FIRE Girls Pension Diary - Aim High & Dream Big

enthusiasticsaver

Sea_Shell said:

enthusiasticsaver said:

Sea_Shell said:

Just going back to projections for a moment...

I just dug out my original spreadsheet from Jan 2019.    On it we had "assumed" a starting pot of £490,000.   Growth of 3%.  Annual spend of £15,000 (starting figure) and 2% inflation.  

This showed that by end 2023, we "should" have had £485,316 remaining, and be spending £16,200.

As at December 2023, we actually had £618,506, with our average spends over 5 years of £14,900.  (ranging between £11-£19k)

Good spending forecast then.  The investments have done pretty well too.  Ours are less than yours  but we are still in positive territory too but we  draw £15k a year to supplement DB pensions. You retired much earlier than me though so I think we would be a lot more frugal than we are if we thought we had a longer period of early retirement to cover and if our DB pensions didn't cover 75% of our income. 

We were 47 and 52 back then. 

Our money has to last 5 years less now. 😉

Yes.  Are you tempted to ramp up the spending now you are five years on or do you not feel at all constricted by your finances? 

enthusiasticsaver

Firegirl said:

michaels said:

Firegirl said:

Ok first attempt at my number.  All figures rounded up.

Bills account is accurate and personal spend is rounded up for what I’d want to do in retirement rather than what I do now.  Interestingly me paying for family holidays pretty much breaks even with OH paying most of the monthly bills.  Family holidays based on this year with 2 teenagers so left same as hubby and I might go on 2 holidays.:o

My total monthly rounded up £2500
—————————
Bills £1100 per month (Council tax/gas/electricity/ factor/ broad band/tv licence/mobile/food

50% £550

Personal spend

Eating out/coffee  £400

Hairdresser £50

Clothes £50

Family Holidays £1000 - 50% £500

Sister holiday £50

Girls holiday £50

Xmas and birthdays £150

Car insurance/Mot/tyres £100

Replace car £250

Home improvements and kitchen goods £50

Thanks.

People often split out council tax, energy+water, telecoms/t and food into separate categories as these can vary a lot between households.

Also I can't see petrol spend?

This is obviously considerably lower than what you have suggested might be available available as income based on your savings plans, seems like you could look to retire sooner with a smaller pot?

I’ve no petrol spend because I have an electric car.  I have the splits on a spreadsheet but just lumped together for the post.

yes maybe could retire earlier, but that would mean I’d need to work out draw down plan  Might be nice to work out an interm target number rather than my Aim high dream big number, so I have 2 targets!

I would say that you will not need a million pot to get £2500 a month.  I lump utilities together as well.  

enthusiasticsaver

Also I would say that we took the TFLS out of DHs DC pot on retirement and spent quite a lot future proofing our house with new bathrooms/kitchen and windows.  The rest went in stocks and shares ISAs and gifts to our DDs to help with house deposits. . 

Firegirl

Thanks for sharing your workings @enthusiasticsaver

Likely I’ll need some adjustments but least I rounded up to cover.

What do you think my interm target should be based on my half being £2500 monthly.  Don’t worry I won’t hold you too it. I value your opinion.

yes saw on another thread, maybe it was you to get all the house jobs done on lead up to retirement and I thought that was a good idea!

enthusiasticsaver

Firegirl said:

Thanks for sharing your workings @enthusiasticsaver

Likely I’ll need some adjustments but least I rounded up to cover.

What do you think my interm target should be based on my half being £2500 monthly.  Don’t worry I won’t hold you too it. I value your opinion.

yes saw on another thread, maybe it was you to get all the house jobs done on lead up to retirement and I thought that was a good idea!

Ah well now the fun starts because how much you need depends on other factors too like how many years you will need to cover.  Do you get full state pension and at what age?  Will you be buying an annuity for guaranteed income?  Will the income come from pension or stocks and shares ISAs? If it is coming purely from pension it will be taxable so to get £30k per annum net you need to aim for £36k gross. If some comes from stocks and shares ISAs you will pay less tax so under £36k.  Do you have any DB pensions which will kick in at any point? 

There are all sorts of retirement calculators and for years it was  suggested a 4% drawdown was acceptable whereas now it is recommended more at 3% but that suggests then that you want to keep the pot more or less intact rather than draw it all down. One way of doing it and the way we did it was to work out our fixed income like DB pensions and state pensions and work out what the difference was and multiply by the number of years it had to cover.  When our state pensions pay out then that along with our index linked DBs will be enough for us not to draw on investments so we just worked on 10 years times the amount we needed plus a buffer and made sure we saved/invested that.  

If you don't have any DB pensions but presumably will get state pensions at 68? If you intend going at 56 then you need at least 12 years times £36k then tops up of state pension for anything up to the age of 80 when spending usually starts to decrease apparently presumably due to less travel. I think I would aim for at least £800k in a mix of pension and stocks and shares isas to take some in the most tax efficient way plus of course if they tinker with pension rules you may not be able to access your pension before 56 by then. That is back of the fag packet maths and of course we are talking about 10 years from now so all sorts  of things may change before then. Is the LTA charge still going? 

Sea_Shell

enthusiasticsaver said:

Sea_Shell said:

enthusiasticsaver said:

Sea_Shell said:

Just going back to projections for a moment...

I just dug out my original spreadsheet from Jan 2019.    On it we had "assumed" a starting pot of £490,000.   Growth of 3%.  Annual spend of £15,000 (starting figure) and 2% inflation.  

This showed that by end 2023, we "should" have had £485,316 remaining, and be spending £16,200.

As at December 2023, we actually had £618,506, with our average spends over 5 years of £14,900.  (ranging between £11-£19k)

Good spending forecast then.  The investments have done pretty well too.  Ours are less than yours  but we are still in positive territory too but we  draw £15k a year to supplement DB pensions. You retired much earlier than me though so I think we would be a lot more frugal than we are if we thought we had a longer period of early retirement to cover and if our DB pensions didn't cover 75% of our income. 

We were 47 and 52 back then. 

Our money has to last 5 years less now. 😉

Yes.  Are you tempted to ramp up the spending now you are five years on or do you not feel at all constricted by your finances? 

I'll answer a couple of the specific to me questions later, over on my own thread.

michaels

Firegirl said:

Thanks for sharing your workings @enthusiasticsaver

Likely I’ll need some adjustments but least I rounded up to cover.

What do you think my interm target should be based on my half being £2500 monthly.  Don’t worry I won’t hold you too it. I value your opinion.

yes saw on another thread, maybe it was you to get all the house jobs done on lead up to retirement and I thought that was a good idea!

So now you have your 'little number' - required annual expenditure - you need to work out your 'big number' - what size pot and how allocated (not just type of investment but also wrapper: pension, isa etc) you need to provide you with your little number every year for as long as you need it.

Always another false peak with fire/retirement planning!

Firegirl

I know! False peaks!!!! Big number planning is next!!! 

Thanks to you all for the info.

Some answers to questions. 

Current Age - 44
Do you get full state pension and at what age? Yes full stamps in 12 years & SP age 68
Will you be buying an annuity for guaranteed income? Don’t know yet.
Will the income come from pension or stocks and shares ISAs? ISA to bridge gap in retireing and retirement age.
save mix of ISA and pension

Husband has DB pension I don’t have details of it.  I have 1 pension with an underpin.

onwards and upwards 

SouthCoastBoy

Firegirl said:

I know! False peaks!!!! Big number planning is next!!! 

Thanks to you all for the info.

Some answers to questions. 

Current Age - 44
Do you get full state pension and at what age? Yes in 12 years
Will you be buying an annuity for guaranteed income? Don’t know yet.
Will the income come from pension or stocks and shares ISAs? ISA to bridge gap in retireing and retirement age.
save mix of ISA and pension

Husband had  DB pensions I don’t have details of it.  I have 1 pension with an underpin.

onwards and upwards 

I think the state pension age or your current age is a typo?

Smudgeismydog

Yes, sorry to break it to you firegirl, but based on your current age, your state pension age is 67.