Retirement planning

flopsy1973

Sorry forgot to add so can we do this or do I need to consider the other job

MallyGirl

flopsy1973 said:

AlanP_2 said:

It seems to me that boosting your partner's situation is the way to go.

You both get an annual tax personal allowance and it doesn't look like they will use theirs so you will need to withdraw more taxable money.

Increase their pension and invest some of that massive cash sum is what I would do.


What about mortgages on theses properties?

What do you mean withdraw more taxable money? 
The mortgage on mine is 6k only keeping it cos of getting more cashback than I pay interest
Hers is around 30k and she has work nest pension with very little in it

If you need £24k and you both have plenty in pensions then you can each withdraw £12k using your nil rate annual allowance with no tax to pay.
If you need £24k and her pension doesn't have enough in it to withdraw £12k then you will need to make up the shortfall and as what you withdraw is over the £12k threshold then you will have to pay some tax.
More evenly balanced pensions are more tax efficient as you both get nil rate allowances and she can only transfer a little bit to you.

westv

Linton said:

westv said:

cfw1994 said:

westv said:

Linton said:

flopsy1973 said:

Hi 
Me and OH are looking to retire at 60 I am 48 now and I have assets of about 1 million. We will both get full state pension at 68. We were looking at funding the gap between 60 till 68 with our savings to give us joint income of about 30k to give us comftarble living according to research? . Then when our state pension kicks in we can just top up the pension with our savings to give us that approx income of 30k. Are there any problems with this simple idea is it achieveble ?  I did try find some pension calculator to see if this would work but no luck. Any feedback or suggestions 

Using published research to determine your income needs in requirement is a seriously bad idea. One person’s “comfortable” could be seen as luxury or penury by someone else. It would be better to determine how much you are spending now, reduce it by the items that won’t apply in retirement and use that as the starting point. You may then wish to include one-offs such as extra holidays, car replacement etc.

It may not be wise to use it as a definitive figure but it can be used as a guide. Yes, certain costs will go but, on the other hand, certain non one-off costs could increase. Looking at what other retirees have spent more money on can assist in deciding what a working person might spend more on once retired.

Sounds like the route to madness to me 😜
Everyone need to “DYOR” into what they spend.  If you have no idea of that, you aren’t ready to retire, I would suggest.

I don't agree. You can know what you spend NOW but it won't necessarily help you to know what additional daily/weekly/monthly spending you might have when retired. 

Wealth in retirement should not be very different to what you are used to..  If you want to take up an expensive hobby then explicitly account for it.  Otherwise, the objective is too ensure you can maintain the same standard of living in retirement as you enjoyed whilst working.  If you cant you may well be unhappy, if you have a lot more wealth in retirement than you are used to then you could have retired earlier and tthere is the possibility that you may not be able to usefully spend it.

I dont believe coming up with a total budget from a list of general categories is the best approach.   The chances are you actually spend significant money on other things that make live worthwhile for you.

Overall spending now = X
Things with no spending in retirement = Y
Things I might spend in retirement = Z

Retirement budget = X-Y+Z = ?

To know what "?" is you need to have some idea of what "Z" is. You could guess the number but you could also use what those who have retired spend as a general guide as to what you might (or might not) spend additional money on. 

Parking_Trouble

Does the OP or their partner actually want to stop work now, or at age 60 which they originally said?
48 is young to stop work and doesn't suit everyone but maybe now they might think 55 (or 57) might be an attractive option.

Looks like filling the gap from 60 to 68 is a breeze and there's no need to change job.

If one or both wants to stay in employment then maybe max the pension contributions. It'll minimise tax and NI and it sounds like the partner needs to beef up their own financial security. Use the savings and investment to max the contributions and maintain  the living standards. Doesn't sound like they need a lot.

Linton

westv said:

Linton said:

westv said:

cfw1994 said:

westv said:

Linton said:

flopsy1973 said:

Hi 
Me and OH are looking to retire at 60 I am 48 now and I have assets of about 1 million. We will both get full state pension at 68. We were looking at funding the gap between 60 till 68 with our savings to give us joint income of about 30k to give us comftarble living according to research? . Then when our state pension kicks in we can just top up the pension with our savings to give us that approx income of 30k. Are there any problems with this simple idea is it achieveble ?  I did try find some pension calculator to see if this would work but no luck. Any feedback or suggestions 

Using published research to determine your income needs in requirement is a seriously bad idea. One person’s “comfortable” could be seen as luxury or penury by someone else. It would be better to determine how much you are spending now, reduce it by the items that won’t apply in retirement and use that as the starting point. You may then wish to include one-offs such as extra holidays, car replacement etc.

It may not be wise to use it as a definitive figure but it can be used as a guide. Yes, certain costs will go but, on the other hand, certain non one-off costs could increase. Looking at what other retirees have spent more money on can assist in deciding what a working person might spend more on once retired.

Sounds like the route to madness to me 😜
Everyone need to “DYOR” into what they spend.  If you have no idea of that, you aren’t ready to retire, I would suggest.

I don't agree. You can know what you spend NOW but it won't necessarily help you to know what additional daily/weekly/monthly spending you might have when retired. 

Wealth in retirement should not be very different to what you are used to..  If you want to take up an expensive hobby then explicitly account for it.  Otherwise, the objective is too ensure you can maintain the same standard of living in retirement as you enjoyed whilst working.  If you cant you may well be unhappy, if you have a lot more wealth in retirement than you are used to then you could have retired earlier and tthere is the possibility that you may not be able to usefully spend it.

I dont believe coming up with a total budget from a list of general categories is the best approach.   The chances are you actually spend significant money on other things that make live worthwhile for you.

Overall spending now = X
Things with no spending in retirement = Y
Things I might spend in retirement = Z

Retirement budget = X-Y+Z = ?

To know what "?" is you need to have some idea of what "Z" is. You could guess the number but you could also use what those who have retired spend as a general guide as to what you might (or might not) spend additional money on. 

Y is dealt with by removing costs that clearly only apply whilst working - eg season tickets.  My point is that Z should be pretty close to zero unless you are making major changes to your lifestyle.  From my own experience and discussions on this forum day to day living in retirement costs much the same as when working.  You save on some things (eg clothes, lunch snacks) but spend more on other things (eg keeping the house warm during the day in winter). But it pretty much balances out.  Any major change in costs would be due to a deliberate decision on your part to do something different and only you know what that might be.

Audaxer

Linton said:

westv said:

Linton said:

westv said:

cfw1994 said:

westv said:

Linton said:

flopsy1973 said:

Hi 
Me and OH are looking to retire at 60 I am 48 now and I have assets of about 1 million. We will both get full state pension at 68. We were looking at funding the gap between 60 till 68 with our savings to give us joint income of about 30k to give us comftarble living according to research? . Then when our state pension kicks in we can just top up the pension with our savings to give us that approx income of 30k. Are there any problems with this simple idea is it achieveble ?  I did try find some pension calculator to see if this would work but no luck. Any feedback or suggestions 

Using published research to determine your income needs in requirement is a seriously bad idea. One person’s “comfortable” could be seen as luxury or penury by someone else. It would be better to determine how much you are spending now, reduce it by the items that won’t apply in retirement and use that as the starting point. You may then wish to include one-offs such as extra holidays, car replacement etc.

It may not be wise to use it as a definitive figure but it can be used as a guide. Yes, certain costs will go but, on the other hand, certain non one-off costs could increase. Looking at what other retirees have spent more money on can assist in deciding what a working person might spend more on once retired.

Sounds like the route to madness to me 😜
Everyone need to “DYOR” into what they spend.  If you have no idea of that, you aren’t ready to retire, I would suggest.

I don't agree. You can know what you spend NOW but it won't necessarily help you to know what additional daily/weekly/monthly spending you might have when retired. 

Wealth in retirement should not be very different to what you are used to..  If you want to take up an expensive hobby then explicitly account for it.  Otherwise, the objective is too ensure you can maintain the same standard of living in retirement as you enjoyed whilst working.  If you cant you may well be unhappy, if you have a lot more wealth in retirement than you are used to then you could have retired earlier and tthere is the possibility that you may not be able to usefully spend it.

I dont believe coming up with a total budget from a list of general categories is the best approach.   The chances are you actually spend significant money on other things that make live worthwhile for you.

Overall spending now = X
Things with no spending in retirement = Y
Things I might spend in retirement = Z

Retirement budget = X-Y+Z = ?

To know what "?" is you need to have some idea of what "Z" is. You could guess the number but you could also use what those who have retired spend as a general guide as to what you might (or might not) spend additional money on. 

Y is dealt with by removing costs that clearly only apply whilst working - eg season tickets.  My point is that Z should be pretty close to zero unless you are making major changes to your lifestyle.  From my own experience and discussions on this forum day to day living in retirement costs much the same as when working.  You save on some things (eg clothes, lunch snacks) but spend more on other things (eg keeping the house warm during the day in winter). But it pretty much balances out.  Any major change in costs would be due to a deliberate decision on your part to do something different and only you know what that might be.

I agree that you save on some things like commuting and spend on other things, and it does usually balance out. However I assume in a lot of cases the "Things they might spend in retirement" like new expensive hobbies or interests, might not be known pre-retirement, especially in cases where the person is some years from retiring like the OP who is 12 years from retirement. 

Albermarle

Audaxer said:

Linton said:

westv said:

Linton said:

westv said:

cfw1994 said:

westv said:

Linton said:

flopsy1973 said:

Hi 
Me and OH are looking to retire at 60 I am 48 now and I have assets of about 1 million. We will both get full state pension at 68. We were looking at funding the gap between 60 till 68 with our savings to give us joint income of about 30k to give us comftarble living according to research? . Then when our state pension kicks in we can just top up the pension with our savings to give us that approx income of 30k. Are there any problems with this simple idea is it achieveble ?  I did try find some pension calculator to see if this would work but no luck. Any feedback or suggestions 

Using published research to determine your income needs in requirement is a seriously bad idea. One person’s “comfortable” could be seen as luxury or penury by someone else. It would be better to determine how much you are spending now, reduce it by the items that won’t apply in retirement and use that as the starting point. You may then wish to include one-offs such as extra holidays, car replacement etc.

It may not be wise to use it as a definitive figure but it can be used as a guide. Yes, certain costs will go but, on the other hand, certain non one-off costs could increase. Looking at what other retirees have spent more money on can assist in deciding what a working person might spend more on once retired.

Sounds like the route to madness to me 😜
Everyone need to “DYOR” into what they spend.  If you have no idea of that, you aren’t ready to retire, I would suggest.

I don't agree. You can know what you spend NOW but it won't necessarily help you to know what additional daily/weekly/monthly spending you might have when retired. 

Wealth in retirement should not be very different to what you are used to..  If you want to take up an expensive hobby then explicitly account for it.  Otherwise, the objective is too ensure you can maintain the same standard of living in retirement as you enjoyed whilst working.  If you cant you may well be unhappy, if you have a lot more wealth in retirement than you are used to then you could have retired earlier and tthere is the possibility that you may not be able to usefully spend it.

I dont believe coming up with a total budget from a list of general categories is the best approach.   The chances are you actually spend significant money on other things that make live worthwhile for you.

Overall spending now = X
Things with no spending in retirement = Y
Things I might spend in retirement = Z

Retirement budget = X-Y+Z = ?

To know what "?" is you need to have some idea of what "Z" is. You could guess the number but you could also use what those who have retired spend as a general guide as to what you might (or might not) spend additional money on. 

Y is dealt with by removing costs that clearly only apply whilst working - eg season tickets.  My point is that Z should be pretty close to zero unless you are making major changes to your lifestyle.  From my own experience and discussions on this forum day to day living in retirement costs much the same as when working.  You save on some things (eg clothes, lunch snacks) but spend more on other things (eg keeping the house warm during the day in winter). But it pretty much balances out.  Any major change in costs would be due to a deliberate decision on your part to do something different and only you know what that might be.

I agree that you save on some things like commuting and spend on other things, and it does usually balance out. However I assume in a lot of cases the "Things they might spend in retirement" like new expensive hobbies or interests, might not be known pre-retirement, especially in cases where the person is some years from retiring like the OP who is 12 years from retirement. 

If you lose out on work perks when you retire ( company car , health insurance etc ) 
Then it is X+Y + Z   

cfw1994

westv said:

I don't agree. You can know what you spend NOW but it won't necessarily help you to know what additional daily/weekly/monthly spending you might have when retired. 

It's fine for us to disagree 😎👍

My view, rightly or wrongly, is that if you don't know what you spend now, you have very little chance of knowing what you might need when retired 🤷🏼‍♂️

If you *do* know, then you are in a much better position to have an idea for your future spend💡   
What additional spend might you have?   Surely that is covered by my comment "5* is the retirement you would desire: more on holidays, entertainment perhaps" ?

Sure, that could be a big increase (world cruise, holidays, etc etc), but that is for you to decide: life isn't a rehearsal, and generic Which? or University reports are really just that - take a look, see if they identify anything you hadn't thought of, but apply it to YOUR life.   Maybe beer is £6 a pint for you.  Maybe it's £3.  Nothing generic here: cheers 🍻

One area I do feel hard to define (IMHO) is healthcare.   I don't mean just potentially care home costs - not sure I would ever have given up work if I worried to much about that - but other possible costs.  At least in the UK we are lucky to have the NHS

Audaxer said:

cfw1994 said:

Sounds like the route to madness to me 😜
Everyone need to “DYOR” into what they spend.  If you have no idea of that, you aren’t ready to retire, I would suggest.

Start at The Number thread if you have never budgeted before.  

Figure out your essential spend items (monthly/quarterly/annual bills that are pretty non-negotiable), identify and add on the discretionary spend and figure out the desirable.
Something like this:


(These numbers are just generic ones, not ours….& you can see assumes the mortgage number shown has gone by retirement 😉)

I view the “comfy” as being “as things are now”.  

“Tight” would be drawing the belt in, perhaps markets drop and you don’t want to risk your savings pots, maybe for other reasons.

“5*” is the retirement you would desire: more on holidays, entertainment perhaps.

Studis can certainly give their idea of a guide, but thinking they will match your lifestyle is a bit…..dangerous!

I'm not sure these figures are up-to-date as £20,978 certainly wouldn't give us, or I suspect most retired couples, a 5* retirement lifestyle. The Which website estimates £41k for a luxury retirement lifestyle for a couple, and I'm sure I saw a link from this forum to another site recently which had £47k for a luxury retirement lifestyle for a couple.

I did say These numbers are just generic ones - they wouldn't meet our desires either, but we all know that they *could* meet some 😉

My point was simply that people need to do their own research for themselves, in their lives, & not to rely on very generic reports from anywhere.   Sure, as I said above, use them to see if you have missed anything, but figure things out for yourself.

Or indeed, don't - there is no right or wrong here, just views & opinions: mine is as valuable as the pay I got to type it 🤣👍

jamesd

flopsy1973 said:

Sorry forgot to add so can we do this or do I need to consider the other job

You can do it in my opinion, provided you're willing to use at least 50% equity (share) fund investments.

But that's not really the best answer. The best answer is that you should read the Drawdown: safe withdrawal rate thread and the references it links to and more and form your own opinion, then act based on that. It's fine for me to be comfortable for it a few years after retiring at 55 but you are the two people who need to be comfortable with it and tolerances vary hugely.

MK62

The Which website estimates £41k for a luxury retirement lifestyle for a couple, and I'm sure I saw a link from this forum to another site recently which had £47k for a luxury retirement lifestyle for a couple.

In the end this is going to come down to personal opinion on the meaning of luxury.......personally I don't see £41k for a couple as luxury....perhaps not even £47k either........on the sunny side of comfortable, sure, but luxury???