Living on own savings with no /small pension

gorgeousme

Just wondering if anyone is living on own savings and investments as opposed to having annuities and drawdown pensions. I would love to hear about your savings plan, whether this way of funding your retirement has proved to be successful for you and whether you wished you had save for retirement in other ways.

JGB1955

I saved for the 'bit' between taking early retirement (at 58) and receiving my LGPS pension (at 60) by spending a couple of previous years only living at that level.  Once my LGPS kicked in I was, suddenly, awash with money and now, 66+, I can't believe I'm being paid so much, not to work!  It's all down to planning and living within one's needs.

Marcon

gorgeousme said:

Just wondering if anyone is living on own savings and investments as opposed to having annuities and drawdown pensions. I would love to hear about your savings plan, whether this way of funding your retirement has proved to be successful for you and whether you wished you had save for retirement in other ways.

I'm not sure what you are trying to achieve by asking your question. Saving in a registered pension scheme would give substantial tax advantages on the contributions you make, but most of the income is (potentially) taxable when in payment. ISAs don't get tax relief on contribuitons, but (like pensions) grow in a tax-advantaged environment until you take income from them - which, unlike a pension, is tax free.

Whichever route you choose, you're still living on the same commodity: cash. Hard to see why people wouldn't have a mix of pensions and ISAs if they could afford both, but I suspect many people will wish they'd saved more, regardless of where they saved it.

diystarter7

Hi OP

Are you talkng about retiring at/about 50-ish like we did and if so the plan that worked for us

Work hard, be prudent with money, enjoy and save and never borrow a penny where you have to pay interest other than
a mortgage and even that get rid off ASAP

Never HP/lease a car or hols/etc on cc etc.

Get your kids to buy their own car and mobiles etc, save you thousands

by the time you are 40/45, you should be in a postion for a BTL for cash or close, then money makes money if you have a decent BTL - dont be greedy on BTL, rent it out a bit cheaper to nice, hard working people but do invest in a fully managed via LA property and have full cover for legal fees, rent not coming in. Have repairs cover - dont do white goods or furnture its just trouble

Buy a nice car by all means if interested but its a treat and not an investment and be fully aware of running costs b4 buying and depreciation etc

Save as early as you can via company pensios as much as you can

dont throw away your money via speeding and more importantly parking fines

Go on hols outside peak periods

before you know it, you will be able to leave work at 50-sih and as expesnes will go up as you have more time on your hands and at home more and surprises like infaltion soaring, you should be able to have decent returns from your company pesion but not to long before retirment age and then a little bonus of retirment pension and still have tens of thousands in your bank account

Btw, your home, the bigger and older it is the more it will cost to look after, so a decent build from the 1960's in a nice location is a lot of proerty but easy to look after and safely park your car and that of guests on your drive.

Thnaks

diystarter7

Btw, if you are still on your own by 60 and all is well otherwaie, start having extra hols etc whatever you enjoy as you dont want to leave money to the tax man or people you may not really like

I hope there is a little bit in there that helps

LHW99

diystarter7 said:

Hi OP

Are you talkng about retiring at/about 50-ish like we did and if so the plan that worked for us

Work hard, be prudent with money, enjoy and save and never borrow a penny where you have to pay interest other than
a mortgage and even that get rid off ASAP

Never HP/lease a car or hols/etc on cc etc.

Get your kids to buy their own car and mobiles etc, save you thousands

by the time you are 40/45, you should be in a postion for a BTL for cash or close, then money makes money if you have a decent BTL - dont be greedy on BTL, rent it out a bit cheaper to nice, hard working people but do invest in a fully managed via LA property and have full cover for legal fees, rent not coming in. Have repairs cover - dont do white goods or furnture its just trouble

Buy a nice car by all means if interested but its a treat and not an investment and be fully aware of running costs b4 buying and depreciation etc

Save as early as you can via company pensios as much as you can

dont throw away your money via speeding and more importantly parking fines

Go on hols outside peak periods

before you know it, you will be able to leave work at 50-sih and as expesnes will go up as you have more time on your hands and at home more and surprises like infaltion soaring, you should be able to have decent returns from your company pesion but not to long before retirment age and then a little bonus of retirment pension and still have tens of thousands in your bank account

Btw, your home, the bigger and older it is the more it will cost to look after, so a decent build from the 1960's in a nice location is a lot of proerty but easy to look after and safely park your car and that of guests on your drive.

Thnaks

Does also depend a little on what salary you manage to achieve though. If low waged, working hard may not be enough to get a retirement income that offers much in the way of holidays and treats.

IMO upskilling where / when you can, and seeking to move up the career ladder in one way or another ranks alongside all diystarter7's other suggestions.

Mrs_Z

Not sure what you mean exactly by your question - why would you not have a pension?  But if you mean funding an early retirement before drawing your pension - ie. bridging the gap - then I'm currently doing that. 

I've just turned 55yrs, so could access my SIPP but I'm choosing not to, and using my savings instead (along with a very small part time job).  Pension is forecast to start in 8yrs time when i'm 63.

As for the saving plan - i've kept it pretty simple.  I worked out the required monthly budget (not too tight) and I lived and tested that budget whilst still working for a number of years; ie. anything in excess of that monthly budget went straight into savings/investments.  There is some contingency in my figures, but i've just kept the numbers as numbers - it does not take into account inflation nor any earnings on investments or savings (I'm not that clever on Excel!!).
I tot up my figures on the last day of each month and compare to the bench mark figure.  If the actual starts to get near or below the bench mark, then I know that my plan is not sustainable and remedial action is needed.  This could include one or more of the following, in no particular order:

a) start bringing extra income - part/full time job
b) cut monthly costs
c) release equity by downsizing property
d) sell/rent out holiday property

To get to this point has taken a number of years.  The following along the way helped:
- know your needs from wants
- live well within your means
- never had any debt apart from mortgages and getting onto property ladder early
- no children
- no flash cars
- well paid jobs
- BTL property along the way (bought, renovated, rented out, sold)
- investing part of the savings (ISA/SIPP/P2P) (ie. not keeping everything in cash)

Albermarle

gorgeousme said:

Just wondering if anyone is living on own savings and investments as opposed to having annuities and drawdown pensions. I would love to hear about your savings plan, whether this way of funding your retirement has proved to be successful for you and whether you wished you had save for retirement in other ways.

A DC pension is normally invested , so the only difference between living off investments and living off a DC pension, is that the pension has gained some tax benefits in the past.
If you have a DB/final salary pension then that is a different scenario.

gorgeousme

I guess I’m getting disillusioned with my finances. I have always worked hard, up to 3 jobs during various points in my life. I have never borrowed other than my mortgage, and live a frugal life so that I can put more into my pension. The value of my pension has dropped and I have found out that on top of the management charges/ admin fees of the pension fund, I will lose a few more £’000s when I want to retire because I have to get financial advice by law before I take my pension.

I just feel that the rewards do not match my efforts and I am wondering if I should be putting my money somewhere else instead for the last 5-10 years before I officially retire. 

I have read a few articles where young couples have managed to retire early without a pension and I found it refreshing. I wish I had today’s knowledge 40 years ago. 

Dazed_and_C0nfused

 I have found out that on top of the management charges/ admin fees of the pension fund, I will lose a few more £’000s when I want to retire because I have to get financial advice by law before I take my pension.

Can you expand on the reason for that?

It is quite unusual.

ouraggie

“A DC pension is normally invested , so the only difference between living off investments and living off a DC pension, is that the pension has gained some tax benefits in the past.”

Surely the employer pays a chunk into a DC pension, as well as you, but they don’t pay into your ISA.