Average pension pot on retirement and whats your aim ?

bostonerimus

While I was working, and someone else was putting money into my account, I took the opportunity to pay down my debt, including the mortgage and made sure I paid for large capital; expenses like a new roof and car before I retired. I could have invested that money, but my approach was to  invest some money and use the rest to reduce fixed costs to take pressure off my pot in retirement. Without a mortgage or any other debt payments I find that my living expenses are about £18k/year with a lot going to home insurance and council/town real estate taxes. But my relatively low expenditure is easily covered by DB pension and a rental property that I also bought and paid off when I was working. Hence my DC pot is not stressed, which means I'm not stressed either.

bostonerimus

Sunnylifeover50plan said:

Ibrahim5 said:

With DC pensions you never know how much you have. The valuation changes every minute. If you look at Seashell's thread a few months ago it was all about having too much money and spending more. Now it's about inflation and energy prices and keeping warm. I can cope with the turbulence because I have over £20k in DB pension. I wouldn't like no DB pension. It was on the news that Russian share prices had dropped 90%. I am sure everyone will say that could never happen with their shares but it does show the nature of share values 

But harping on about DB pensions to those who they are not available to is a little like like trying to sell the virtue of alcohol or bacon to a Muslim or Jew.  

A DB pension certainly reduces the income generation pressure, but there are other ways to do that as well. Pay off all debt, including the mortgage, while you are working, maybe diversify your investments to include a rental property, control your spending and be open to partial annuitization if the numbers look good.

Thrugelmir

Sunnylifeover50plan said:

My aim was £620k by 55 though the assumptions I had made in my original planning sheets are perhaps now no longer valid, at least in the short term. I hit that target aged 52 in December 21 but value has eased since then.

Given we currently self fund spend actuals are on target but inflation is a concern along with current market volatility. 

I'm surprised by some comments about being terrified by DC pensions/ SIPPs given most in the UK, at least in the private sector, no longer have a choice. The forum could benefit from a degree of separation between DC/DB.

I'd probably be terrified at the moment if I were in the Ukraine but I lose no sleep over my pension.

I'm sure that there's many investors who have been extrapolating recent stock market growth rates and planning for an early well funded retirement. Bear markets are named as such for good reason. There's a generation of investors yet to experience the full force of one. 

michaels

Sunnylifeover50plan said:

Ibrahim5 said:

With DC pensions you never know how much you have. The valuation changes every minute. If you look at Seashell's thread a few months ago it was all about having too much money and spending more. Now it's about inflation and energy prices and keeping warm. I can cope with the turbulence because I have over £20k in DB pension. I wouldn't like no DB pension. It was on the news that Russian share prices had dropped 90%. I am sure everyone will say that could never happen with their shares but it does show the nature of share values 

But harping on about DB pensions to those who they are not available to is a little like like trying to sell the virtue of alcohol or bacon to a Muslim or Jew.  

I am taking a large cut in my headline pay to join the CS entirely so that I can transfer some of my DC into the CS DB scheme - about 20k gross pa should do it along with state pensions to give that nice squeak free bum feeling. 

Then I will still have a DC pot that will allow me to retire whenever I want and fill the gap until SRA but I will have derisked.

Lets look at what a DC pot means - compared late last year to now, 4% rule would give me 10% less income plus rpi inflation of 7.5% would mean perhaps 15% less effectively per year forever than I might have thought likely just 6 months before.  Sure some would like to have a 25% cushion and then it is so what but I would rather not put in the extra years to build up that cushion that in 95% of scenarios would turn out to be excessive but that sounds pretty inefficient to me - after all you can only be certain you have 'won' and up your expenditure long after your ideal period for spending more.

bostonerimus

michaels said:

Sunnylifeover50plan said:

Ibrahim5 said:

With DC pensions you never know how much you have. The valuation changes every minute. If you look at Seashell's thread a few months ago it was all about having too much money and spending more. Now it's about inflation and energy prices and keeping warm. I can cope with the turbulence because I have over £20k in DB pension. I wouldn't like no DB pension. It was on the news that Russian share prices had dropped 90%. I am sure everyone will say that could never happen with their shares but it does show the nature of share values 

But harping on about DB pensions to those who they are not available to is a little like like trying to sell the virtue of alcohol or bacon to a Muslim or Jew.  

I am taking a large cut in my headline pay to join the CS entirely so that I can transfer some of my DC into the CS DB scheme - about 20k gross pa should do it along with state pensions to give that nice squeak free bum feeling. 

Then I will still have a DC pot that will allow me to retire whenever I want and fill the gap until SRA but I will have derisked.

Lets look at what a DC pot means - compared late last year to now, 4% rule would give me 10% less income plus rpi inflation of 7.5% would mean perhaps 15% less effectively per year forever than I might have thought likely just 6 months before.  Sure some would like to have a 25% cushion and then it is so what but I would rather not put in the extra years to build up that cushion that in 95% of scenarios would turn out to be excessive but that sounds pretty inefficient to me - after all you can only be certain you have 'won' and up your expenditure long after your ideal period for spending more.

I did the same and spent the last 10 years of my career in a government organization and put $280k into the DB plan. I'm very glad of the guaranteed monthly check now and the inflation indexing.

ex-pat_scot

General ambition - to hit LTA by 55, in a couple of years. If nothing else, the LTA is a powerful disincentive to carry on beyond.
I might carry on a little longer, perhaps to optimise the last year's tax position, or if the markets are not as kind.
Or I might stop and settle for what I have.
Who knows? It's not a bad starting point.

I'll certainly have to get to 55, and then reflect.

From a financial standpoint, the optimum would be clearly to hit the LTA, then stop.
I suspect I'll want to work until the summer, so as to collect a final year's NI, and also get a decent tax refund.
My quandary is that I'm reasonably well paid (approx £140,000 pa) so the draw of "one more year" is strong.

From an emotional standpoint, I can't wait to stop.
I struggle, and always have, with managing my time and the work/life interface. I am rather overwhelmed with work, but there isn't any ready solution. 

From a family standpoint, there will undoubtedly be challenges on children leaving for uni, funding of school fees and uni contributions etc for a while.

In terms of costs, I'm not entirely sure.
I have a good friend whose early retirement base costs are £1,500/m to run the house. Bills etc and day to day expenses. Fun budget and capital expenditure on top. Modern house (and pre-Ukraine energy prices). It seems pretty decent as a starting point, perhaps adjusting to £2,000/m in light of the current utilities prices. (he's a rich retired ex C suite from large PLC, so doesn't need to budget).
I'm expecting our current costs will ebb back once the youngest children make their way out into the world, but at the moment it seems that the elder ones are replacing direct costs (lots of teenage spending on music, drama, sports etc) with indirect costs (uni support, discretionary help).
I think that £3,000 pm would be OK, £4,000 pm good. Simplistically this would mean that I'd take out of the DC pot up to the top of BR tax threshold, which is the most tax-efficient approach anyway. It's a good start.

flipper_72

I have learned so much reading this board, and am now actively saving for my retirement from a salary of £18,361, I know I don’t earn a lot and plan to change that as soon as I can but 

“ I'm reasonably well paid (approx £140,000 pa)” puts @ex-pat_scot in the top 1% of uk earners. This is why so many like me daren’t post on their pot size and expected income in retirement and why it is so skewed.

ex-pat_scot

flipper_72 said:

I have learned so much reading this board, and am now actively saving for my retirement from a salary of £18,361, I know I don’t earn a lot and plan to change that as soon as I can but 

“ I'm reasonably well paid (approx £140,000 pa)” puts @ex-pat_scot in the top 1% of uk earners. This is why so many like me daren’t post on their pot size and expected income in retirement and why it is so skewed.

I am indeed well aware of where my income puts me, but also a fan of self-deprecation and understatement.
I work with a peer group all of whom are on good 6 figure salaries. However I have spent many years previous to this in extended education, professional training, and in good (but not higher tax band) positions to build my CV to command this level, and am acutely aware of the precariousness of operating in this space.  I certainly started at the bottom of the salary ladder.

You note that you are reluctant to share. Conversely, I find the anonymity of the web /forum rather liberating. It's only recently that I've not been muddling through this on my own, and finding inspiration here (eg @Marine_life) for those further along the journey.

Albermarle

michaels said:

Sunnylifeover50plan said:

Ibrahim5 said:

With DC pensions you never know how much you have. The valuation changes every minute. If you look at Seashell's thread a few months ago it was all about having too much money and spending more. Now it's about inflation and energy prices and keeping warm. I can cope with the turbulence because I have over £20k in DB pension. I wouldn't like no DB pension. It was on the news that Russian share prices had dropped 90%. I am sure everyone will say that could never happen with their shares but it does show the nature of share values 

But harping on about DB pensions to those who they are not available to is a little like like trying to sell the virtue of alcohol or bacon to a Muslim or Jew.  

I am taking a large cut in my headline pay to join the CS entirely so that I can transfer some of my DC into the CS DB scheme - about 20k gross pa should do it along with state pensions to give that nice squeak free bum feeling. 

Then I will still have a DC pot that will allow me to retire whenever I want and fill the gap until SRA but I will have derisked.

Lets look at what a DC pot means - compared late last year to now, 4% rule would give me 10% less income plus rpi inflation of 7.5% would mean perhaps 15% less effectively per year forever than I might have thought likely just 6 months before.  Sure some would like to have a 25% cushion and then it is so what but I would rather not put in the extra years to build up that cushion that in 95% of scenarios would turn out to be excessive but that sounds pretty inefficient to me - after all you can only be certain you have 'won' and up your expenditure long after your ideal period for spending more.

I only retired last year and yes it can be said that with my pension/investments down around 8% since the start of 2022; cash savings earning 1 to1.5% and inflation possibly heading to 8 to 10% , I must be 15% worse off than I was on Jan 1st ( rough and ready calculation )
On the other hand the last ten years of investment growth boosted my pot significantly , over 50% above inflation  If I had been a more aggressive investor I would probably have doubled that figure. Plus boost from higher rate tax relief.
So in my book I am still well ahead and the present turbulence will pass at some point ( hopefully) .

MEM62

bostonerimus said:

Sunnylifeover50plan said:

Ibrahim5 said:

With DC pensions you never know how much you have. The valuation changes every minute. If you look at Seashell's thread a few months ago it was all about having too much money and spending more. Now it's about inflation and energy prices and keeping warm. I can cope with the turbulence because I have over £20k in DB pension. I wouldn't like no DB pension. It was on the news that Russian share prices had dropped 90%. I am sure everyone will say that could never happen with their shares but it does show the nature of share values 

But harping on about DB pensions to those who they are not available to is a little like like trying to sell the virtue of alcohol or bacon to a Muslim or Jew.  

A DB pension certainly reduces the income generation pressure, but there are other ways to do that as well. Pay off all debt, including the mortgage, while you are working, maybe diversify your investments to include a rental property, control your spending and be open to partial annuitization if the numbers look good.

Clear debt absolutely. Ideally, you want to enter retirement debt-free.  But it still surprises me that people suggest BTL's as good investments.  The come with their own risks and are neither passive or tax-efficient.