
 

You're so organised & on it Baron, have a wnderful time!

Albermarle

PennyForThem_2 said:

Pandemic - SIPPs went down fast about 20-25% ish - stress!  (I know that most are back to pre pandemic levels and also increasing in value)

Inflation 10%+ - SIPP may or maynot be keeping up and if retired do you increase your drawdown???

How long am I going to live and will my SIPP last?????  Stress again.  Yes, spending MAY go down as get older but there are other calls - instead of holidays, care packages, people to do basic cleaning, gardening.

Just my take on SIPPs and DC pensions when get to age you need to access them.

Clearly for most people, a DB pension is better. However the main reason for this is that the employer ( or taxpayer in the case of public sector pensions) funds these DB pensions at a much higher level ( 25% to 30% of salary) than the typical, DC scheme ( 3% to 10% )
Of course the DB can also be less stressful for those of a nervous disposition.

hobo_baggins

Albermarle said:

Of course the DB can also be less stressful for those of a nervous disposition.

I recently re-structured my pension provision so that I had sufficient DB income from State Retirement Age to live comfortably as I was nervous about managing my SIPP & ISA (investment and drawdown decisions) from 70 onwards (even though I do consider myself reasonably well informed in the area of Investing).   I was fortunate that I work in local government and was able to transfer in an old pension that will provide a significant DB boost when I retire.   I have some SIPP/ISA provision which means I could use this for early retirement bridging and/or use as top up income once I receive State/DB pensions but the key for me was knowing I would have secure income later in life so I planned on boosting my DB pension to the level that I was covered (I will not be rich by any means but I should have enough to cover my living costs + the other modest plans I have).

It's all down to your individual circumstances, plans and risk tolerance of course.  I do think though that being heavily reliant on a DC pension or SIPP, as many will be nowadays, will by quite difficult to manage for the average person (especially if there is a stock market downturn at the time you need to start drawing on those funds).  I read about the various strategies to manage this risk and it is not straight forward (I will still have these issues to manage with my SIPP/ISA but I will be able to afford not to take any income if I do not need to which will not be the case for many unfortunately).

PennyForThem_2

hobo_baggins said:

Albermarle said:

Of course the DB can also be less stressful for those of a nervous disposition.

I recently re-structured my pension provision so that I had sufficient DB income from State Retirement Age to live comfortably as I was nervous about managing my SIPP & ISA (investment and drawdown decisions) from 70 onwards (even though I do consider myself reasonably well informed in the area of Investing).   I was fortunate that I work in local government and was able to transfer in an old pension that will provide a significant DB boost when I retire.   I have some SIPP/ISA provision which means I could use this for early retirement bridging and/or use as top up income once I receive State/DB pensions but the key for me was knowing I would have secure income later in life so I planned on boosting my DB pension to the level that I was covered (I will not be rich by any means but I should have enough to cover my living costs + the other modest plans I have).

It's all down to your individual circumstances, plans and risk tolerance of course.  I do think though that being heavily reliant on a DC pension or SIPP, as many will be nowadays, will by quite difficult to manage for the average person (especially if there is a stock market downturn at the time you need to start drawing on those funds).  I read about the various strategies to manage this risk and it is not straight forward (I will still have these issues to manage with my SIPP/ISA but I will be able to afford not to take any income if I do not need to which will not be the case for many unfortunately).

Thank you, hobo-baggins - that is exactly where I am coming from.  

Albermarle

hobo_baggins said:

Albermarle said:

Of course the DB can also be less stressful for those of a nervous disposition.

I recently re-structured my pension provision so that I had sufficient DB income from State Retirement Age to live comfortably as I was nervous about managing my SIPP & ISA (investment and drawdown decisions) from 70 onwards (even though I do consider myself reasonably well informed in the area of Investing).   I was fortunate that I work in local government and was able to transfer in an old pension that will provide a significant DB boost when I retire.   I have some SIPP/ISA provision which means I could use this for early retirement bridging and/or use as top up income once I receive State/DB pensions but the key for me was knowing I would have secure income later in life so I planned on boosting my DB pension to the level that I was covered (I will not be rich by any means but I should have enough to cover my living costs + the other modest plans I have).

It's all down to your individual circumstances, plans and risk tolerance of course.  I do think though that being heavily reliant on a DC pension or SIPP, as many will be nowadays, will by quite difficult to manage for the average person (especially if there is a stock market downturn at the time you need to start drawing on those funds).  I read about the various strategies to manage this risk and it is not straight forward (I will still have these issues to manage with my SIPP/ISA but I will be able to afford not to take any income if I do not need to which will not be the case for many unfortunately).

Your strategy makes perfect sense, but as I have highlighted in bold, being a member of an existing public sector scheme, where you can buy extra DB pension at a preferential rate, is the key factor in making it work . For those with DC only, the only option to gain more guaranteed income is to buy an annuity. These have been poor value although they have been improving recently and are becoming more of an option again. Although to buy an annuity with all the bells and whistles of a public sector pension, would still be prohibitively expensive.