How much to live on

ex-pat_scot

PennyForThem_2 said:

OK
Those on DB pensions probably are fine - the pension is paid automatically (usully 50%) to the survivor.

My big question is if you who do all the financial planning die - does your partner know how to manipulate the finance to the best to provide them with an income?   Some of your partners will.  I am not talking to those ppl who have thought and communicated very thoroughly how this will progress after they die.  It is the others.  

I was really, really lucky in that it fell into place and most of my deceased partener's pensions were DB pensions - but just putting this out as a caveat.  Even one person who thinks - yeah, umm not done this makes this post worthwhile.........

It's sometimes known as a "living will".
It's something I really need to do.
It will need to cover:
- where everything is
- login details, administration details etc
- investment principles
- suggested drawdown strategy
- options (eg annuitise if Mrs XPS either cannot or does not want to administer the DC pot)

My gentle attempts to engage her in pension planning, spreadsheets etc have met with very dismissive response. She's not interested, and sees this as entirely my problem to manage.  Until one day, when it will become hers...

GunJack

ex-pat_scot said:

My gentle attempts to engage her in pension planning, spreadsheets etc have met with very dismissive response. She's not interested, and sees this as entirely my problem to manage.  Until one day, when it will become hers...

This is, I believe, a major problem for many, with it seems the female half of the couple more likely to be the disinterested party. Which I see as being strange, as the chances are that the wife (or equivalent) will live longer than the husband (or equivalent). I just don't understand why...

Daffodil1234

runningromani said:

 I don't want to feel I'm leaving due to a bad boss, I've been a civil servant 37 years and worked my way up from the bottom to a senior position and want go with my head held high. Also I enjoy some kudos in my role. Not really points relevant to this thread I know as more philosophical but they add to the mix so to speak. So very mixed emotions at the moment. My views change daily.

Hi Running Romani

Your figures come out as very similar to mine for me plus spouse so it does seem viable to me at least !

Interesting comments from you about the kudos of your role and the meaning of it to you - I think these are very relevant things to consider as well as the money.  I think of retiring as a form of transition where there is going to be some sadness for the good parts of work that aren't going to be there any longer for me - and also some enthusiasm for the new set of life options ahead.

blue.peter

ex-pat_scot said:

My gentle attempts to engage her in pension planning, spreadsheets etc have met with very dismissive response. She's not interested, and sees this as entirely my problem to manage.  Until one day, when it will become hers...

There might be a way round this, depending on your family circumstances.

My mother took much the same line as your wife: my father was solely responsible for their joint finances (and did a very good job of it, I'm glad to say). Mum took no interest in it. When Dad died, Mum passed responsibility to me and my eldest sister by way of a Power of Attorney that had been drawn up about 20 years earlier (at Dad's behest). Mum still takes no interest, but we look after things for her. (In practice, I look after some aspects and my sister does other things, each of us keeping the other informed and acting under their oversight).

Mum's Alzheimer's Disease has now progressed to the point at which she is no longer able to make decisions, even if she was willing. My sister and I are in the process of activating an Enduring Power of Attorney, again drawn up in the mid-1990s.

Do you have anyone who'd be trustworthy, willing and competent to help your wife by acting as her attorney in the event of your predeceasing her (a child, perhaps)? If so, maybe it's worth talking to a solicitor about Powers of Attorney.

runningromani

Thanks @Daffodil1234 for your reply, yes there is a lot to consider beyond the finances I feel. If I have a bad day at work I’m like...that’s  it I’m finishing, then if i have a good few days I think, ok I can manage this.....just went for a run and reflected on my post though, I have spreadsheets and plans but adding to a forum really brought it home and I think I’m leaning to we will manage, your comments helped too 👍

Dazza1902

runningromani said:

Hi all, I have read this thread with huge interest and this feels like a nice and safe place to post. I am on the cusp of taking early retirement at 55 in April but feel apprehensive. I'd intended to go at 58 but circumstances have changed which I'll explain below. First some  figures:

My estimated pension circa £19250 pa 

Lump sum £50,000

Wife pension £3000 pa 

Lump sum £2500

Savings £20000

Small lump sum from a private pension circa £4,000 - earmarked for son. Annual remaining pension peanuts.

House value circa £280,000 so future downsizing an option in the future.

We will have mum in laws house to sell circa £135000 one of the unexpected and sad changes in circumstances.

Now there are some calculated deductions, £5000 to relatives at wife's mum in laws request, £5000 to finish house improvements (future proofed property) and daughters wedding. Only big things that may need in future is a new boiler or heat pump? Fingers crossed property in good repair but you never know.

Mum in laws wishes and wife's dream was to own a caravan for the family in Devon, this we are already doing with a loan to be repaid from the inheritance which will cost £30,000 and we have paid deposit. We will cover site fees and utilities by renting out peak months only. It's a one off purchase that we have written 100% of that money off and are comfortable with that. 

I have done the maths and our combined pensions will cover all our outgoings (no mortgage, kids grown up and left home, doing well) no debts. Deducted tax over £12500. Allowing us to run 2 cars, 1 nearly new so no worries there, meals out but nothing lavish. Also, and this I struggle with, no longer able to save anything bar a bond of £25 per month. We do like an expensive holiday every 18 months or so, I like a beer and nice coffee, wife a few treats but nothing huge. We don't feel we need stuff or latest phone etc. We will use some capital whilst we can to travel. I'm mindful we need capital to last 12 years until state pensions kick in, wife just turned 55, so will be very careful at first. We have agreed to hold an emergency fund of £60,000, and I want £10,000 towards one final nice car (my weak point I own an old mx5 and like my mid life crisis cars), will be happy to run the next one into ground. So doing the sums we will have about £100,000 capital to last 12 years until SRP (due full pensions each) for extras and holidays on top of pensions (keeping that £60,000 tucked away). I have quite a bit of stuff to sell on eBay as I used to collect vintage toy cars and I hope to sell £50 minimum a month. I'm also happy to take Christmas jobs for a few years if needs be but want the summers for the caravan. We will spend very little when away apart from petrol to get there and back and food.

So, I mentioned I'd give some reasons for bringing forward (apart from inheritance that is apart of this), we have had two terrible years, seen close family die, good friends younger with cancer and I'm really not enjoying work anymore, it's very stressful, I'm getting cynical and not helped by a new boss and of course the pandemic made us appreciate the simpler things in life. My wife has had an industrial accident and is only now just going back to work, she too has had enough, we both started work at 16. Where I feel anxious is that we're enjoying having some serious money for the first time in our lives and it's nice not to think about buying odd things, but more importantly I don't want to feel I'm leaving due to a bad boss, I've been a civil servant 37 years and worked my way up from the bottom to a senior position and want go with my head held high. Also I enjoy some kudos in my role. Not really points relevant to this thread I know as more philosophical but they add to the mix so to speak. So very mixed emotions at the moment. My views change daily. 

The primary reason for this post is to see if I've missed anything glaringly obvious financially, I'm not a risk taker (despite a programme and risk manager by trade 😂) we can't loose the house, the kids are sorted, we will just need to be careful at times and a bit more measured which I've always essentially done until last year or so where I've spent a bit more. I do think it's time for us now. I look forward to seeing your thoughts and challenges, many thanks in anticipation, RR.

Hi Runningromani, everything looks good for retirement. If I've got this right you have £22,250 per annum dB pension at 55 yrs old, and £100 k plus to "lean " on till state pension in 12 yrs.
Assuming you both get full state pension 2 X 9.5 k ( have you checked ?), at state retirement age you'll have over £40 gaurenteed yearly pension which puts you in the luxurious retirement bracket.
Suppose only observations are that's it's a pity your wife cannot use her tax allowance over the next 12 yrs. 
 Your dB pension figures include any reductions for early payment ?
 I'm sure somebody on the forum will have an opinion on how you manage your capital. Enjoy

runningromani

Hi @Dazza1902, thanks very much for the comments, yes both pensions actuarily reduced. Have checked state pensions, wife’s is full, mine is down £10 per week thereabouts so not worried about that, I’m about 2 years short as was in SERPS. I hadn’t thought of the tax allowance to be honest. It is indeed a shame as you say. Wife is talking of maybe working a day or two if possible which would capitalise on this. 

otb666

Hi runningromani I would make your plans without including inheritance as there really is no such thing unless they just suddenly pass away healthy The care homes for 4 parents costs 4k weekly ans an inheritance wont last long So best to exclude that in your calculations Just my two penny worth You are a lot better off than me
Also your wife will be able to transfer some of her tax allowance to you

DairyQueen

blue.peter said:

hugheskevi said:

100% of DC pension passes to the surviving partner so death does not affect resources provided from DC pension but will reduce demands on the available resources.

You appear to be thinking primarily about death before retirement. For death after retirement, it can be very different story: it depends on the choices made at retirement. In particular, some people will prefer to use the DC fund to buy an annuity*. In this case, the survivor's benefits are determined at the point of annuity purchase. I'd like to think that people will think about a dependant's annuity inb the context of a partner's needs, but suspect that not everyone will.

*Yes, I know that annuity rates are very poor at the moment, and have been for several years. Nonetheless, an annuity does give the advantage of certainty of income, and this is attractive to some.

I don't think so. 

Nobody (in their right mind) will buy an annuity right now. Why would anyone sign-uo to a guaranteed loss of capital?

@hugheskevi rightly illustrates that a DC pension/SIPP will 100% pass to the surviving partner.

You are missing a trick.

Dazza1902

runningromani said:

Hi @Dazza1902, thanks very much for the comments, yes both pensions actuarily reduced. Have checked state pensions, wife’s is full, mine is down £10 per week thereabouts so not worried about that, I’m about 2 years short as was in SERPS. I hadn’t thought of the tax allowance to be honest. It is indeed a shame as you say. Wife is talking of maybe working a day or two if possible which would capitalise on this. 

You might want  to post on the main pensions board and get specific opinions of how to manage what you already have. If your wife is working now ?it might be worth getting some of your savings into a Sipp for her, can put in up to her annual pay up to£40 k.
On the pensions board I'm sure you may get some options. Even if she does not pay tax, she would still get an uplift into a Sipp. Worth asking the knowledgeable folk their opinion.