How much to live on

Albermarle

daz378 said:

I'm in care...got a 10% rise...even backdated to last  April...a good firm  but so short staffed...its just assumed you will take up the slack.  no acknowledgement...but something not done...you get  told off...2026   will have 25 years lgps... xmas no time off taken for granted....so even at 60 if I get 2/3  of monthly pay may pull trigger...and  part time to supplement income...will work when I want to....so tired

Normally if you can generate 2/3 of monthly gross pay in retirement, you get more than 2/3 of net/take home pay. As you proportionately pay a bit less tax, no NI and no pension contributions.
Even 50% of gross pay can often provide 2/3 of take home pay.

Organgrinder

Albermarle said:

daz378 said:

I'm in care...got a 10% rise...even backdated to last  April...a good firm  but so short staffed...its just assumed you will take up the slack.  no acknowledgement...but something not done...you get  told off...2026   will have 25 years lgps... xmas no time off taken for granted....so even at 60 if I get 2/3  of monthly pay may pull trigger...and  part time to supplement income...will work when I want to....so tired

Normally if you can generate 2/3 of monthly gross pay in retirement, you get more than 2/3 of net/take home pay. As you proportionately pay a bit less tax, no NI and no pension contributions.
Even 50% of gross pay can often provide 2/3 of take home pay.

Very true.

It shocks many that their total deductions are about 40% of anything above the tax free allowance. Someone earning £50,000 sees almost 32% of their income deducted from their salary, assuming pension of 10%. This gives a net income of £2835/month.

For them to see 2/3 (£1890) in retirement, their pension needs to £25,200.

I see so many people who for years have lived a good lifestyle and have mortgage and travel to work costs (and children) consuming 1/3 of their salary who insist they need at least 2/3 of the gross salary to retire. Some end up working too long to enjoy the benefits.

jackieblack

Just done some very basic sums. 

In very simple and basic terms…

It looks like £10k pa to live on is do-able for me. This is approx 2/3 of my current income and means I should be able to save about £400pm.

If I took my pension early, in just over 5 years time, I think I should get around £5k pa. 
£400 pm saved for the next 5 years is not far short of the £5k pa shortfall and, supplemented with a little part-time/seasonal work, should roughly fill that gap 🤷🏻‍♀️ .

So, very basically, every month going forward under this plan would be a month’s future shortfall bridged, roughly halving the time between now and my State Pension date… or am I missing something?  

I have some savings, these should be sufficient to cover one-off unexpected expenses/emergencies. 

Obviously things outside my control such as inflation and interest rates will have an effect on this, but I’m looking in broad terms for now…

WYSPECIAL

jackieblack said:

Just done some very basic sums. 

In very simple and basic terms…

It looks like £10k pa to live on is do-able for me. This is approx 2/3 of my current income and means I should be able to save about £400pm.

If I took my pension early, in just over 5 years time, I think I should get around £5k pa. 
£400 pm saved for the next 5 years is not far short of the £5k pa shortfall and, supplemented with a little part-time/seasonal work, should roughly fill that gap 🤷🏻‍♀️ .

£400 per month saved into a pension would get boosted to £500 per month with tax relief added. £6 k per annum for the next five years would give you a £30k pot without taking into account any investment growth.

jackieblack

WYSPECIAL said:

jackieblack said:

Just done some very basic sums. 

In very simple and basic terms…

It looks like £10k pa to live on is do-able for me. This is approx 2/3 of my current income and means I should be able to save about £400pm.

If I took my pension early, in just over 5 years time, I think I should get around £5k pa. 
£400 pm saved for the next 5 years is not far short of the £5k pa shortfall and, supplemented with a little part-time/seasonal work, should roughly fill that gap 🤷🏻‍♀️ .

£400 per month saved into a pension would get boosted to £500 per month with tax relief added. £6 k per annum for the next five years would give you a £30k pot without taking into account any investment growth.

Thanks, I’m sure you’re right, but I’ve no clue about how I’d go about that and I’m very averse to risk. I know I’d get the tax relief but would it be worth it for just 5 years, with the fees and suchlike? I’ve always understood that investing wasn’t usually worth it for something relatively short term 🤷🏻‍♀️ 

I’d just need what I save over the next 5 and a bit years to ‘bridge the gap’ for the following few years until I get my state pension.

Albermarle

jackieblack said:

WYSPECIAL said:

jackieblack said:

Just done some very basic sums. 

In very simple and basic terms…

It looks like £10k pa to live on is do-able for me. This is approx 2/3 of my current income and means I should be able to save about £400pm.

If I took my pension early, in just over 5 years time, I think I should get around £5k pa. 
£400 pm saved for the next 5 years is not far short of the £5k pa shortfall and, supplemented with a little part-time/seasonal work, should roughly fill that gap 🤷🏻‍♀️ .

£400 per month saved into a pension would get boosted to £500 per month with tax relief added. £6 k per annum for the next five years would give you a £30k pot without taking into account any investment growth.

Thanks, I’m sure you’re right, but I’ve no clue about how I’d go about that and I’m very averse to risk. I know I’d get the tax relief but would it be worth it for just 5 years, with the fees and suchlike? I’ve always understood that investing wasn’t usually worth it for something relatively short term 🤷🏻‍♀️ 

I’d just need what I save over the next 5 and a bit years to ‘bridge the gap’ for the following few years until I get my state pension.

You are right that investing is  for the long term. However you can contribute to a pension and keep it as cash, it will still earn some interest ( although not as much as in a savings account)

So is you add £400 pm to a pension, then each month £100 in tax relief will be added on. So at the end of the year, you will have £6000, instead of £4,800 if you had just added the £400 pm to a savings account. The difference in interest payable will be small compared to the tax relief.
The sort of catch is that when you withdraw from the pension. 25% is tax free and 75% taxable. However if you keep any taxable withdrawal below £12570 per tax year ( £12570 being your personal tax allowance) you will not actually pay any tax.
After 5 years you will have approx. £30,300 in the pension pot as opposed to having approx £24,500 in a savings pot, so nearly £6k of effectively free money.

You can open a new pension online very easily . Your contributions will automatically stay in cash ( unless you do invest them which is probably not a good idea. This is probably the most  suitable provider.

Personal Pension | Vanguard UK Investor (vanguardinvestor.co.uk)

jackieblack

Albermarle said:

jackieblack said:

WYSPECIAL said:

jackieblack said:

Just done some very basic sums. 

In very simple and basic terms…

It looks like £10k pa to live on is do-able for me. This is approx 2/3 of my current income and means I should be able to save about £400pm.

If I took my pension early, in just over 5 years time, I think I should get around £5k pa. 
£400 pm saved for the next 5 years is not far short of the £5k pa shortfall and, supplemented with a little part-time/seasonal work, should roughly fill that gap 🤷🏻‍♀️ .

£400 per month saved into a pension would get boosted to £500 per month with tax relief added. £6 k per annum for the next five years would give you a £30k pot without taking into account any investment growth.

Thanks, I’m sure you’re right, but I’ve no clue about how I’d go about that and I’m very averse to risk. I know I’d get the tax relief but would it be worth it for just 5 years, with the fees and suchlike? I’ve always understood that investing wasn’t usually worth it for something relatively short term 🤷🏻‍♀️ 

I’d just need what I save over the next 5 and a bit years to ‘bridge the gap’ for the following few years until I get my state pension.

You are right that investing is  for the long term. However you can contribute to a pension and keep it as cash, it will still earn some interest ( although not as much as in a savings account)

So is you add £400 pm to a pension, then each month £100 in tax relief will be added on. So at the end of the year, you will have £6000, instead of £4,800 if you had just added the £400 pm to a savings account. The difference in interest payable will be small compared to the tax relief.
The sort of catch is that when you withdraw from the pension. 25% is tax free and 75% taxable. However if you keep any taxable withdrawal below £12570 per tax year ( £12570 being your personal tax allowance) you will not actually pay any tax.
After 5 years you will have approx. £30,300 in the pension pot as opposed to having approx £24,500 in a savings pot, so nearly £6k of effectively free money.

You can open a new pension online very easily . Your contributions will automatically stay in cash ( unless you do invest them which is probably not a good idea. This is probably the most  suitable provider.

Personal Pension | Vanguard UK Investor (vanguardinvestor.co.uk)

Thank you for explaining it so clearly. The withdrawal would definitely be below my personal tax allowance (most likely the withdrawal plus the LGPS pension income will be below that in total)

It definitely sounds like something I should consider! 

Organgrinder

I must confess that ever since I thought of cutting back my hours, I keep thinking "but what if I stay full time for another x years". 

So with spreadsheet at hand I plug the numbers in.

Option 1 is to take a phased retirement. Take 75% of my teacher pension and all my others including the tax free lump sum. This pays off all debts, buys a new car and allows me to recycle (legally) into a fund to see me through to state pension. 4 more years part time on 3 days a week, with 2 days spent on hobbies etc. 

Option 2 is to carry on working full time for 3 years. Why? Bigger pensions. 

Now I realise one has an earlier retirement date but honestly I can't face 4 more full years in the classroom. Even 3 full years sounds dreadful, whereas part time seems manageable.

I keep thinking my figures must be wrong. Option 1 has more in the bank at 67. Option 2 at 75. But hey who knows if i make it that far!

Yes my overall pension increases but not by a huge amount. And yes I retire 1 year earlier at 59 instead of 60. 

I suppose it's obvious really. More interest to pay on the mortgage. No tax breaks for reinvesting. One more year to fund before state pension. 

The more I look at it, the more sense it makes!

[Deleted User]

A little update.

I have further streamlined my savings/investment accounts in preparation for full retirement in 5 weeks time!
I now have
One main current account (all income paid into this account)
One back up current account (regular monthly input from main current account)
One joint account with another relative for household bills. (Regular monthly input from my main account and another from older relative)
One Loyalty Saver (Regular monthly in to cover annual bills, travel etc...)
One Cash ISA
One S&S ISA (Regular Monthly Payment)
One Two Year Online Bond
Premium Bonds.

Two more salary payslips to go. The June pay slip will be quite small as it only covers period 1st to 9th June.

From July 2023 to July 2024 Monthly income will be £1656 after tax. Budget done and it will be very doable.

From July 2024 monthly income, at present payment levels, will be about £2300 a month after tax.

I now have 46 NI paid years. One more to pay up to April 2024.

I am really looking forward to finishing. Finding it hard to keep motivated at work as the finish line approaches. Fortunately only have 15 part-time working days left. (Not that I'm counting!)

Absolutely fed up with current weather. Never been so behind with getting garden ready for the summer. Impossible to cut the grass when it is so wet, and as for the weeds!

After my nostalgic 4 day visit to Kent in June I plan to spend at least a month really sorting the garden and enduring the house is in order. (to be fair the house usually is, as my mild case of OCD does not allow otherwise!) 

I may then take myself away for a few days thinking time!

It has been been interesting reading some recent posts. Keep them coming.

Hard to believe this thread now has had over 1400 responses and over 340000 views. It must one of the most popular threads on the MSE Forum. Amazing.

I hope you all enjoyed the weekend. Best Wishes.

Brighton01

[Deleted User] said:

A little update.

I have further streamlined my savings/investment accounts in preparation for full retirement in 5 weeks time!
I now have
One main current account (all income paid into this account)
One back up current account (regular monthly input from main current account)
One joint account with another relative for household bills. (Regular monthly input from my main account and another from older relative)
One Loyalty Saver (Regular monthly in to cover annual bills, travel etc...)
One Cash ISA
One S&S ISA (Regular Monthly Payment)
One Two Year Online Bond
Premium Bonds.

Two more salary payslips to go. The June pay slip will be quite small as it only covers period 1st to 9th June.

From July 2023 to July 2024 Monthly income will be £1656 after tax. Budget done and it will be very doable.

From July 2024 monthly income, at present payment levels, will be about £2300 a month after tax.

I now have 46 NI paid years. One more to pay up to April 2024.

I am really looking forward to finishing. Finding it hard to keep motivated at work as the finish line approaches. Fortunately only have 15 part-time working days left. (Not that I'm counting!)

Absolutely fed up with current weather. Never been so behind with getting garden ready for the summer. Impossible to cut the grass when it is so wet, and as for the weeds!

After my nostalgic 4 day visit to Kent in June I plan to spend at least a month really sorting the garden and enduring the house is in order. (to be fair the house usually is, as my mild case of OCD does not allow otherwise!) 

I may then take myself away for a few days thinking time!

It has been been interesting reading some recent posts. Keep them coming.

Hard to believe this thread now has had over 1400 responses and over 340000 views. It must one of the most popular threads on the MSE Forum. Amazing.

I hope you all enjoyed the weekend. Best Wishes.

Congratulations & enjoy your well earned retirement! Everything seems to be well organised & now you can just enjoy your freedom!
 I hope you can get out into your garden soon…the weather’s got to improve soon!