How much to live on

2Scratters

@Albermarle Yes, we are aware of the pot running out that has been factored in. It will serve its purpose of getting to SPA and plus 3 years. If things change before that time that bridge will get crossed at the time of what to do next. We probably have not done our best with it even with guidance from a FA. No regrets though. This is a health over wealth decision. 

2 Scratters xx

Kim1965

2Scratters said:

@Albermarle Yes, we are aware of the pot running out that has been factored in. It will serve its purpose of getting to SPA and plus 3 years. If things change before that time that bridge will get crossed at the time of what to do next. We probably have not done our best with it even with guidance from a FA. No regrets though. This is a health over wealth decision. 

2 Scratters xx

Am i right thinking your monthly income is about £1200? With 60k you can dip into. 
If so when yiu both get state pension yiur income will rise a lot. 
 

2Scratters

@Kim1965 it is actually a bit more, we are pension wise at 1617 currently with DH benefit payments on top of that and 60K to dib into if needed. 

2 Scratters xx

[Deleted User]

2Scratters. The 770 and 197 figures you mentioned earlier, are they monthly or annually? Are they DB pensions? If they are DB they are a very useful provision to have and not exactly ‘really small’. If they are DC are you running the pots down or is that a sustainable rate?

Wednesday2000

I have been thinking about this topic a lot lately. We moved out of London to the seaside recently and as my husband has had cancer (10 years cancer free as of this month) I want him to retire early. He has been doing shift work as an engineer and is 52 and I am 47. I have some health issues too, fibromyalgia (handled through exercise and lifestyle changes) and I now have suddenly developed what could be osteoarthritis and possibly rheumatoid arthritis, I am waiting for test results. We have been mortgage free for some years now due to overpaying and we are debt free. Our health issues is what has made me think I want him to retire as soon as possible, I have been getting PIP from last year. He has ongoing problems from the cancer treatment so I may try and claim carers allowance for him soon. I think he earns too much to claim it for me! He is having tests too at the hospital in the next few weeks.

We are hoping to retire in 2026 with what will be £30,000 in his DB pension as I looked at the projected forecast the other day and we also have an AVC of almost £50,000. I have 12 years on my state pension and he has 36 years. I will probably make voluntary NIC payments for the remaining years. I don't have a private pension although reading this very long thread and others on here is making me think I need to have a SIPP as I'm a non earner now. We have 1 dog and  2 cats, but the cats are in the 90s and the dog in her 60s in human years. I would possibly think about fostering a dog, but not adopting another until my husband is past state pension age. No kids!:)

Albermarle

We are hoping to retire in 2026 with what will be £30,000 in his DB pension

A DB pension is a promise to pay an annual pension, so it does not have £X in it.

Do you mean it will pay £30K pa when he retires, because that is quite a lot ?

Wednesday2000

I thought it was a DB pension from reading on here. It used to be called a final salary scheme, I thought. 

I checked the projection for 2023 the other day and it is £23,000 a year at the moment, but that is not enough for us to retire on now. I worked out that we are spending £200 a month on our pets food and medicine alone and our household bills including pet insurance are £750 a month. Excluding groceries.

Albermarle

Wednesday2000 said:

I thought it was a DB pension from reading on here. It used to be called a final salary scheme, I thought. 

I checked the projection for 2023 the other day and it is £23,000 a year at the moment, but that is not enough for us to retire on now. I worked out that we are spending £200 a month on our pets food and medicine alone and our household bills including pet insurance are £750 a month. Excluding groceries.

Yes it sounds very much like a DB pension. It was just the way you said there will be £30K in his pension was a bit confusing. You meant it will reach £30K pa when he retires, I guess.
This is a very good pension/guaranteed income to have, even if he takes a reduced amount.

However as you say without any other income coming in it is probably too early for him to retire yet from a financial point of view anyway.

blue.peter

Wednesday2000 said:

I thought it was a DB pension from reading on here. It used to be called a final salary scheme, I thought. 

Defined Benefit (DB) is the more general term. It means that the amount of pension is promised, and can be calculated for any individual on the basis of facts specific to that person. There is no pension fund attributable to that person; rather, there is a single pooled trust fund for all members of the scheme. The promised benefits are either paid directly from the scheme fund or bought with it.

Final Salary is a particular form of DB. The term simply means that the member's final salary (= salary at the date of leaving) is used in calculating their pension. A typical formula might be n/80 * final salary, where n is the number of years service with the employer.

Another form of DB pension is the career average scheme. In this one, the promised pension is linked to the employee's average earnings whilst working for the employer, rather than their final salary.

Other forms of DB are possible.

Defined Contribution (DC), by contrast, means that specified contributions are paid into an individual fund that is attributable to a particular person. That person then receives whatever benefits can be provided from their own fund when they retire. Obviously, this means that their pension income is dependent on the fund performance up to that time. If they want to use it to buy an annuity, their income will also be dependent on annuity rates at that time. Nobody promises a particular level of pension, so there's nobody to pick up the balance of cost of doing so. The individual bears all of the risk.

Wednesday2000

I mean the amount he would get if he retired in 2026 would be £30,000 a year. He has four options when I have run the pension projections including two options with a lump sum, but I read that option 3 is the best one. That is the highest amount of pension he can get, £30,000 a year pension, and it reduces when he reaches state pension age. That won't be a problem that it reduces as he has over 35 years to qualify to get the full state pension. I checked it yesterday and it is something like £203 a week he will be getting.

All the other men he works with who have retired have taken the option with the lump sum as they have kids, mortgages, debts, but I said we don't need the lump sum option as we don't have anything to pay off. That is right isn't it?