Just became a millionaire

hugheskevi

marlot said:

The ONS death date figure suggests I'll live to 84.  I retired at 55, and took some DB pensions then.

https://www.ons.gov.uk/peoplepopulationandcommunity/healthandsocialcare/healthandlifeexpectancies/articles/lifeexpectancycalculator/2019-06-07

Personally I prefer to align with the assumptions being used by pension scheme actuaries, as the population data used by ONS is not representative of DB pension scheme savers that tend, on average, to be higher paid and have longer life expectancy.

Even then, DB scheme experience varies significantly depending on the membership, with schemes having a legacy membership of high percentage of manual workers from deprived areas seeing far lower life expectancy than schemes with a mostly white collar non-manual background from prosperous areas,

Pension Regulator data suggests 45 year old men have a median life expectancy of 89 years and a 65 year old is 87 years. For females, a 45 year old is 91 years and a 65 year old 89 years.

Alexland

DT2001 said:

I like the idea of including SP as it has value.

If we are including SP can I include our anticipated future child benefit payments and LISA bonuses? It really doesn't seem right to include future money from the government (or the full value of tax deferred pensions) without the corresponding future tax liability.

Albermarle

hugheskevi said:

marlot said:

The ONS death date figure suggests I'll live to 84.  I retired at 55, and took some DB pensions then.

https://www.ons.gov.uk/peoplepopulationandcommunity/healthandsocialcare/healthandlifeexpectancies/articles/lifeexpectancycalculator/2019-06-07

Personally I prefer to align with the assumptions being used by pension scheme actuaries, as the population data used by ONS is not representative of DB pension scheme savers that tend, on average, to be higher paid and have longer life expectancy.

Even then, DB scheme experience varies significantly depending on the membership, with schemes having a legacy membership of high percentage of manual workers from deprived areas seeing far lower life expectancy than schemes with a mostly white collar non-manual background from prosperous areas,

Pension Regulator data suggests 45 year old men have a median life expectancy of 89 years and a 65 year old is 87 years. For females, a 45 year old is 91 years and a 65 year old 89 years.

So the pension actuaries are adding about three years on to the life expectancy of a 65 year old , compared to the figures usually quoted .

DT2001

Alexland said:

DT2001 said:

I like the idea of including SP as it has value.

If we are including SP can I include our anticipated future child benefit payments and LISA bonuses? It really doesn't seem right to include future money from the government (or the full value of tax deferred pensions) without the corresponding future tax liability.

I see your net worth as a personal/joint balance sheet. 

If you ‘own’ something that will generate an income stream it has a value. Obviously there are special accounting rules as your ‘assets’ can disappear or half on death/1st death. You can also have the potential liability for future tax.

If you see Net Worth as realisable assets then that is different however personally I think it should reflect more than that. 

If you use the balance sheet analogy then the more important part is your profit and loss and cash-flow forecast. They work in tandem

[Deleted User]

marlot said:

Albermarle said:

I do agree with you I was just curious how you would assess a DB element.

Well for LTA purposes it is X20 but everybody thinks that is too low.

Most CETV offers are in the region of X 30 to 35 but current market conditions means that is higher than they have been historically .

Mordko's approx estimate of X25 is as good as any for this type of theoretical exercise . A bit more if the T's and C's about inflation linking and spousal pension are  good .

I've done it slightly differently.  The ONS death date figure suggests I'll live to 84.  I retired at 55, and took some DB pensions then.

For DB pensions taken at 55, I multiply the current payment rate x 30.
My wife's main DB pays out at 60, so x25
State pensions at 67, so multiplied by just 18.

Add in our savings and SIPPs and this comes out at a fairly decent number.  But I then deduct tax and living expenses over the course of my retirement and I come out about even.  So hopefully I've juggled saving for retirement about right.

https://www.ons.gov.uk/peoplepopulationandcommunity/healthandsocialcare/healthandlifeexpectancies/articles/lifeexpectancycalculator/2019-06-07

Expected age at mortality changes as one gets older. 

Ganga

Mistermeaner said:

monaymadlol said:

Mistermeaner said:

Just some random musings after my net worth (dc pensions + isas + House equity) tipped the 1million Mark at age 42

- Save hard and save early ; i earn well but not mega bucks. I'm a middle manager not director. 10 years ago I was recently divorced with 1 kid and earning 35k. Now I have 4 kids and earn around 90k + bonuses but it's only in the last 5 years I've been in the 60k+ bracket

- Been 'lucky' with stock market performance in last 10years and no doubt this will drop some time but I did things right in investing cheaply and globally 100% in equities and didn't mess around changing investment s or timing drops e tc 

- Been very tax efficient maximising annual allowances and Lisa's etc .... I feel like I could ease off pension contributions but just can't bring myself to pay taxes to get at my hard earned

- I live well below my means : I have a nice house and buy good food but no fancy clothes holidays cars etc - material goods bring fleeting pleasure , family very much share same values - kids want for nothing and aren't bothered about competing for fanciest football boots in the team e tc. I'm typing this on 8year old kindle hence all the typos

- Goes without saying but no drugs, very little alcohol , plenty of exercise and sleep

- Learned so much from this forum and others like it - take time to research and learn them follow great advice

- don't rush to pay off the mortgage - that is good cheap debt. don't however get cars and other rubbish on credit

- Pick partner carefully , my first wife was a financial liability - I'm lucky we split young and only had one kid

- Hitting big financial milestones early bring s an element of peace of mind but not necessarily freedom - we still.Got bills to pay and I will keep working in fairly stressfu! Job for now - tax remains a massive anchor and remains and incentive to save into pension

- That said we are hoping that the missus can start back work part time in a couple of years and then hopefully I can do the same . A couple earning modestly is way more tax and time efficient than one big earner

- Having achieved an element of future security our plan will.now be to make sure we have good quality of life with plenty of free time - money important but only to a point and not worth sacrificing quality of life for too much .

- saMe goes for health - I've been hospitalised with stress related conditions - never again 

- StreTch - do yoga , never too late to s

No fancy clothes, cars, holiday.

What a depressing way to live with so much money you earn.

Live life, you could die tomorrow and your post would mean zilch

I feel sorry for people that need material things to make them happy

And you're incorrect about it meaning zilch - if I d is tomorrow my savings pension and life insurance will see my partner and kids financially covered for the rest of their lives with no detriment to lifestyle - someone living closed to the wife with credit and little savings would be much more vulnerable 

What like food ,heating and lighting ,personal transport , presents for my wife /children /grandkids ,do not feel sorry for me .

michaels

marlot said:

Albermarle said:

I do agree with you I was just curious how you would assess a DB element.

Well for LTA purposes it is X20 but everybody thinks that is too low.

Most CETV offers are in the region of X 30 to 35 but current market conditions means that is higher than they have been historically .

Mordko's approx estimate of X25 is as good as any for this type of theoretical exercise . A bit more if the T's and C's about inflation linking and spousal pension are  good .

I've done it slightly differently.  The ONS death date figure suggests I'll live to 84.  I retired at 55, and took some DB pensions then.

For DB pensions taken at 55, I multiply the current payment rate x 30.
My wife's main DB pays out at 60, so x25
State pensions at 67, so multiplied by just 18.

Add in our savings and SIPPs and this comes out at a fairly decent number.  But I then deduct tax and living expenses over the course of my retirement and I come out about even.  So hopefully I've juggled saving for retirement about right.

https://www.ons.gov.uk/peoplepopulationandcommunity/healthandsocialcare/healthandlifeexpectancies/articles/lifeexpectancycalculator/2019-06-07

I'd value it as the cost of buying a replacement annuity.

Albermarle

michaels said:

marlot said:

Albermarle said:

I do agree with you I was just curious how you would assess a DB element.

Well for LTA purposes it is X20 but everybody thinks that is too low.

Most CETV offers are in the region of X 30 to 35 but current market conditions means that is higher than they have been historically .

Mordko's approx estimate of X25 is as good as any for this type of theoretical exercise . A bit more if the T's and C's about inflation linking and spousal pension are  good .

I've done it slightly differently.  The ONS death date figure suggests I'll live to 84.  I retired at 55, and took some DB pensions then.

For DB pensions taken at 55, I multiply the current payment rate x 30.
My wife's main DB pays out at 60, so x25
State pensions at 67, so multiplied by just 18.

Add in our savings and SIPPs and this comes out at a fairly decent number.  But I then deduct tax and living expenses over the course of my retirement and I come out about even.  So hopefully I've juggled saving for retirement about right.

https://www.ons.gov.uk/peoplepopulationandcommunity/healthandsocialcare/healthandlifeexpectancies/articles/lifeexpectancycalculator/2019-06-07

I'd value it as the cost of buying a replacement annuity.

That would seem a bit too much , especially as currently annuities are very poor value .
Based on a £10K pension with inflation linkage and 50% spouse.
Times 20 X = £200K ( LTA multiplier)
Times 25X = £250K 
Times 30X = £300K ( typical CETV offer )
Buy annuity = £500K ( 50X) 
Drawdown pot needed to withdraw at 3.5% = £285K ( 28.5X) 

So depending on your view you can legitimately pick a figure between 20X and 50X, although I think most would view a figure between 25X and 30X as good an estimate as any.