FISCAL DRAG: When is the number not THE NUMBER

m_c_s

We had a thread a month ago before the budget which highlighted the need to include quite pessimistic assumptions in one's future net cashflow in retirement. One of the assumptions offered up was to assume a freeze in personal allowance for the lifetime of the cashflow. Then you will need to work out your net income over your anticipated retirement time horizon and ensure it rises by atleast inflation, I would say again take a more pessimistic view so use 3 to 3.5% to see how sensitive your net income flow is over the long term to this slightly higher inflation.
This is quite a conservative approach but in retirement you need to be cautious with the assumptions you make.
Also it's starting to look very prudent to tuck away a good amount of money in ISA's as a key part of retirement planning to provide the comfort of knowing that whatever happens to thresholds and tax rates in future, despite what is promised, one can top up future income tax free thus minimising fiscal drag.

Marcon

The number never is the number. That's the mistake so many make...

Cobbler_tone

The lower band is more relevant than the 40%+ bands. The vast majority can survive some time under the £50k band, especially if there are two of you.
There must have been an argument to raise the lowest band and incentivise work over benefits, whilst helping everyone a little.

Cobbler_tone

Marcon said:

The number never is the number. That's the mistake so many make...

I take a stab that the majority aim too high. Judging by the case studies on here and the lived experience around me. Or maybe more relevantly, maybe people are not generally laser focused on early retirement. A lot of people I work with aren’t.