Help with knowing how much is 'needed' to retire?

LHW99

Veloflyer said:

kempiejon said:

State Pension seems a long way away when you're in your 30s, my first pension had started by my 22nd birthday, but it was in my 30s that there was a real plan, it was a 15+ year plan but state pension never factored as I wanted early retirement. The early bit is the clue there. SIPPs are not accesible until 55, SP not for another 12 years. Younger folk can plan, I am lucky not to be too dependant on SP, my retirement plan was separate to the SP, If I get to 67 let's see. 

For sure younger folk can plan - as long as they are aware of the issues. I am not sure the vast majority are, or are even aware of the need to have a pension to supplement the SP - assuming it even exists in the next 30/40 years. I also appreciate many cannot also afford to supplement it.

Compared with younger folk, I consider myself extremely fortunate to be in the position I am in with regard to pensions.          

While I can't see the state pension being abolished, even if the triple lock goes, it is not only the Mail readers who appears to be considering the possibility

https://www.moneymarketing.co.uk/news/advisers-told-to-model-zero-state-pension-for-younger-clients/

Cus

I had a well paid job for years that I didn't enjoy but did it for the money. When I was 50 I knew I probably had enough saved, but had no plan for what I would do in retirement, I was too busy/drowning to be able to realistically work that out.  The thing that persuaded me to jump was whether I would do my job if I wasn't paid. Of course I knew I wouldn't choose to. So then the next logical step was to think that there must be something else out there that I would do for nothing/little and enjoy.  It wasn't easy, and it's scary because it's out of the comfort zone.  But I did it, and it was hard and still is to a degree, but it's so much better than before.

katejo

not2plan said:

B0bbyEwing said:

On the topic of which, I'm not sure how many years people typically plan for since nobody owns a crystal ball.
My dad lived until 68 which is when health finally got him. Having done my family tree, he was actually one of the eldest in his line, many died before 68. My mothers side seems to be a little different. While not in to their 100s they do seem to live on to 70s, 80s, 90s.

What I've observed from my parents and the parents of people I grew up with is that those who retired earlier lived longer and had better health.
Middle class white collar typically.

There are studies about it Im sure, but I'm retiring as early as possible.
Doesn't mean I'm going to be on a beach but I'll be doing things on my terms with less stress and more time for me and my family.

Which brings us back to retire when you can afford to and budget to retire with your health.
Or semi-retire.
But do it sooner rather than later is my observation.

I am nearly 63. I dropped to working 4 days a week just over 2 years ago and have since reduced further to 3 days. I will probably finish in late April/early May. I don't want to look back in future and regret staying on as long. I have a good DB pension (1990-) topped up with AVCs which I started in the mid 90s. 

B0bbyEwing

Cus said:

I had a well paid job for years that I didn't enjoy but did it for the money. When I was 50 I knew I probably had enough saved, but had no plan for what I would do in retirement, I was too busy/drowning to be able to realistically work that out.  The thing that persuaded me to jump was whether I would do my job if I wasn't paid. Of course I knew I wouldn't choose to. So then the next logical step was to think that there must be something else out there that I would do for nothing/little and enjoy.  It wasn't easy, and it's scary because it's out of the comfort zone.  But I did it, and it was hard and still is to a degree, but it's so much better than before.

Is it better because you have that (i assume you do) buffer that your well paid job allowed you?
If whatever you're paid now was what you were being paid before, would you be just as happy? As I assume you'd not be as financially well off as you are?

I'm basically on minimum wage for 40hrs. I probably average about 50-52hrs per week & those extra are a few quid more. I've thought of other roles but pretty much I'd be getting the same money elsewhere per hour. 
Less hours would be nice but then is job happiness going to be switched with money worries because less is then coming in.
One reason I've just stayed. There's others but none of them are because I like it.

Cus

I took a career route at a young age that was very rewarding money wise, but unrewarding in most other ways. It was a planned financial means to an end, which was acquiring enough to stop at a relatively young age (for me 50) whilst also not having to worry about saving and being able to spend what I wanted when I wanted.

Absolutely it's better now as I don't have to worry about wealth accumulation, but was it worth 30 years??

My comment was more directed to @Veloflyer with regard to why carry on IF you have accumulated enough.

It's a very valid question though from you about whether I would have been happy earning what I do now throughout my career. I would have worried that I would never reach the amount that I thought I wanted to accumulate (hence choosing my path), I would have to consciously save and budget, and maybe that would have detracted from the enjoyment of that alternative career, who knows.

People that choose that route, of work satisfaction rather than renumeration,  as it's about what they enjoy rather than what they can accumulate have my respect. I couldnt do it.  Now's the time to make up for it, although that's not easy.

B0bbyEwing

Cus said:

I took a career route at a young age that was very rewarding money wise, but unrewarding in most other ways. It was a planned financial means to an end, which was acquiring enough to stop at a relatively young age (for me 50) whilst also not having to worry about saving and being able to spend what I wanted when I wanted.

Absolutely it's better now as I don't have to worry about wealth accumulation, but was it worth 30 years??

My comment was more directed to @Veloflyer with regard to why carry on IF you have accumulated enough.

It's a very valid question though from you about whether I would have been happy earning what I do now throughout my career. I would have worried that I would never reach the amount that I thought I wanted to accumulate (hence choosing my path), I would have to consciously save and budget, and maybe that would have detracted from the enjoyment of that alternative career, who knows.

People that choose that route, of work satisfaction rather than renumeration,  as it's about what they enjoy rather than what they can accumulate have my respect. I couldnt do it.  Now's the time to make up for it, although that's not easy.

Its an interesting thought. Some people can stomach it, others not so. 

A relative of mine was in a job not so long ago. They were pocketing a smudge over £4k each month after taxes. Nice earner. 
Except they were having to do all the hours going. Not sure what you know about driving law but they were maxing out their tacho hours & being pressured to do more on top of that without it being officially so. 
It allowed them to get a good deposit & mortgage on a house they wanted but they were a zombie by the weekend. 
In the end they had to bail out because they were frazzled. Got a job paying much less but it covers the bills & they're infinitely more happy. 

Means to an end like you say & stood it for as long as they could manage. 

I'm not in a high pay high demand job though. My problem - for want of a better phrase, I'm a floater. 

Exodi

LHW99 said:

Veloflyer said:

kempiejon said:

State Pension seems a long way away when you're in your 30s, my first pension had started by my 22nd birthday, but it was in my 30s that there was a real plan, it was a 15+ year plan but state pension never factored as I wanted early retirement. The early bit is the clue there. SIPPs are not accesible until 55, SP not for another 12 years. Younger folk can plan, I am lucky not to be too dependant on SP, my retirement plan was separate to the SP, If I get to 67 let's see. 

For sure younger folk can plan - as long as they are aware of the issues. I am not sure the vast majority are, or are even aware of the need to have a pension to supplement the SP - assuming it even exists in the next 30/40 years. I also appreciate many cannot also afford to supplement it.

Compared with younger folk, I consider myself extremely fortunate to be in the position I am in with regard to pensions.          

While I can't see the state pension being abolished, even if the triple lock goes, it is not only the Mail readers who appears to be considering the possibility

https://www.moneymarketing.co.uk/news/advisers-told-to-model-zero-state-pension-for-younger-clients/

People often prefer to resort to ad hominem attacks like that or deliberately misrepresenting what is being said as opposed to having a constructive conversation on the triple lock on this forum. But credit where it's due, there are also many others that acknowledge that it's unsustainable.

Like you, I also can't see the state pension being completely abolished, I can however see it being scaled back - whether that's means testing, increasing SPA more than life expectancy, increasing minimum auto-enrollment contributions and reducing SP, etc. Especially if politicians continue to feel they don't have the political capital to end the triple lock in the future.

Unfortunately this forum is not the place to have a balanced conversation on this, as mentioned earlier the forum demographic skews much older and there are more retirees than workers. Naturally you can expect to have a bias for maintaining the triple lock, which is what we often see.

I would certainly agree that young people of today should consider the worst case scenario that they won't have a state pension, as JP Morgan suggests in that article.

michaels

Exodi said:

LHW99 said:

Veloflyer said:

kempiejon said:

State Pension seems a long way away when you're in your 30s, my first pension had started by my 22nd birthday, but it was in my 30s that there was a real plan, it was a 15+ year plan but state pension never factored as I wanted early retirement. The early bit is the clue there. SIPPs are not accesible until 55, SP not for another 12 years. Younger folk can plan, I am lucky not to be too dependant on SP, my retirement plan was separate to the SP, If I get to 67 let's see. 

For sure younger folk can plan - as long as they are aware of the issues. I am not sure the vast majority are, or are even aware of the need to have a pension to supplement the SP - assuming it even exists in the next 30/40 years. I also appreciate many cannot also afford to supplement it.

Compared with younger folk, I consider myself extremely fortunate to be in the position I am in with regard to pensions.          

While I can't see the state pension being abolished, even if the triple lock goes, it is not only the Mail readers who appears to be considering the possibility

https://www.moneymarketing.co.uk/news/advisers-told-to-model-zero-state-pension-for-younger-clients/

People often prefer to resort to ad hominem attacks like that or deliberately misrepresenting what is being said as opposed to having a constructive conversation on the triple lock on this forum. But credit where it's due, there are also many others that acknowledge that it's unsustainable.

Like you, I also can't see the state pension being completely abolished, I can however see it being scaled back - whether that's means testing, increasing SPA more than life expectancy, increasing minimum auto-enrollment contributions and reducing SP, etc. Especially if politicians continue to feel they don't have the political capital to end the triple lock in the future.

Unfortunately this forum is not the place to have a balanced conversation on this, as mentioned earlier the forum demographic skews much older and there are more retirees than workers. Naturally you can expect to have a bias for maintaining the triple lock, which is what we often see.

I would certainly agree that young people of today should consider the worst case scenario that they won't have a state pension, as JP Morgan suggests in that article.

Fiscal drag means govt revenues go up faster than average incomes or prices so if the triple lock is unaffordable it will be due to demographics rather than pension increases - and increases to the spa help to protect against some of the impacts of demographics.

Can you show us some figures for what share of GDP SP will be gong forward and whether this can't be funded by simply splitting the benefit of any GDP growth per capita going forward say 2/3:1/3 towards pensioners rather than workers.

A quick google suggests the state pension share of GDP is likely to go from 5% to 8% of GDP over the next 50 years under the triple lock.  Lets suppose that is funded by pushing the govt share of the economy up from 44.5% to 47.5%, that is a smaller than 0.1% per year increase in the tax burden as a proportion of GDP. 

Don't forget that from next year, pretty much all increases in the state pension will be subject to either 20% or 40% tax so will cost considerably less than the headline figure (how much less depends on how high inflation is).

[You could if you want look at this as the triple lock already having been dropped by the back door]

MarlowMallard

michaels said:

Fiscal drag means govt revenues go up faster than average incomes or prices so if the triple lock is unaffordable it will be due to demographics rather than pension increases - and increases to the spa help to protect against some of the impacts of demographics.

This is not really correct.  Triple-lock means the ratio of state pension to average wage can either stay the same (if wages are the highest of the 3 factors), or increase (if inflation or 2.5% are the highest),  but it can never decrease.  So this ratio will be forever-increasing in the future which is clearly impossible to sustain indefinitely.  It's just a case of which govt dares to bite the bullet, and replace triple-lock with something sensible, like index to average of wages+inflation. 

michaels

MarlowMallard said:

michaels said:

Fiscal drag means govt revenues go up faster than average incomes or prices so if the triple lock is unaffordable it will be due to demographics rather than pension increases - and increases to the spa help to protect against some of the impacts of demographics.

This is not really correct.  Triple-lock means the ratio of state pension to average wage can either stay the same (if wages are the highest of the 3 factors), or increase (if inflation or 2.5% are the highest),  but it can never decrease.  So this ratio will be forever-increasing in the future which is clearly impossible to sustain indefinitely.  It's just a case of which govt dares to bite the bullet, and replace triple-lock with something sensible, like index to average of wages+inflation. 

Sure but as I noted, current forecast is that the state pension share will go from 5% to 8% of GDP over the next 50 years so I guess you are talking about maybe 200 years time being a problem?

And it is actually less bad than that as 20-40% of that increase in pensions will come straight back as income tax with the frozen thresholds.