How to Plan for retirement ?

Coppice10

QrizB said:

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?

Yes - have solar panels and house battery. Just in the first year of ownership though so waiting to see how my bills pan out. I would expect my export to offset a lot of my winter gas use.   So that needs firming up over the next few years...

Coppice10

BoGoF said:

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.

Cars is an omission - thank you. Currently have one via salary sacrifice and hadn't considered what I will do when in retirement - excellent spot, thanks.
Travel is in there at £10k pa 

Unsure what figure to inflate them by to take into account inflation - any advice? I need to go and double check the DB pension and its inflation proofing. I *think* it goes up by one of the inflation measures up to a max of 2.4%pa but will find out for sure.

So the £16k is DB. The scheme closed about 18 months ago and the £16k figure is if i leave at about 59 with zero lump sum. Transfer value is projected to be 362k at this point (or at least thats my understanding of the info it shows!) so coupled with the DC side of things plus savings I got up to £1.2 m total. 

BoGoF

Coppice10 said:

Cars is an omission - thank you. Currently have one via salary sacrifice and hadn't considered what I will do when in retirement - excellent spot, thanks.
Travel is in there at £10k pa 

Unsure what figure to inflate them by to take into account inflation - any advice? I need to go and double check the DB pension and its inflation proofing. I *think* it goes up by one of the inflation measures up to a max of 2.4%pa but will find out for sure.

So the £16k is DB. The scheme closed about 18 months ago and the £16k figure is if i leave at about 59 with zero lump sum. Transfer value is projected to be 362k at this point (or at least thats my understanding of the info it shows!) so coupled with the DC side of things plus savings I got up to £1.2 m total. 

Inflation is predicted to come down to target by 2025 but who knows - I would over-estimate to be on the safe side.

Another thing that occurred that may be missing from your list is clothes?

Is your house maintenance annual provision including budgeting to replace your solar panels in 25/30 years.

eastcorkram

......and, obviously, that figure will drop by 11.5k when the other person passes away, and will drop by £27.5k if you pass away first.

Albermarle

Transfer value is projected to be 362k at this point (or at least thats my understanding of the info it shows!) so coupled with the DC side of things plus savings I got up to £1.2 m total. 

The £362K transfer value is not a real figure as such, as it is very difficult ( and usually unwise) to transfer out of a DB pension. It might be nice to add it to your other assets to get a nice big figure, but apart from that it does not tell you much.

You could argue that your state pension is worth about £250K on paper, and add that to it as well. 

Coppice10

I have revised my budget based on a few of the comments - thanks. It now looks like this:

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
Holidays		833
House maint		80
New Car		150
		2993.59
		35,923.08

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. 

So i still have this question - 
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?  

coyrls

Your guaranteed income is gross, you will need to take tax off to see if it is sufficient for your budget.

BoGoF

£3k isn't much a leeway should you have an unexpected bill for example. You have ignored the comments about what happens if one of you died. Holidays £833? - one holiday a year if lucky - what do you do just now - retirement should be about doing the things you couldn't when working? What is your 'current lifestyle'

Not seeing any life insurance for you or your OH?

New car - does that include fuel/insurance/VED?

Coppice10

coyrls said:

Your guaranteed income is gross, you will need to take tax off to see if it is sufficient for your budget.

True - thanks. Part of the plan is how to have a good std of living with minimal tax? Thats something i can research over the next few years then. 

RNV

As you stated,  " I'm 47 and want to start generating what i think could be a 10 year plan to retirement.... "  presumably you are planning to retire at ~57.   The guaranteed income of £39k will only come into play at 67/68?, so you need to fund 10 years before that