How to Plan for retirement ?

cfw1994

jim8888 said:

Don't forget to also start planning what to do with your time! I once read you're very unlikely to start new things in retirement, you'll just continue with what you've always done (which kind of reflects my actual experience, three years into retirement). So get into the garden now, start those piano lessons, take short holidays, start writing that book, go fishing, get down the gym.... 

I am sure you are broadly right….but we have started pickleball, sort of written a bit of a book, learnt how to lime mortar and even done a teeny bit of kayaking since stopping…..& indeed hoping to do more of all that….

…..as well as the old things we did 🤣

Just not enough time for everything 👀

GazzaBloom

As several have posted above, the key to unlocking my retirement plan financially was having a good current budget and knowing how much we will need to spend annually in retirement. Once you have that, the plan for pension contributions and what your invested portfolio requirements will need to be can fall into place.

being debt and mortgage free also helps, we have spend £40K renovating the whole of the downstairs of the house (new kitchen, gutted and stripped lounger/diner, all new furniture etc.) over the last couple of years while earning to get that lumpy cost out of the way.

I love spreadsheets and have been running a monthly and annual budget spreadsheet for years, my current budget rolls out to end of March 2026, in detail, listing all income and expected expenditure each month with a rolling balance through the whole period. April 2025-March 2026 will be my first year of retirement.

As also posted above, finances are one thing, filling your time is another. I am building  list of specific goals for 2025, achievements I will aim to get done in the first year of retirement, plus a list of activities to consider, clubs, quiz nights, gardening (we want to build a raised planting bed), places to visit, books to read, etc. This is really helping shape what that first year is going to look like.

The finance side can he helped by use of an IFA if you are not confident to manage it yourself.

Coppice10

GazzaBloom said:

As several have posted above, the key to unlocking my retirement plan financially was having a good current budget and knowing how much we will need to spend annually in retirement. Once you have that, the plan for pension contributions and what your invested portfolio requirements will need to be can fall into place.

being debt and mortgage free also helps, we have spend £40K renovating the whole of the downstairs of the house (new kitchen, gutted and stripped lounger/diner, all new furniture etc.) over the last couple of years while earning to get that lumpy cost out of the way.

I love spreadsheets and have been running a monthly and annual budget spreadsheet for years, my current budget rolls out to end of March 2026, in detail, listing all income and expected expenditure each month with a rolling balance through the whole period. April 2025-March 2026 will be my first year of retirement.

As also posted above, finances are one thing, filling your time is another. I am building  list of specific goals for 2025, achievements I will aim to get done in the first year of retirement, plus a list of activities to consider, clubs, quiz nights, gardening (we want to build a raised planting bed), places to visit, books to read, etc. This is really helping shape what that first year is going to look like.

The finance side can he helped by use of an IFA if you are not confident to manage it yourself.

Thanks - filling the time isnt too much of a concern. I hate being bored and volunteer on weekend after working all week as sitting down too long doesnt suit me! I'd just think about expanding that which would be great.

The budgeting side and spreadsheets is where i need to get to. Do you have anything you could share? Or any recommendations for apps which consolidate and then export?

GazzaBloom

Coppice10 said:

GazzaBloom said:

As several have posted above, the key to unlocking my retirement plan financially was having a good current budget and knowing how much we will need to spend annually in retirement. Once you have that, the plan for pension contributions and what your invested portfolio requirements will need to be can fall into place.

being debt and mortgage free also helps, we have spend £40K renovating the whole of the downstairs of the house (new kitchen, gutted and stripped lounger/diner, all new furniture etc.) over the last couple of years while earning to get that lumpy cost out of the way.

I love spreadsheets and have been running a monthly and annual budget spreadsheet for years, my current budget rolls out to end of March 2026, in detail, listing all income and expected expenditure each month with a rolling balance through the whole period. April 2025-March 2026 will be my first year of retirement.

As also posted above, finances are one thing, filling your time is another. I am building  list of specific goals for 2025, achievements I will aim to get done in the first year of retirement, plus a list of activities to consider, clubs, quiz nights, gardening (we want to build a raised planting bed), places to visit, books to read, etc. This is really helping shape what that first year is going to look like.

The finance side can he helped by use of an IFA if you are not confident to manage it yourself.

Thanks - filling the time isnt too much of a concern. I hate being bored and volunteer on weekend after working all week as sitting down too long doesnt suit me! I'd just think about expanding that which would be great.

The budgeting side and spreadsheets is where i need to get to. Do you have anything you could share? Or any recommendations for apps which consolidate and then export?

I have access to a software retirement planning tool called Timeline for the full retirement planning piece, it's; designed for Financial Advisors but I am very comfortable with it. For budgeting I just use a spreadsheet. It's quite simple but tailored to my personal circumstances but I'm sure there will be many templates online if you search.

Albermarle

Coppice10 said:

Albermarle said:

Ive just checked my contributions and I'm contributing 6% and my employer their maximum of 12%. 

6% is low even if it is helped by a pretty generous employer contribution.

Higher rate tax relief on pension contributions is very generous and should be taken advantage of + of course it will help to boost your pot, courtesy of HMRC.

6% is low? I had no idea. So glad i asked!  I do pay AVC's as well, only a small amount (£55pm i think), and the money gets lumped together into the workplace pension pot i believe.  If i increase my contribution overall, does it matter if i do that by increasing the main contribution or via AVC's? Or does it make no difference? 

Firstly for a higher earner, higher rate tax relief is very generous. Putting 6% in your pension does not cost you 6%.
Many of the regular posters on here who were/are on good salaries probably would have been adding more like 10 to 20% at your age , rising to maximum allowed for the last few years before retirement. Living off savings and maximising pension contributions to get the maximum 40% tax relief is a clever move, if you can afford it.

Normally with a DC pension there are no separate AVC's, you just pay the % you want into the main pension.
Can be some odd set ups at different employers though.
I would forget the AVC's ( it all ends up in the main pension anyway) and just bump up the regular % contributions.

Coppice10

Albermarle said:

Coppice10 said:

Albermarle said:

Ive just checked my contributions and I'm contributing 6% and my employer their maximum of 12%. 

6% is low even if it is helped by a pretty generous employer contribution.

Higher rate tax relief on pension contributions is very generous and should be taken advantage of + of course it will help to boost your pot, courtesy of HMRC.

6% is low? I had no idea. So glad i asked!  I do pay AVC's as well, only a small amount (£55pm i think), and the money gets lumped together into the workplace pension pot i believe.  If i increase my contribution overall, does it matter if i do that by increasing the main contribution or via AVC's? Or does it make no difference? 

Firstly for a higher earner, higher rate tax relief is very generous. Putting 6% in your pension does not cost you 6%.
Many of the regular posters on here who were/are on good salaries probably would have been adding more like 10 to 20% at your age , rising to maximum allowed for the last few years before retirement. Living off savings and maximising pension contributions to get the maximum 40% tax relief is a clever move, if you can afford it.

Normally with a DC pension there are no separate AVC's, you just pay the % you want into the main pension.
Can be some odd set ups at different employers though.
I would forget the AVC's ( it all ends up in the main pension anyway) and just bump up the regular % contributions.

Im shocked at the 10 -20% contributions you mention. I will reassess my financial outgoings and see what can be done to increase from my measly 6%!  

Albermarle

Coppice10 said:

Albermarle said:

Coppice10 said:

Albermarle said:

Ive just checked my contributions and I'm contributing 6% and my employer their maximum of 12%. 

6% is low even if it is helped by a pretty generous employer contribution.

Higher rate tax relief on pension contributions is very generous and should be taken advantage of + of course it will help to boost your pot, courtesy of HMRC.

6% is low? I had no idea. So glad i asked!  I do pay AVC's as well, only a small amount (£55pm i think), and the money gets lumped together into the workplace pension pot i believe.  If i increase my contribution overall, does it matter if i do that by increasing the main contribution or via AVC's? Or does it make no difference? 

Firstly for a higher earner, higher rate tax relief is very generous. Putting 6% in your pension does not cost you 6%.
Many of the regular posters on here who were/are on good salaries probably would have been adding more like 10 to 20% at your age , rising to maximum allowed for the last few years before retirement. Living off savings and maximising pension contributions to get the maximum 40% tax relief is a clever move, if you can afford it.

Normally with a DC pension there are no separate AVC's, you just pay the % you want into the main pension.
Can be some odd set ups at different employers though.
I would forget the AVC's ( it all ends up in the main pension anyway) and just bump up the regular % contributions.

Im shocked at the 10 -20% contributions you mention. I will reassess my financial outgoings and see what can be done to increase from my measly 6%!  

Common issues with pension pots are:

1)Underestimating how big a pot is needed to generate a good long term income.
2)Underestimating ones possible lifespan
3) Not taking account of inflation in the long term properly

Points 2) & 3) add to the problem with Point 1)

Hence the need to add more than most people actually do. However getting higher rate tax relief helps things along in this respect.

Coppice10

Linton said:

A) Outline plan

1) Specify on-going annual spending  based on actual expenditure (rather than a bottom-up budget) perhaps with a bit of padding to give a reasonable starting point.

2)  Take off any guaranteed income - State Pension, DB pensions etc  That will give you the net inflation adjusted income you need from your pension pot at current prices.  A reasonable rule of thumb is to convert annual net income to gross and then calculate the required lump sum by multiplying the annual figure by 30.

If this figure is well within your planned pension pot at retirement you can move forward otherwise  reconsider your pension contributions and/or your spending needs

@linton - I've done some estimates of what we spend each year on things which will be ongoing in retirement. Round numbers are £2k pm, so £24k pa.   This hasn't included house maintenance or holidays, which i would lump in at £10k.  Giving a grand total of £34k pa.

Utilities	Council Tax	227
	Electric & Gas
	Water	38.72
Insurance	Animal 1	6.46
	Animal 2	6.17
	House	12.5
TV & Internet	Vmedia	44
	TV Licence	13.25
	Netflix	10.99
Banking	Nationwide Flex	13
Mobile Phones	Lebara & ID	13
Health & Fitness	Dentist	10
	Gym	27.5
	Badminton	10
	Hairdressers	40
Shopping	Food	672
	Amazon/Other	250
Entertainment		536
		1930.59

Guaranteed Income - State Pension - assume £11.5k for both of us and then my defined benefit of £16k, that gives us an income of £39k - and that before we add in the OH small pension and what ends up in my DC pot. 


This seems as if we will have access to more in pensions than we currently look like spending?  Have i missed something fundamental?  
Because unless i have, why would i increase my current contribution of 6% and take a hit on current lifestyle?

BoGoF

Coppice10 said:

Linton said:

A) Outline plan

1) Specify on-going annual spending  based on actual expenditure (rather than a bottom-up budget) perhaps with a bit of padding to give a reasonable starting point.

2)  Take off any guaranteed income - State Pension, DB pensions etc  That will give you the net inflation adjusted income you need from your pension pot at current prices.  A reasonable rule of thumb is to convert annual net income to gross and then calculate the required lump sum by multiplying the annual figure by 30.

If this figure is well within your planned pension pot at retirement you can move forward otherwise  reconsider your pension contributions and/or your spending needs

@linton - I've done some estimates of what we spend each year on things which will be ongoing in retirement. Round numbers are £2k pm, so £24k pa.   This hasn't included house maintenance or holidays, which i would lump in at £10k.  Giving a grand total of £34k pa.

Utilities	Council Tax	227
	Electric & Gas
	Water	38.72
Insurance	Animal 1	6.46
	Animal 2	6.17
	House	12.5
TV & Internet	Vmedia	44
	TV Licence	13.25
	Netflix	10.99
Banking	Nationwide Flex	13
Mobile Phones	Lebara & ID	13
Health & Fitness	Dentist	10
	Gym	27.5
	Badminton	10
	Hairdressers	40
Shopping	Food	672
	Amazon/Other	250
Entertainment		536
		1930.59

Guaranteed Income - State Pension - assume £11.5k for both of us and then my defined benefit of £16k, that gives us an income of £39k - and that before we add in the OH small pension and what ends up in my DC pot. 


This seems as if we will have access to more in pensions than we currently look like spending?  Have i missed something fundamental?  
Because unless i have, why would i increase my current contribution of 6% and take a hit on current lifestyle?

Nothing for cars and or travel in those figures?

What will those figures be in 10/15 years time with inflation - will your DB pension increased with CPI?

Is the £16k actually DB? You said in one of your earlier posts that your workplace pension pot would be worth £1.2m in 20 years - you normally don't have a 'pot' with a DB scheme.

QrizB

BoGoF said:

Nothing for cars and or travel in those figures?

Also, while there's a line in the table for electricity & gas, there's no cost shown?