Planning for retirement

Bimbly · 12 August 2018 at 1:44PM

Gizmo70 wrote: »

Does that make sense?

No, because you haven't told us about your DB pensions.

When is the standard retirement age and what will they pay out per year? It maybe that they will pay £13k+ per year from 60, 65 or 67. So will only need to fund the inbetween gap.

Having said that, you have a million pounds in savings outside of pensions, so looks like you're sorted. I'd be using some money to live a little.

bostonerimus · 12 August 2018 at 1:56PM

Gizmo70 wrote: »

Annual Expenses:
Car (inc Fuel, Insurance & Maintenance) : £1,700
Council Tax: £850
Electricity, Gas & Water: £1,090
Food & Clothing (inc Dining Out / Drinks) : £2,160
Household Repairs & Replacements (inc Insurance): £1,200
Healthcare (Optical, Dental, Insurance, Pills & Potions): £870
Leisure (inc Books, Magazines, Music, DVDs, Holidays & Sporting Events): £3,480
Presents (Birthdays, Christmas, etc): £300
Savings & Investment Charges: £150
TV, Phone & Internet: £1,260
Total: £13,060

Estimated Income from Savings & Investments: £9,600

I reckon to address the shortfall, I need to continue saving / investing at the same rate for another 6-7 years to add another about another £100k to them.

Does that make sense?

Thanks

Where did this budget come from? How old is your car? Do you need to do any major fixes to your house? Are you sure about the food number?

List your DB pensions amounts, when they start, any survivor benefits and whether they are inflation linked. Then list you DC, ISA and regular account amounts and maybe someone can help you with comments.

stoozie1 · 12 August 2018 at 1:59PM

How does the OP have a million pounds outside pensions? I think I missed something.

Gizmo70 · 12 August 2018 at 3:44PM

kidmugsy wrote: »

Oh no it doesn't. The DB pensions don't have a pot. Instead they have promises of income when you start to draw them. So listing the past contributions is a worthless activity.

What you should ideally do is list out for each:

(i) Scheme retirement age.
(ii) Annual pension at SRA.
(iii) Tax-free lump sum, if any.
(iv) Inflation-protection.
(v) Actuarial reduction i.e. the annual deduction from annual pension for taking the pension early.

There's no need to tell us but you need to be on top of those five issues.

Lesser issues: commutation rate and reverse commutation rate.

The two DB schemes and two of the AVCs are all set to 65 and will give me around £22.4k p.a. plus a tax free lump sum of £1830.
The Career Average and the other AVC are set to 67 and will give me around £3.2k p.a.
All above in today's pricing, all have some level of inflation protection at RPI (but some limit to 5% maximum).
I've not dug out the early retirement information for each scheme yet, but will do at some point.

Gizmo70 · 12 August 2018 at 3:50PM

stoozie1 wrote: »

How does the OP have a million pounds outside pensions? I think I missed something.

Yes, not sure how that was identified either. I have about £356k outside of pensions.

Gizmo70 · 12 August 2018 at 3:58PM

bostonerimus wrote: »

Where did this budget come from? How old is your car? Do you need to do any major fixes to your house? Are you sure about the food number?

List your DB pensions amounts, when they start, any survivor benefits and whether they are inflation linked. Then list you DC, ISA and regular account amounts and maybe someone can help you with comments.

Budget comes from analysing the last 12 months of actual spend (yes, I do account for every penny) so food number should be correct.
Car is 5 years old and regularly serviced, might look at replacing it in another 5 years. House is in a good state too.

kidmugsy · 13 August 2018 at 12:36AM

Gizmo70 wrote: »

The two DB schemes and two of the AVCs are all set to 65 and will give me around £22.4k p.a. plus a tax free lump sum of £1830.
The Career Average and the other AVC are set to 67 and will give me around £3.2k p.a.
All above in today's pricing, all have some level of inflation protection at RPI (but some limit to 5% maximum).

So by age 67 or so, with a full SRP added, you should be on a retirement income of about £38k gross p.a. Many people would find that pretty comfortable. Therefore you could contemplate using your other wealth to allow you to retire early if you so desired.

Triumph13 · 13 August 2018 at 9:01AM

Gizmo70 wrote: »

I reckon to address the shortfall, I need to continue saving / investing at the same rate for another 6-7 years to add another about another £100k to them.

Does that make sense?

Thanks

No, it makes no sense whatsoever. Your annual spending requirement is £13k pa. You already have 27 years' worth of that saved outside pensions. Your DBs and SP will give you well over £30k pa once they are all online - say age 68, and about £100k of further capital from AVCs etc.

You seem to be trying to create a plan that avoids you ever having to spend any of your capital by working longer than you need / spending less than you could. If you continue with this plan you will probably end up with you having an income 4x what you have been spending by the time you are 68.

Anonymous101 · 13 August 2018 at 9:57AM

Triumph13 wrote: »

No, it makes no sense whatsoever. Your annual spending requirement is £13k pa. You already have 27 years' worth of that saved outside pensions. Your DBs and SP will give you well over £30k pa once they are all online - say age 68, and about £100k of further capital from AVCs etc.

You seem to be trying to create a plan that avoids you ever having to spend any of your capital by working longer than you need / spending less than you could. If you continue with this plan you will probably end up with you having an income 4x what you have been spending by the time you are 68.

I agree, it makes no sense at all.

In the Financial Independence community they talk about needing to save 25x your annual expenditure and then at that point you can live off your investments indefinitely. Many of them have retired in their 30's and 40's using this principle.

OP has more than this outside of his pensions. Add the pensions and you're hugely clear of what you need to retire NOW.

If I was in your position I'd be looking at an exit strategy. You no longer need to work for the money, you've got plenty.

simonfitba · 13 August 2018 at 6:14PM

Anonymous101 wrote: »

I agree, it makes no sense at all.

In the Financial Independence community they talk about needing to save 25x your annual expenditure and then at that point you can live off your investments indefinitely. Many of them have retired in their 30's and 40's using this principle.

OP has more than this outside of his pensions. Add the pensions and you're hugely clear of what you need to retire NOW.

If I was in your position I'd be looking at an exit strategy. You no longer need to work for the money, you've got plenty.

Actually, if you have 25x expenses you "should" be able to live off 4% of your investments for 30 years, not indefinitely, without running of of cash. This is based on a study of portfolio of 50% US shares and 50% bonds.

So OP should, based on his non-pension stash, be able to draw £14k per year for 30 years.

Planning for retirement

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