Success Stories - Pensions

pterri

I’ve been planning to retire for ages. Very lucky with house purchase, paid off well before I was 50.

- DB pension currently worth £35k (rpi linked up to 5%) although can only claim at 60 without penalty, can claim earlier but take quiet a hit
- £123k in company AVCs which I can take out of the whole ‘pot’ tax free. (Long story, I can, I’ve checked)
- £72k sipp
- £97k isa. 

Plan to retire at 56, use the SIPP/isa until 60 and claim the db pension.

can not wait…

savingholmes

pterri said:

I’ve been planning to retire for ages. Very lucky with house purchase, paid off well before I was 50.

- DB pension currently worth £35k (rpi linked up to 5%) although can only claim at 60 without penalty, can claim earlier but take quiet a hit
- £123k in company AVCs which I can take out of the whole ‘pot’ tax free. (Long story, I can, I’ve checked)
- £72k sipp
- £97k isa. 

Plan to retire at 56, use the SIPP/isa until 60 and claim the db pension.

can not wait…

You sound very well set up. 

Albermarle

@Queen_of_the_Hive
My pension pots inc LISA is worth 124k which compared to most is very small but I am working on making increases where I can. 

£124K at age 43 is not very small, and for the private sector at least is well above average. Of course you do see some bigger numbers on this forum, but that is not typical of your average person.
On the other hand of course the bigger the better, and with your continuing contributions and 100% equity investments ( or similar) it should grow nicely over the next 15/20 years.

leosayer

My wife and I are in our early 50s and by any reasonable measure I consider we are financially secure for the rest of our lives. In total between us we are due around £45k in DB pensions, 2 x full state pensions, have  £500k in DC/SIPPs and £100k in ISAs. The mortgage on our house was paid off 10 years ago and we are very happy living where we are.  The date we have in mind for retirement is April 2025 but right now, I think I want to stop sooner than that. 

How did we achieve this?
- Working since the age of 18 without break in relatively high paying jobs and final salary schemes. Living in London from childhood helped
- Being lucky with timing of property purchases (mid 90s and early 2000s)

- Spending a lot of time researching financial planning and investments and taking full advantage of tax reliefs, matched pensions and offset mortgages
- Investing from an early age and not being forced sellers even when things seemed very precarious eg. credit crunch

Both my wife and I had direct experience of the impact that limited financial resources and knowledge can have on a family and this drove me to a career in asset management and my wife to the public sector.  We're both pretty prudent when it comes to our finances but it still took some fairly major events for us take action. For example:

Before we bought a house together in 2001 I sold my flat and remember being shocked how little of my 25-year mortgage had been paid off after 6 years of ownership. From that point on I resolved to have a much better understanding of the maths and through investment and saving we had fully offset the mortgage in 2013.

In 2008, I had started investing more with a view to using those funds to pay off the mortgage. I was also paying into a share option scheme at work and had a fairly large amount of cash saving in an Icelandic bank. Then the credit crunch happened and the shares tanked by 40%+, my share options were wiped out (forever as it turned out), the cash savings weren't accessible for months and my job was looking very precarious. This was quite a scary time especially as we had a young child but we came through it although I didn't put any more money into investments for another 4 years whilst we focused on offsetting the mortgage.

In 2012, my firm stopped accruals into the DB scheme and shifted us to DC. I realised I didn't really have a clue of the impact so spend a lot of time trying to make sense of it all. I worked out that I'd need to put in around 35% of my salary to have a hope of matching what I'd lost.  I then started to learn about tax reliefs and when the Pension Freedoms Act came in in 2015 we really set about making sure we secured out retirement, making good use of salary sacrifice.

Since 2012, when we started adding to investments again, they have grown (if my calcs are to be believed) by 9% per year on average. We have had 5 years of 18%+ performance and our worst year was 2018 (down 10%). Throughout this time we were invested 100% in equity until last year when we realised that retiring soon was a real possibility. This, plus the increase in bond yields gave me the impetus to start directing our future savings to cash and short term bond funds. We are currently at 22/78 and I'm targeting 25/75. I feel we can take more risk because of the security provided by our DB schemes but I'm now consider whether a more risky approach is necessary now that long term bond yields are at 5% and we will only drawn on our DC savings for 12 years from age 55 to 66 until State Pensions kick in. 

Looking back, I have effectively had a second job of planning our family's financial future for the past 10 years and I really must thanks this forum for invaluable help along with the Pistonheads Finance forum and YouTubers Ben Felix, James Shack, Pete Matthews and Lars Kroijer.

I must also castigate successive government for the never ending spiral of complexity and change around the pension and taxation regime. Just looking at the acronyms that I have become exposed to....DC, DB, LTA, AA, UFPLS, FADD, MPAA, ISA, LISA, SS, SIPP, GMP, COPE, AVC, TFC, PCLS....Luckily I'm a bit geeky and work in FS so have a head start compared to most people. 

Quantifier

I think we've been quite successful with saving over the years. We've always been quite careful that any pay rises following promotions or new jobs go into paying off mortgage or additional pension payments.

I'm 52 and my wife is 49. Currently I have defined contribution pension savings of about £935k and my wife has around £150k. I also have £70k in an ISA. I have a very small DB scheme that will pay me the princely sum of £3k pa from age 65. I have maximum state pension entitlement while my wife will have in another 3 years. We always paid voluntary contributions when needed, e.g. when we were living overseas as expats and when we first had kids and she didn't work.

I'm still working and pay the maximum £60k pa into my pension and my wife works variable self employed hours and pays about £20k pa into hers. We are thinking about retiring in 2027 (April to be precise just after I receive my annual bonus) when I will be 56 and she will be 53. We are both fit and well but have seen family health issues that cut retirement plans very short so want to do it while young enough to travel and do the things we want. 

Separately we have a holiday apartment in France worth about £250k on which we paid off the mortgage earlier this year. We mostly use it but do rent it out some weeks and get around £3.5k net income pa. Our main home is worth around £800k and we have £65k mortgage left on it. My wife is about to inherit £30k which we will use to pay off part of the remaining mortgage. We will also make over payments so that all being well the mortgage should be cleared by next summer. 

My wife is European so we have no Brexit related restrictions if we want to retire abroad, which we are seriously considering having lived in Prague, Zurich and Paris over the years and not really liking what the UK has become post Brexit, which we were very opposed to. I don't think we could do that until our 60s though as we have a 14 year old and 16 year old and we wouldn't want to leave them until they are standing on their own two feet as adults. They have EU passports so have options to live and work in Europe if they did want to follow us.

So that's where we are. I think in 2027 we should have pensions and ISAs of around £1.4m and an apartment worth £250k that we will use during our early retirement years quite a bit but sell later on. We wouldn't want to live in that apartment as it's in a ski resort that is quite depressing in the off season. If we do move to Europe we might be able to release another £250k or so of equity from our main home, depending on where we decide to go, as generally you get more for your money most places. 

I think we've done OK with our approach. We typically spend around £2k per month once mortgage, pension and savings have been taken care of, so we are quite frugal. In the last 5 years my earnings increased a lot due to change of company and role, which we've cashed in on by paying off mortgages and saving: 10 years ago we still had £300k of mortgages. It will undoubtedly be quite hard psychologically to retire and drop from a good steady income to drawing down on investments. I do mostly enjoy my work but there are definitely days when my patience runs thin with corporate politics and I'm sure I'll be ready to jump by 2027.

fly-catchers

My success story and a decision I am so glad I made! Was to both transfer an older DB pension from an earlier employer to my them current job. And buy Added Years as an AVC to bump up to the maximum of 40 years DB pension when I got to 60. Because of changes at the company the Final Salary changed to Career Average for the last tens years of pension. And 8 of those were moved to age 65. But if I hadn’t done that I would have only had 20 years Final Salary together with 2 years Career Average at 60. And those other 8 years of Career Average at 65 together with that older company pension which was worth a lot less than it ultimately turned into once transferred! So it much better position than if I had left it. Also because of my age quite a bit better than those employees who although in the job longer than me couldn’t either transfer in a pension or buy Added Years because that would have taken then over the 40 year limit. 

Bostonerimus1

My pension success is built on frugality, avoidance of debt, keeping financial fees low and regular investing into a few inexpensive index trackers. I started saving for retirement 35 years ago and have managed an average 8% annual return over that time without any fancy portfolios, advisors or management techniques, just trackers and some rebalancing. I also have a DB pension and have paid off the mortgages on my own home and a rental property so I am truly debt free and retired at age 52.

alfabet

I got a graduate job straight out of university with a major employer with a decent DC scheme.

I contributed 5%, they contributed 10%. I also made voluntary contributions, initially an extra £100pm, increasing over time as my career progressed.

I stayed with the company for a long time, investing almost exclusively in global all-cap equities. Here is my pension progress, starting at age 22, ending at age 42.

justme111

started saving about 10 years ago, aged 50 today, have about 130 k between pension and SS ISA. Got a terminal disease with a very bleak life expectancy (months but who knows) and it can be inherited by my daughter  who is 19 - nice to know she would not have immediate money pressure. Apart from it have about 8k/year in NHS pension from the ago 60  - I think some of it will be paid to her if I die and if I survive for a couple of years ( I think it is paid if I die till she is 21 or 22) I will nominate my partner to receive it/marry him so he has some survivor income.

Cus

justme111 said:

started saving about 10 years ago, aged 50 today, have about 130 k between pension and SS ISA. Got a terminal disease with a very bleak life expectancy (months but who knows) and it can be inherited by my daughter  who is 19 - nice to know she would not have immediate money pressure. Apart from it have about 8k/year in NHS pension from the ago 60  - I think some of it will be paid to her if I die and if I survive for a couple of years ( I think it is paid if I die till she is 21 or 22) I will nominate my partner to receive it/marry him so he has some survivor income.

Make sure your sipp beneficiary is named as your daughter