This is money, how much you need in retirement

SomeMadeUpName

randompenitent said:

SomeMadeUpName said:

Malthusian said:

I see they've still got the video of the poor old duffer who confidently proclaims that he's drawing down 10% of his fund each year yet claims that his fund is still "gaining interest and dividends all the time".

@Malthusian have you written to the authors? 

I did this for an error (or at least a poorly written explanation) I saw in a web article on BTL CGT and the writer was both grateful and swift in his revision. 

Worth doing for the benefit of others if you spot an error, journalists are only human (by certain definitions anyway). 

If this is the same video I'm thinking about (and it sounds like it) it's been on the Which? website for quite a while, certainly before this year.
I was so annoyed by it that I wrote to Which? and said I thought it was potentially misleading. I *think* I may have received an acknowledgement (it was a while ago) but no real response and clearly the video is still there.  Disappointing.

That is poor.  Anyone can make a mistake, but not correcting it once you're aware is unprofessional.

SouthCoastBoy

zagfles said:

Stubod said:

PennyForThem_2 said:

Which? survey their customers.  Who subscribes to Which but those who are probably better off.  
However for those with DB pensions low inflation is not good news (IMO).  As from experience price increases do not adher to inflation.   
Hence I would advise a hedge against above inflation price increases when you retire......which I am not sure has been taken into consideration.

..very true. OH NHS pension increase for this year 0.5%, but council tax up by 5%, (was 9% past year), electric going up by 28%, (after going up by 10% a few months ago), and Plusnet increase of Cpi (1.5%) +another 4.5%.....so much for index linking!

And my gas price is down 22% from 2 years ago. Some things rise in price, some things fall, some things stay the same. People only whinge about the things that rise in price. Inflation figures reflect the average basket, it may not be the same as everyone's basket but the likelyhood over the long term is that it will even out, your personal inflation rate will likely be above the official figures for some of the time and below for others.

The big issue for me is council tax, as a percentage of household income it is one of the more expensive costs and generally rises well above the CPI figure and is not assessed on ability to pay. It is a big concern for me, 5% compounded can become quite a large amount.

Malthusian

SomeMadeUpName said:

randompenitent said:

SomeMadeUpName said:

Malthusian said:

I see they've still got the video of the poor old duffer who confidently proclaims that he's drawing down 10% of his fund each year yet claims that his fund is still "gaining interest and dividends all the time".

@Malthusian have you written to the authors? 

I did this for an error (or at least a poorly written explanation) I saw in a web article on BTL CGT and the writer was both grateful and swift in his revision. 

Worth doing for the benefit of others if you spot an error, journalists are only human (by certain definitions anyway). 

If this is the same video I'm thinking about (and it sounds like it) it's been on the Which? website for quite a while, certainly before this year.
I was so annoyed by it that I wrote to Which? and said I thought it was potentially misleading. I *think* I may have received an acknowledgement (it was a while ago) but no real response and clearly the video is still there.  Disappointing.

That is poor.  Anyone can make a mistake, but not correcting it once you're aware is unprofessional.

And this is why I didn't bother. I had enough mental energy to point the errors out either to this forum or Which but not both. The difference between moaning on a random Internet forum and complaining to Which is that by doing the former, at least some people will see the correct information.

People who take financial adv... guidance from unqualified journalists are likely to get what they pay for. Of course, people down the pub here is also free guidance, but at least here errors can be shot down on the same page by someone better informed (mine have been often enough).

Terron

drumtochty said:

kuratowski said:

I think Neasy was referring to the way that the thisismoney article quotes the state pension as £8060 per person, which is a bit less than the full new state pension.  Although the which article (on which thisismoney is based) also quotes the average actual state pension for a couple being £16000 (i.e. on average, today's post 2016 retirees do not have sufficient NICs to qualify for the full new state pension), which is close.

Kuratowski, where have you found data to confirm that "on average, today's post 2016 retirees do not have sufficient NICs to qualify for the full new state pension" 

No data is needed. It is an inevitable consequence of the system and the way the statement is worded. Some people have enough to qualify for the full pension, some have less. The average (mean) will be less than the full amount since more than enough NICs makes no difference.

A more interesting question would be does the average (median) retiree qualify for at least the full new state pension, taking into account SERPS and any GMP? Or what percentage of retirees do so qualify?

I had a bit of a look and found some interesting information.

The government’s most recent data (taken from 2017/18) shows the average weekly income for pensioners to be £304 – that’s after you’ve taken away direct taxes and housing costs. This works out at around £15,080 net per year.

According to Which?, the average payout for the basic State Pension is currently £153.36 per week. For the new State Pension, the current average payout is £164.10 per week. So, the overall average payout is £158.73.

From 2019 - The Department for Work and Pensions (DWP) data revealed that of the 1.1 million people who receive the new state pension, only 44 per cent or just under 500,000 pensioners receive the full amount of £168.60 a week or £8767.20 a year.

A similar number receive at least three-quarters, but aren’t eligible for the full amount.

Under the old system, around 65 per cent of state pension recipients received the full, lower amount, potentially topped up with other benefits.

SomeMadeUpName

Terron said:

drumtochty said:

kuratowski said:

I think Neasy was referring to the way that the thisismoney article quotes the state pension as £8060 per person, which is a bit less than the full new state pension.  Although the which article (on which thisismoney is based) also quotes the average actual state pension for a couple being £16000 (i.e. on average, today's post 2016 retirees do not have sufficient NICs to qualify for the full new state pension), which is close.

Kuratowski, where have you found data to confirm that "on average, today's post 2016 retirees do not have sufficient NICs to qualify for the full new state pension" 

No data is needed. It is an inevitable consequence of the system and the way the statement is worded. Some people have enough to qualify for the full pension, some have less. The average (mean) will be less than the full amount since more than enough NICs makes no difference.

Lies, damn lies, & ................

segovia

SouthCoastBoy said:

kuratowski said:

bostonerimus said:

So do your own detailed budget and then figure what items will be different in retirement: you might not have a mortgage payment or commuting costs. 

The other data I have observed to test my adjustments is the rate at which my parents have slowed down in their late 70s; and I'm not saying that it will be the same for me, but things like going out in the evenings, travelling more than 100 miles away from home, etc, do not appear to be costs that are likely to persist into very old age.

I think this is the key, retirement spending won't be linear, my 89 year old father in law, goes hardly anywhere and doesn't want to, he gets too tired, however in his 70s he was very active. Generally (not the same for all) I think it is a fair assumption that at 80+ expenditure will decrease. Personally in my plan I have front loaded spending at 3k/mth until 80, then a gradual decrease from there. 

The only piece of decent advice I got from an IFA, was "who needs 000's when they are in their 80's and 90's", take your money and enjoy it in your 60's and 70's. This was from an initial conversation about a DB transfer many years ago. In his case it was sadly true, he got cancer and died in his late 50's. 

Sea_Shell

marlot said:

SouthCoastBoy said:

kuratowski said:

bostonerimus said:

So do your own detailed budget and then figure what items will be different in retirement: you might not have a mortgage payment or commuting costs. 

The other data I have observed to test my adjustments is the rate at which my parents have slowed down in their late 70s; and I'm not saying that it will be the same for me, but things like going out in the evenings, travelling more than 100 miles away from home, etc, do not appear to be costs that are likely to persist into very old age.

I think this is the key, retirement spending won't be linear, my 89 year old father in law, goes hardly anywhere and doesn't want to, he gets too tired, however in his 70s he was very active. Generally (not the same for all) I think it is a fair assumption that at 80+ expenditure will decrease. Personally in my plan I have front loaded spending at 3k/mth until 80, then a gradual decrease from there. 

My assumption is more U shaped.  Higher spending in early retirement - travel etc.  Then a wind down, before needing additional funds for care provision.

There is always those years (could be quite a few) when you no longer want to (or are able) do all the usual things needed to run a house, and you really need to get paid help in to do.   Gardening, cleaning, ex-DIY jobs etc.    Especially if you've no close family to call on to assist.

It's not "care" in that sense of the word, but it could rack up quite a few £££ a month, off-set by the fact you probably won't be doing much else, if you cant manage the above things.    So from a spending POV, there might not be much "winding down"!!

pip895

I would find it depressing to think I had factored in reduced funds after a certain age (particularly when I was approaching that age!) so have kept my budget requirements flat.  A separate pot of money put aside for early retirement “treats” would seem a better way to go.  

Predicting requirements far into the future is virtually impossible so it’s best to keep it simple.  

Bravepants

pip895 said:

I would find it depressing to think I had factored in reduced funds after a certain age (particularly when I was approaching that age!) so have kept my budget requirements flat.  A separate pot of money put aside for early retirement “treats” would seem a better way to go.  

Predicting requirements far into the future is virtually impossible so it’s best to keep it simple.  

I just bought a book called "Die with Zero" for Kindle: https://www.amazon.co.uk/gp/product/B07T5LSF1J

Though I take some of what the author says with a pinch of salt...for example, he seems to suggest that annuities pay better than 4% (when comparing with the "safe withdrawal rate"), but it gives a good perspective.

barnstar2077

Bravepants said:

pip895 said:

I would find it depressing to think I had factored in reduced funds after a certain age (particularly when I was approaching that age!) so have kept my budget requirements flat.  A separate pot of money put aside for early retirement “treats” would seem a better way to go.  

Predicting requirements far into the future is virtually impossible so it’s best to keep it simple.  

I just bought a book called "Die with Zero" for Kindle: https://www.amazon.co.uk/gp/product/B07T5LSF1J

Though I take some of what the author says with a pinch of salt...for example, he seems to suggest that annuities pay better than 4% (when comparing with the "safe withdrawal rate"), but it gives a good perspective.

Having just read the sample, I agree with what he says.  Although I do not like the term "life energy" when talking about your time and value for money etc.  I have long said that it is better to think about money as time.  Would you rather work for two hours for a new pair of shoes and spend the rest of the day at the beach with your friends, or spend all day at work, not see your friends and end up with a pair of Nikes?  I know which I would choose.