Enough in my pensions?

What_time_is_it

I've got a mixture of DB (final salary- now dormant, and average salary - still contributing) and DC pensions. I've only started contributing AVCs to my DC pot in the past 10 years, and I want to make sure I'm on track to retire by 60. 

Final salary (dormant) 1: £1.5k pa, plus lump sum of £3.5k
Final salary (dormant) 2: £3.5k pa, plus lump sum of £10k
Average salary (ongoing): £3k pa, plus lump sum of £9k
DC pot (now contributing about £1k per month): £65k 
State pension on top of that: ???

Salary in the £40-£45k range
Age 45

For info my partner's pension is much smaller than this.
She has around £3.5k pa in an ongoing average salary scheme, with a lump sum at around £10k.
Salary around £25k, age 45.

We both work full-time and have no dependents.

Are we "on track"?
Should we be doing more?

Audaxer

It doesn't sound that much so far when you add up the final and average salary pensions, but it really depends what your target income is for retirement?  

You have around £70k in gross annual income between you, so I would try to pay in as much as possible into your DC pensions over the next 15 years. If you are both on track for full State Pensions at 67 or 68, that should make up a decent chunk of your income - around £7,700 each after tax from SP age at today's rate. Maybe more if you or your wife have available personal tax allowance at that time.

What_time_is_it

Thanks for your comments @Audaxer.
Yes, we've left it late and should have started earlier, but we do intend to max out our DC pensions as much as possible. Maybe upping our contributions to around £1.5k - £2k per month between us.

I think around £2k income per month (jointly) after tax in today's money would cover us very nicely in retirement.

MX5huggy

You’re going to add about £13k to the CARE and wife about £7.5k (calculated as 1/50th of annual salary multiplied by 15 years, you need to use your actual accrual rates). But that will be for taking the pension at 67 or even 68. You need to get the tables for each scheme but LGPS is 29% for 7 years early so £20.5k becomes £14500.

Basically you’ll have enough once SP kicks in but you need to work out how much you need to get from 60 to SP and how your going to save for it using AVC being the best plan. 

What_time_is_it

Thanks @MX5huggy.
That's similar to what we were trying to work out. If we both retire at 60, and assume that we don't take out of our DB pensions and state pension until 70, then we will need to have around £250k in the pot (in today's money) to get us through those 10 years on £2k a month. 
Am I calculating this right? Or missing something?

sheslookinhot

What_time_is_it said:

Thanks @MX5huggy.
That's similar to what we were trying to work out. If we both retire at 60, and assume that we don't take out of our DB pensions and state pension until 70, then we will need to have around £250k in the pot (in today's money) to get us through those 10 years on £2k a month. 
Am I calculating this right? Or missing something?

Why would you wait until 70 to access your DB pension ?

What_time_is_it

sheslookinhot said:

What_time_is_it said:

Thanks @MX5huggy.
That's similar to what we were trying to work out. If we both retire at 60, and assume that we don't take out of our DB pensions and state pension until 70, then we will need to have around £250k in the pot (in today's money) to get us through those 10 years on £2k a month. 
Am I calculating this right? Or missing something?

Why would you wait until 70 to access your DB pension ?

sheslookinhot said:

What_time_is_it said:

Thanks @MX5huggy.
That's similar to what we were trying to work out. If we both retire at 60, and assume that we don't take out of our DB pensions and state pension until 70, then we will need to have around £250k in the pot (in today's money) to get us through those 10 years on £2k a month. 
Am I calculating this right? Or missing something?

Why would you wait until 70 to access your DB pension ?

Well, I was thinking of waiting until state retirement age to access it so that it doesn't get reduced. I'd estimated state retirement age to be 70 in 25 years time.
Or is it better to take a reduced DB pension immediately when retiring?

MX5huggy

Yes go through each pension and work out what it will pay at 60 (while you are at it do 55 and 65 as well). Taking DB pensions early is cost neutral so in my example £21000 becomes £14500 by taking it 7 years early without checking the early retirement option gets more money out in total until you live to 84 ish. Look at not taking any lump sums where possible these are poor value. (Use your AVC for lump sum). 

Watch out for sequence of death risk if you die early your partner will have a much bigger cut in total income then you if she dies early. (Presuming the DB’s are pay 1/3rd to 1/2 as dependents pensions.)

What_time_is_it

Thanks @MX5huggy.
That's really helpful information. 
I'm still fairly new to this and learning all the time!

Audaxer

What_time_is_it said:

Thanks @MX5huggy.
That's similar to what we were trying to work out. If we both retire at 60, and assume that we don't take out of our DB pensions and state pension until 70, then we will need to have around £250k in the pot (in today's money) to get us through those 10 years on £2k a month. 
Am I calculating this right? Or missing something?

£2k per month spend seems quite low for a couple currently earning £70k. I only say that as we are a retired couple averaging more in the range of £2.5k per month (around the same as when we were working), and I don't consider us big spenders.

A £250k pot of cash would cover a fixed £2k per month over 10 years without much allowance for inflation. However I assume you plan to keep most of it invested, whereby I think it would be quite difficult to ensure it is a risk/volatility level to ensure you could safely drawdown £24k per year plus inflation over 10 years.

I am surprised that you say that you plan on not taking DB or SPs until you are 70. I was assuming you were planning to take DB pensions at 60 and SP at 67/68. That way I would have thought you could keep your DC pots invested, just to top your DB pensions from 60, and still having a fair amount in the DC pots when you are able to claim your SPs?

What_time_is_it

Audaxer said:

What_time_is_it said:

Thanks @MX5huggy.
That's similar to what we were trying to work out. If we both retire at 60, and assume that we don't take out of our DB pensions and state pension until 70, then we will need to have around £250k in the pot (in today's money) to get us through those 10 years on £2k a month. 
Am I calculating this right? Or missing something?

£2k per month spend seems quite low for a couple currently earning £70k. I only say that as we are a retired couple averaging more in the range of £2.5k per month (around the same as when we were working), and I don't consider us big spenders.

A £250k pot of cash would cover a fixed £2k per month over 10 years without much allowance for inflation. However I assume you plan to keep most of it invested, whereby I think it would be quite difficult to ensure it is a risk/volatility level to ensure you could safely drawdown £24k per year plus inflation over 10 years.

I am surprised that you say that you plan on not taking DB or SPs until you are 70. I was assuming you were planning to take DB pensions at 60 and SP at 67/68. That way I would have thought you could keep your DC pots invested, just to top your DB pensions from 60, and still having a fair amount in the DC pots when you are able to claim your SPs?

Thanks for the comments again @audaxer. 
I'm really not much of an expert and it does sound it may well be better to plan to take our DB pensions at the point of retirement. I'd used 70 as a guess at what the state pension might be in 25 years time, but we would certainly both take our state pension as soon as it is available.