How much to live on

[Deleted User]

Many thanks pOO for your post. Are you able to give a rough breakdown of how you spend your income? Just may be useful for others with similar income. No worries if not.

Madrick

Although there is a phenomenal amount of useful info contained within the main pensions forum, so much doesn't seem relevant to me.
I don't have a £1m pension pot or a £50k+ pension income requirement or ££££ in ISA's

This post and the paupers pension one has been a blast of fresh air, as far more within my income range

Just wanted to run my own retirement plan through for any advice

Looking to retire early @60 in a few months, stress free and enjoy life whilst I can

Current situation
Age 59 (widowed)
Working... office work. home based
Mortgage free for 10 years (3bed £350k)
2 grown up kids living at home,
one working, one just finishing uni
Currently giving me £600 pm towards their keep, our food bill is quite extravagant for 3, but this covers it.
Total bills (excl food) calculated at £500pm
Have very modest expenditure otherwise

Assets
Have a very small DB pension starting in a few months.  £2k pa with a £14k lump sum due

£48k.  old DC pension (Aegon)
£135k.  Work DC pension (Aegon) still contributing into
£50k premium bonds
£12k S&S ISA (nutmeg)
£45k in various banks/savings acts
(have earmarked £20-25k of this for new boiler and some major house/garden updating that is req)
I know I have way too much cash and should have put a large amount into pension.

Estimate that I can live comfortably with £15k to  £18k income per annum, which after bills & living expenses, leaves plenty for social, travel etc

So if I were to retire in a couple of months....

£2k pa DB pension
Move the £48k DC pension into Drawdown (put all in won't take 25% taxfree?) for 5 or more years taking £10k pa,
Leave larger pension invested (£135k)
So £12k pension income, (which will be tax free)

top up to £15k pa with the DB cash lump sum
If need to increase income further, dip into S&S isa or other cash savings.

Kids currently give £600 pm, which may increase to £800pm in autumn when both will be working full time, but could reduce to £400 if one leaves.
Not counting on this long term as they will both leave home..... (but curr £4.8k to £9.6k pa)
But this could be used to top up £12k pension initially to £18k, towards bills, leaving lump and savings intact

Intend to continue to invest £2.8k pa (plus tax relief) taken from savings each year to main pension.
After 5 years when £48k pension runs out, move £135k pension (plus any additions + profits) into drawdown (so £160k plus) & start taking £10k per annum, topped up with £2k DB pension and savings as necessary

2 years later start £9k State pension and reduce main pension drawdown accordingly.

Does this seem like a viable plan?
Anything that I have overlooked?

Would I need to engage an IFA to manage this, with the inevitable £4k charge plus any ongoing management fees.
Would this be advisable anyway, as could this be financially beneficial in the long run. 🤔

I also have both parents still living (seperately) both in £300k houses in late 80s (only myself and sibling as beneficiaries so 50% inheritance) but not counting on this in above calcs, due to possible care home costs etc
If I do inherit anything in the future, would be splitting it with my two boys.

Should I do it? Or have I overlooked anything?

[Deleted User]

Looks like a good plan to me. Welcome to the thread.

jimi_man

Hi all
A very interesting thread. Here are my plans. My wife and I are planning to finish at the end of next year - we'll be 57. I've been keeping score of our spending and the breakdown is this. (I've extracted mortgage and other work costs, which will be paid off.)

                                 Yr         Mth
Council Tax              3024     252

Electricity                   960       80

Gas                            720       60

Water                         540       45

Phone/BB                  456       38

Mobile Phones.         360       30

House Insurance       360       30

Car                             900       75

Fuel                          1200      100

Car Deprec              1500      125

Hair/Other                 384        32

Dentist                      240        20

Food                       3360       280

Xmas, AA, etc          900        75

Maintenance            840        70

Total                        15744     1312

The car deprec is just a nominal figure for accounting purposes. Obviously no holidays in that. We do like holidays, so we're working on a total figure of £3000 a month which gives us some spending leeway. 

I'm a public sector worker, however not a top exec or anything - I was the second lowest rank in the police. My pension is £2250 a month (net), which leaves £750 a month to find. I'm currently in the Civil service, so with the pension from that and my wife's public sector pensions, they amount to £10k at 65. If we were to take them at 60, it would mean a reduction of 25%, so £8k per year. So, from 57 to 60, needs £9000 x 3 plus inflation which is around £28K. Thereafter from 60 to 67 with the additional £8K db pensions taken, there is a shortfall of about £1200 per year x 7 plus inflation, so I've estimated another £9000. From 67 onwards we'll have two state pensions, and total net income will be around £4200 a month. 

We've both been saving into SIPPs and ISAs and my wife's DC pension scheme (just as a convenient and tax efficient way of saving) and have around £110K, which should be about £150K by the end of next year (haven't really added any stock market gains in that). We'll also move and whilst not downsizing as such - we'll keep the same size house -  it will be in a much cheaper location, as we live in Surrey at the moment.

So with £37k to find in total, I think we should be ok by the end of next year. If we spend more than £3k a month, then we'll have to reconsider (or spend less!) but if it's less then we'll just draw down less from the SIPPs.

There are some other money streams, my wife pays into a savings plan which matures at 60 and one of her pensions comes with an automatic lump sum, however I haven't factored these in.

It's fair to say that these figures may seem a little more than some on here, which was why I was slightly hesitant about posting - however I stress that neither of us are high powered executives or high earners or anything like that. A police officer and a former nurse and I'm now a not particularly high grade civil servant, and my wife earns very little doing what she's doing. The bulk of our retirement is in DB pensions and as can be seen, we don't have a huge savings buffer, but with after 'downsizing' and looking at the prices of where we want to live, we should have around £250K in total. I've been lucky enough to accrue a fantastic pension by 'default' since I had no choice to join it when I did, as it was mandatory,  which I do understand is a great position to be in.

[Deleted User]

Welcome to the thread jimi_man. You are certainly in a very good position. Well done! Best wishes.

shinytop

Madrick said:

Although there is a phenomenal amount of useful info contained within the main pensions forum, so much doesn't seem relevant to me.
I don't have a £1m pension pot or a £50k+ pension income requirement or ££££ in ISA's

This post and the paupers pension one has been a blast of fresh air, as far more within my income range

Just wanted to run my own retirement plan through for any advice

Looking to retire early @60 in a few months, stress free and enjoy life whilst I can

Current situation
Age 59 (widowed)
Working... office work. home based
Mortgage free for 10 years (3bed £350k)
2 grown up kids living at home,
one working, one just finishing uni
Currently giving me £600 pm towards their keep, our food bill is quite extravagant for 3, but this covers it.
Total bills (excl food) calculated at £500pm
Have very modest expenditure otherwise

Assets
Have a very small DB pension starting in a few months.  £2k pa with a £14k lump sum due

£48k.  old DC pension (Aegon)
£135k.  Work DC pension (Aegon) still contributing into
£50k premium bonds
£12k S&S ISA (nutmeg)
£45k in various banks/savings acts
(have earmarked £20-25k of this for new boiler and some major house/garden updating that is req)
I know I have way too much cash and should have put a large amount into pension.

Estimate that I can live comfortably with £15k to  £18k income per annum, which after bills & living expenses, leaves plenty for social, travel etc

So if I were to retire in a couple of months....

£2k pa DB pension
Move the £48k DC pension into Drawdown (put all in won't take 25% taxfree?) for 5 or more years taking £10k pa,
Leave larger pension invested (£135k)
So £12k pension income, (which will be tax free)

top up to £15k pa with the DB cash lump sum
If need to increase income further, dip into S&S isa or other cash savings.

Kids currently give £600 pm, which may increase to £800pm in autumn when both will be working full time, but could reduce to £400 if one leaves.
Not counting on this long term as they will both leave home..... (but curr £4.8k to £9.6k pa)
But this could be used to top up £12k pension initially to £18k, towards bills, leaving lump and savings intact

Intend to continue to invest £2.8k pa (plus tax relief) taken from savings each year to main pension.
After 5 years when £48k pension runs out, move £135k pension (plus any additions + profits) into drawdown (so £160k plus) & start taking £10k per annum, topped up with £2k DB pension and savings as necessary

2 years later start £9k State pension and reduce main pension drawdown accordingly.

Does this seem like a viable plan?
Anything that I have overlooked?

Would I need to engage an IFA to manage this, with the inevitable £4k charge plus any ongoing management fees.
Would this be advisable anyway, as could this be financially beneficial in the long run. 🤔

I also have both parents still living (seperately) both in £300k houses in late 80s (only myself and sibling as beneficiaries so 50% inheritance) but not counting on this in above calcs, due to possible care home costs etc
If I do inherit anything in the future, would be splitting it with my two boys.

Should I do it? Or have I overlooked anything?

Madrick, if I were you I'd post this in the main pensions board.  There may be some merit in using savings to contribute more into your DC pension in order to claim the tax relief, especially since most of your income will be tax free. Someone there will work it out.  Just start a new thread and call it 'please review my retirement plans' or similar and don't worry about how much money you have.  

[Deleted User]

Good idea shinytop. Welcome to the thread.

Xbigman

Madrick said:

Although there is a phenomenal amount of useful info contained within the main pensions forum, so much doesn't seem relevant to me.
I don't have a £1m pension pot or a £50k+ pension income requirement or ££££ in ISA's

This post and the paupers pension one has been a blast of fresh air, as far more within my income range

Just wanted to run my own retirement plan through for any advice

Looking to retire early @60 in a few months, stress free and enjoy life whilst I can

Current situation
Age 59 (widowed)
Working... office work. home based
Mortgage free for 10 years (3bed £350k)
2 grown up kids living at home,
one working, one just finishing uni
Currently giving me £600 pm towards their keep, our food bill is quite extravagant for 3, but this covers it.
Total bills (excl food) calculated at £500pm
Have very modest expenditure otherwise

Assets
Have a very small DB pension starting in a few months.  £2k pa with a £14k lump sum due

£48k.  old DC pension (Aegon)
£135k.  Work DC pension (Aegon) still contributing into
£50k premium bonds
£12k S&S ISA (nutmeg)
£45k in various banks/savings acts
(have earmarked £20-25k of this for new boiler and some major house/garden updating that is req)
I know I have way too much cash and should have put a large amount into pension.

Estimate that I can live comfortably with £15k to  £18k income per annum, which after bills & living expenses, leaves plenty for social, travel etc

So if I were to retire in a couple of months....

£2k pa DB pension
Move the £48k DC pension into Drawdown (put all in won't take 25% taxfree?) for 5 or more years taking £10k pa,
Leave larger pension invested (£135k)
So £12k pension income, (which will be tax free)

top up to £15k pa with the DB cash lump sum
If need to increase income further, dip into S&S isa or other cash savings.

Kids currently give £600 pm, which may increase to £800pm in autumn when both will be working full time, but could reduce to £400 if one leaves.
Not counting on this long term as they will both leave home..... (but curr £4.8k to £9.6k pa)
But this could be used to top up £12k pension initially to £18k, towards bills, leaving lump and savings intact

Intend to continue to invest £2.8k pa (plus tax relief) taken from savings each year to main pension.
After 5 years when £48k pension runs out, move £135k pension (plus any additions + profits) into drawdown (so £160k plus) & start taking £10k per annum, topped up with £2k DB pension and savings as necessary

2 years later start £9k State pension and reduce main pension drawdown accordingly.

Does this seem like a viable plan?
Anything that I have overlooked?

Would I need to engage an IFA to manage this, with the inevitable £4k charge plus any ongoing management fees.
Would this be advisable anyway, as could this be financially beneficial in the long run. 🤔

I also have both parents still living (seperately) both in £300k houses in late 80s (only myself and sibling as beneficiaries so 50% inheritance) but not counting on this in above calcs, due to possible care home costs etc
If I do inherit anything in the future, would be splitting it with my two boys.

Should I do it? Or have I overlooked anything?

Your comment about putting your DC pension into drawdown but going all in and not taking a lump sum needs some clarification. There's no point putting a pension into drawdown and not taking a lump sum as you simply throw the right to the tax free part away. If your DC scheme allows it you should use UFPLS withdrawals and not crystallize the whole fund. Posting on the main pensions board about this is a good idea. 

Darren

203846930

It is good to read about other people's plans and how they will fund them but it does make me feel somewhat embarrased when I see some of the huge number that are being handed around and I am left wondering what I am missing out on.
But then when I reflect on it, I am missing out on nothing, I am living the life that I had planned for and I still have room to spare on my drawdown as well as the equity on my house and with just 4 years 'till pension age when my income will almost treble, I have a lot to look forward to.

RetSol

I have a lot to look forward to.

Me too.  Comparing yourself to others who you think are doing better when you have what you need - not a good idea.