Pay rise..what to do with it?

happymum37

Albermarle said:

MEM62 said:

happymum37 said:

friolento said:

What are your own pension arrangements? Would your husband be happy to make contributions to your pension?

Regarding ISA: these are individual, you cannot share them.  Read the MSE guide for ISAs.

His pension pot is at about 150k at the moment

And he wants to retire in 13 years?  He is significantly behind the curve to meet that plan so needs to either start hammering that pension or plan a very modest retirement lifestyle.    

OP - to add to the above, there are two common mistakes people make when planning retirement.

They underestimate how much money they need to build up.
They underestimate how long they are going to live ( and need money) 

Also despite what you might read, retiring at 60 is still quite early. I think the average is about 63/64 and of course many carry on longer than that.

Thank you. 

The men in his family have not lived long lives . He's trying to do everything he can to avoid this but he doesn't want to work late.  I am younger so we will have my wage for a few years .. we don't live flash lives.  If we can't afford it he will have to work but that's our aim 

Eco_Miser

I think a common mistake people make when planning retirement is to overestimate the amount of money they need.

It really depends on what sort of lifestyle you want, but people living modestly before retirement tend to continue to live modestly after retirement.

In my case I'm not even spending my state pension, despite also having a private annuity and £100,000s in an S&S Isa.

OP, you know how much you're spending now (actually spending, not the gross or net earnings). Is it going to change much when you are both retired? (apart from inflation) No commuting, more holidays and days out. You'll know how much of this will be covered by your existing works and state pensions, and you need extra savings to cover the shortfall (if any).

And remember that great financial maxim of Dickens' character,Wilkins Micawber: "Something will turn up." 

Angelica123

happymum37 said:

Albermarle said:

MEM62 said:

happymum37 said:

friolento said:

What are your own pension arrangements? Would your husband be happy to make contributions to your pension?

Regarding ISA: these are individual, you cannot share them.  Read the MSE guide for ISAs.

His pension pot is at about 150k at the moment

And he wants to retire in 13 years?  He is significantly behind the curve to meet that plan so needs to either start hammering that pension or plan a very modest retirement lifestyle.    

OP - to add to the above, there are two common mistakes people make when planning retirement.

They underestimate how much money they need to build up.
They underestimate how long they are going to live ( and need money) 

Also despite what you might read, retiring at 60 is still quite early. I think the average is about 63/64 and of course many carry on longer than that.

Thank you. 

The men in his family have not lived long lives . He's trying to do everything he can to avoid this but he doesn't want to work late.  I am younger so we will have my wage for a few years .. we don't live flash lives.  If we can't afford it he will have to work but that's our aim 

Have you actually sat down and done the numbers? Have you looked at how much you spend now ? You are mortgage free which is amazing. How much would retiring change your current income (eh you won't be commuting, but will you be filling time with hobbies that cost money). You can then start to project properly - and work out what you need to do now to make your retire early dream happy 

Albermarle

I think a common mistake people make when planning retirement is to overestimate the amount of money they need

Of course some people will do this, and plenty of them on this forum !
However your average member of the public is pretty clueless about personal finance, and will have at best a very hazy idea about how much is needed .
People for example are totally unaware that to buy a pension like the state pension, would cost over £250K.

kempiejon

happymum37 said:

MEM62 said:

happymum37 said:

friolento said:

What are your own pension arrangements? Would your husband be happy to make contributions to your pension?

Regarding ISA: these are individual, you cannot share them.  Read the MSE guide for ISAs.

His pension pot is at about 150k at the moment

And he wants to retire in 13 years?  He is significantly behind the curve to meet that plan so needs to either start hammering that pension or plan a very modest retirement lifestyle.    

If we can't make it happen it won't happen.  We both will get full state pensions when the time comes.  Granted my pension plus his pension might not be as much as people on here have but we are mortgage free and debt free.  I am 5 years younger than him so my wage will be coming in till he's 65 . We are not big spenders

I think you could make it happen but you don't seem too fixated on that. When I sat down and constructed my plan for early retirement I was about 15 years from my target date. I did the sums worked out a budget for a minimum amount to make work optional. I looked at investment returns long term and cracked on. I probably would have popped the whole £10k in my pension but making work optional was my prime objective. 

happymum37

Eco_Miser said:

I think a common mistake people make when planning retirement is to overestimate the amount of money they need.

It really depends on what sort of lifestyle you want, but people living modestly before retirement tend to continue to live modestly after retirement.

In my case I'm not even spending my state pension, despite also having a private annuity and £100,000s in an S&S Isa.

OP, you know how much you're spending now (actually spending, not the gross or net earnings). Is it going to change much when you are both retired? (apart from inflation) No commuting, more holidays and days out. You'll know how much of this will be covered by your existing works and state pensions, and you need extra savings to cover the shortfall (if any).

And remember that great financial maxim of Dickens' character,Wilkins Micawber: "Something will turn up." 

Thank you  . We have children and by the time hubby is 60 only 1 should be left in university / training. 

We are planning on hubby retiring and living off my wages until his state pension.  If it doesn't work we can reassess. 

happymum37

kempiejon said:

happymum37 said:

MEM62 said:

happymum37 said:

friolento said:

What are your own pension arrangements? Would your husband be happy to make contributions to your pension?

Regarding ISA: these are individual, you cannot share them.  Read the MSE guide for ISAs.

His pension pot is at about 150k at the moment

And he wants to retire in 13 years?  He is significantly behind the curve to meet that plan so needs to either start hammering that pension or plan a very modest retirement lifestyle.    

If we can't make it happen it won't happen.  We both will get full state pensions when the time comes.  Granted my pension plus his pension might not be as much as people on here have but we are mortgage free and debt free.  I am 5 years younger than him so my wage will be coming in till he's 65 . We are not big spenders

I think you could make it happen but you don't seem too fixated on that. When I sat down and constructed my plan for early retirement I was about 15 years from my target date. I did the sums worked out a budget for a minimum amount to make work optional. I looked at investment returns long term and cracked on. I probably would have popped the whole £10k in my pension but making work optional was my prime objective. 

Thank you.  I think he will save half the extra wage and put the other half in his pension.  If the contract continues we will reassess in 18 months.   

PropertyGuru_Wannabe

If your husband continues to contribute to his pension fund, after 13 years he should have at least £500k. That should give him a drawdown pension of £20k a year at age 60.

When you retire at at that age, you should have an index linked uncapped pension paying you at least £18k a year. Add both your full state pension, that would be £24k + £38k is therefore £62k and that doesn’t include your savings. Here is what is a comfortable retirement for a couple estimated to be:

A comfortable retirement for a couple in the UK requires an estimated 

£60,600 a year (after tax), according to 2025 research from the Pensions and Lifetime Savings Association (PLSA). This lifestyle allows for more luxuries, including regular beauty treatments, theatre trips, and two weeks in Europe.

Therefore you are well on track to hit that target but you must keep plodding on at it and not overspend if possible. Good luck!

happymum37

PropertyGuru_Wannabe said:

If your husband continues to contribute to his pension fund, after 13 years he should have at least £500k. That should give him a drawdown pension of £20k a year at age 60.

When you retire at at that age, you should have an index linked uncapped pension paying you at least £18k a year. Add both your full state pension, that would be £24k + £38k is therefore £62k and that doesn’t include your savings. Here is what is a comfortable retirement for a couple estimated to be:

A comfortable retirement for a couple in the UK requires an estimated 

£60,600 a year (after tax), according to 2025 research from the Pensions and Lifetime Savings Association (PLSA). This lifestyle allows for more luxuries, including regular beauty treatments, theatre trips, and two weeks in Europe.

Therefore you are well on track to hit that target but you must keep plodding on at it and not overspend if possible. Good luck!

Can I ask for how you reached that sum? Maths not my strong point sorry

PropertyGuru_Wannabe

You mentioned that your husband has a Pension of £150k pot with Aviva. He is earning £50k and contributing 13% with employer contributing another 5% every year. Therefore he is contributing a total of £9k every year. I saw someone mentioned that he wanted to retire in 13 years and so if his pension investments grows by 6% on average over those 13 years, then the compound growth projection would reach the £500k mark. If we use the 4% rule, he could drawdown his pension by £20k each year on retirement, with the rest being still invested.

Now for you, you mentioned you are 44 and therefore will be contributing to your DB Pension for 16 years with an added pension contribution of £1800 a year (£150 a month). For those 16 years your accrued pension increases by CPI +1.25% and because of this, there were significant annual uplifts including 11.35% in 2023.

You don't actually say how much you have accrued or how many hours you work part-time so I took a complete guess that you at 60 will have a CARE scheme pension of £18k a year with the added pension if you do not take any lump sum. Of course that could be entirely optimistic.

You and your husband should have obtained the full state pension but if you have missing years, you should be able to top this up to the full state pension before you and your husband hits state pension age. This would entitle you £24k state pension altogether for both of you.

You also mentioned that you are saving £1k every month so therefore if you keep this up and save into an ISA or S+S ISA over 16 years before you hit normal retirement age, that becomes £192k which can also be used in your retirement plans to either bridge any gaps if you want to retire early or to invest further into a personal pension or added pension. I hope this makes sense?