How much to live on

bluenose1

@mrs_slapshot. I retired in January this year at 57 and was in USS.
If I were you I would be putting the max I can into my USS pension as I assume your university offer salary sacrifice. I reduced my salary to NMW to max this out and lived off savings.

Unfortunately although USS  contributions have been reduced which is great news, what they haven’t publicised is that the Early Retirement Factors from April 24 are much worse than current. I have therefore applied to take my pension now.
The restoration of benefits is worth £220 additional pension per year.

If guiide says figures ok and you can afford it I would consider leaving  if work stressful. I can’t describe how lovely it is not to be stressed and the freedom retirement has given me, though still very early days for me. 

mrs_slapshot

Oh wow @bluenose1 that doesn’t sound good for me!! I’ll have to find out more. 

I’m assuming your extra contributions went into the DC part - were you able to take all of that as lump sum, and were there tax implications?

glad it all worked out for you!!

bluenose1

@mrs_slapshot - the revised ERF are here showing before and after 2024 changes. https://www.uss.co.uk/for-members/calculate-your-benefits/factors-used-by-uss

If you make additional contributions then it goes in your DC pot/ investment builder.

25% of your DC pot is tax free, so basically even if you pay tax on the remainder for every £70 you contribute from your salary you will get £85, which is approximately 21% increase. You can take up to 4 withdrawals per year from pot, just need to make sure total amount took out in any year doesn’t make you a higher rate tax payer.
As I am using my pot to fund age 57- 60 I have kept it in the liquidity fund which is paying over  5% interest per annum at moment.

[Deleted User]

Well just checking in for my weekly look during the Lenten period. I was initially surprised to see 59 new posts. Wow I thought, that’s great, only to find you naughty people in my absence had slipped in tens of posts about energy companies lol😱!!! Teasing a little, but was relieved to read the contributions of @mrs_slapshot and others getting the thread back on course.

@mrs_slapshot your plans look interesting and doable. When are you planning to take your DB pensions? Your DC pot could certainly help tie you over to 67. Very useful lump sums coming to you too. Best wishes with your plans.

Wednesday2000

I found this blog yesterday about a British couple who were teachers and retired at 51 years old and they have a YouTube channel too.

Home | Early Retirement Wanderlust

I was watching some of their YT videos from the first one they made and found them very interesting. They were giving themselves a budget of £120 a week for groceries and petrol the last video I watched and they showed what food they bought and what meals they made. They get their pensions at 55, but they are trying to bridge the gap until then.

Organgrinder

I've just been reading how Pension Funds have performed this past year and whilst one year is no indication of long term performance it was nevertheless a pleasant surprise to find that after moving my funds to a new provider, they have in 4-6 months (different transfer dates) grown by over 8%.

With inflation at 4% (or say 2% over the six months) that is very encouraging and hopefully we'll see long term growth averaging say 5% in real terms.

In terms of the "how much to live on" debate I continually have with myself, real growth of anywhere upwards of 3% is incredibly good news given that outside of my DB pensions I have a personal pension to see me through the years from 61 to 67. 

My current forecast is that my savings/cash should be sufficient but of course any unplanned expenditure eg, roof repairs will mean that won't be the case.

So to see such positive growth is such good news. The less optimistic part of me thinks of course that investments may fall sometime soon though. However, I'll monitor the situation given how much difference a real terms growth makes.

(Eg. For every £100,000 you have invested, a 3% real terms growth year on year yields an additional £34,000 over 10 years).

Albermarle

I've just been reading how Pension Funds have performed this past year and whilst one year is no indication of long term performance it was nevertheless a pleasant surprise to find that after moving my funds to a new provider, they have in 4-6 months (different transfer dates) grown by over 8%.
With inflation at 4% (or say 2% over the six months) that is very encouraging and hopefully we'll see long term growth averaging say 5% in real terms

Yes a typical multi asset/pension default fund is up 8 to 10% since the beginning of November.

The less good news is that the same type of fund is at best back where it was 27 months ago, some ( if heavy in bonds/gilts) are still 10% down.

With inflation 20% over the period, it has not been a great couple of years for many funds in real terms, although it looks like we are starting to pull out of it now.

If you go back farther it looks better but this recent bout of inflation has been a killer to real returns.

Pat38493

Organgrinder said:

With inflation at 4% (or say 2% over the six months) that is very encouraging and hopefully we'll see long term growth averaging say 5% in real terms.

As discussed on another recent thread it looks like inflation is heading more towards 1% by mid year unless there is some major event - if you look at it monthly, inflation since September has been negative (deflation) on the original CPI measure.  I guess that means we will probably see at least one interest rate cut in the Summer.

Albermarle said:

The less good news is that the same type of fund is at best back where it was 27 months ago, some ( if heavy in bonds/gilts) are still 10% down.

Yes - my Interactive Investor fund just recently crossed the same level it was at by the end of 2021, so it took more than 2 years just to recover to the same nominal level, never mind in real terms where I guess it is circa 15% down (hardly any bonds in there).

blue.peter

Albermarle said:

Yes a typical multi asset/pension default fund is up 8 to 10% since the beginning of November.

The less good news is that the same type of fund is at best back where it was 27 months ago, some ( if heavy in bonds/gilts) are still 10% down.

With inflation 20% over the period, it has not been a great couple of years for many funds in real terms, although it looks like we are starting to pull out of it now.

If you go back farther it looks better but this recent bout of inflation has been a killer to real returns.

Quite so.

Looking at my ISA (I've already taken my pensions, so don't have a pension fund that I can use as an example), I've gained 15% since the beginning of November. That's without any change of investment, let alone provider. Taken in isolation, that looks good.

On the other hand, the fund value is still down 10% compared with its peak on 9 November 2021. And, at about 15%, it isn't particularly heavy in fixed interest investments.

CPIH October 2021 = 113.4

CPIH January 2024 = 130.0 (most recent published figure)

That gives inflation over the same period of 15%. (I'm not sure where you got your figure of 20% - perhaps you used a different index?) So in reality, I'm still 25% down over the last 27 months.

Albermarle

That gives inflation over the same period of 15%. (I'm not sure where you got your figure of 20% - perhaps you used a different index?) So in reality, I'm still 25% down over the last 27 months.

RPI index Oct 2021 - 312

Jan 2024 - 378 

An increase of slightly over 20% 

Probably the truth is somewhere inbetween CIPH and RPI.