Pensions Planning: The NUMBER

System · 1 January 2016 at 4:21PM

I totally concur with those who prioritise quality of life over spending extra years working for a bigger and bigger pension. I am not stupid, I realise that we all need a certain amount to live comfortably but not all the good things in life are expensive or even able to be bought!!
I have been fortunate to have been paying into the TPS scheme for nearly 35 years. I could do another 2 years but have decided to claim my pension next October at 58 and 2 months. I have been offered some part-time teaching if I want from next September, which I may or may not take. It is always good to have a buffer! I have maximised my lump sum, which I know will cause waves of shock for some on here, :eek: but it suits me. I have no direct dependants but a large loving extended family. Even allowing for maximising the lump sum and 'going' early my pension will be around £16500 a year. This will be enough for me to live on quite well. Without a mortgage life can be transformed! The maximised lump sum will ensure I start the next phase of my life debt and mortgage free with a very reasonable amount saved and invested in various accounts.
At 66 my SP will kick in ,which even at the lower amount, having been contracted out for many years, will be a welcome and useful addition.
I have worked hard at my job and in recent years have spent 60 plus hours a week working as well as numerous days during the holidays. Time to slow down and enjoy some active retirement years. Very few people are remembered for how much they had but rather for what they actually did with their lives and their impact on the lives of others.
Good health cannot be bought and happiness does not need to be expensive. Losing a sister at the age of 42 to cancer 3 years ago has certainly influenced my views.
I have planned of course.The house has been upgraded and there should not be any major expenditure for a while. I have checked my income requirements and ensured I have back ups, although they will never as substantial as some people manage to achieve on here! How do they do it?

(but importantly will be enough for some hobbies and reasonable holidays)
I do sometimes worry that some posters on here concentrate too much on the future and not enough on today. Of course you must plan as though you are going to live along time but please do not forget to also enjoy life today. Being 'frugal' is admirable but for some can become an obsession. It certainly does not buy you more time or better health! Sorry I have rambled somewhat. I fully appreciate that the purpose of this forum is to help people plan and maximise retirement income. It has been extremely helpful for me too. However it can be too easy to become fixated by the finances to the detriment of living life. I just add my comments I suppose as a sort of balance. If you read my posts elsewhere on this forum it is a bit of a theme for me! Sorry!! Indeed I have had to ensure that I do not become too fixated with how much and accept that some will have more and some will have less. The number will be different for all of us but that number should not be the only reason influencing when to or when not to retire.
Happy New Year to you all!!

robin61 · 1 January 2016 at 5:04PM

gadgetmind wrote: »

I agree. However, Mrs Gadget strongly disagrees, so we're aiming for the same monthly income (after tax, pension contributions, ISA subscriptions, etc.) post retirement as pre-retirement.

Yeah pretty much what we are aiming for. Nearly there but not quite.

greenglide · 1 January 2016 at 5:05PM

Taking the other half out for the day can soon run up a bill of £100 and more with admission fees , lunch and a souvenir (at least that 's how much it costs with my other half!!!)

Surely it shouldn't be a case of "Taking the other half out for the day" but "going out together" and if you gp to the park, walk along the river, go to the beach etc these do not incur much / any cost?

Having said that I am not great believer in the theory that stopping work will save money, the only cost we incur at work is getting there / back - we take sandwiches etc and the travel costs if anything will be increased when we had time to visit numerous places locally much more frequently.

saver861 · 1 January 2016 at 5:08PM

I think there are two numbers at least - the minimum and the comfortable. General consensus in the financial world is that you need two thirds of your salary to maintain a similar lifestyle in retirement.

I actually found the budget planner spreadsheet from this site very useful. In there I have got all our outgoings and as prices change etc I just update the change and I get the number needed for this year.

I think the current generation of retirees are somewhat better off than the previous generation. I think also, despite all the concern about pension ages rising etc., the next generation of retirees will be even better off than us. There are many more advantages in terms of planning and being aware than previously.

Our retirement situation is comfortable, but mainly down to the fact that financial matters are a hobby of mine as much as prudent planning. A lot of people that do not have the same interest are less likely to be unaware of financial management than many current retirees were in their working life.

So while the future generation retirees might have to wait longer for pensions etc., equally, they will have much less financial wastage in their working life thus putting them in an overall better position.

bigadaj · 1 January 2016 at 5:42PM

Two thirds of salary is quite a target for many people, particularly for many who are saving and investing a large percentage of their income to be in a position to be able to retire at a relatively young age. It was always the target with final salary schemes but these are being closed or diluted now such that a target or a pipe dream for the majority of the population.

I disagree about the wealth of retirees, I think a high water mark has been hit for the majority of the population some years ago, and current but particularly future pensioners will be worse off on average, but with a much wider spread in incomes then is currently the case. Reduction in social mobility also means that much of wealth I really and in retirement will be based on inheritance and fixed by factors often out of the control of the individual or coule concerned..

Triumph13 · 1 January 2016 at 7:34PM

Two thirds salary has always been a fairly nonsense number as it ignores how much you are saving. We had a 67% savings rate for 2015 so two thirds of salary would be twice what we currently spend. Having said that, I am working on for an extra few years to have more than we currently spend.

I also very much agree with bigadaj that the highwater mark for pensions is past for the middle classes. We have changed from a world where you could sleepwalk into a very comfortable retirement thanks to an employer's DB pension to one where huge numbers will sleepwalk into relative poverty by not realising how woefully inadequate the contributions in their employer's DC scheme is.

Linton · 1 January 2016 at 7:42PM

gadgetmind wrote: »

I agree. However, Mrs Gadget strongly disagrees, so we're aiming for the same monthly income (after tax, pension contributions, ISA subscriptions, etc.) post retirement as pre-retirement.

I think Mrs Gadget is right, it's what I did when planning our retirement. You do need to balance net expenditure now with net expenditure in the future. The easiest and safest way to do it is to make them the same.

In our case that and inflation being lower than the planned 3% has meant that anything we wanted to do hasnt been constrained by lack of money. A much better situation than having to count the pennies for the next 30 years and being unable to do anything about it.

cns06 · 1 January 2016 at 9:03PM

For us we think £10k PA each income for general costs and £10k PA each for entertainment and travel.

(i.e £40k joint total income)

I suspect by 2035 that might not actually mean we can travel very far!

We are ignoring state pension at this stage because we want to retire at 55 and it will be 70 ish before we get anything (if that!)

robin61 · 1 January 2016 at 10:39PM

Linton wrote: »

I think Mrs Gadget is right, it's what I did when planning our retirement. You do need to balance net expenditure now with net expenditure in the future. The easiest and safest way to do it is to make them the same

I think this is spot on. I reckon we have another year or so to go before I can start to feel we can manage this comfortably. Two years and i' d feel very comfortable. It will certainly help my cause if salary sacrifice lasts another couple of years. The budget in March is going to be interesting and I am ready to adapt and change strategy if I need to.

Marine_life · 1 January 2016 at 11:54PM

I think putting an arbitrary number such as two-thirds of salary out there is somewhat meaningless as it depends so much on which expenses will fall away.

I'm actually a fan of the Australian pension authorities estimates which split between a single / couple and a modest / comfortable lifestyle. I would suggest taking this as a basis and adapting to your own circumstances.

http://www.superannuation.asn.au/resources/retirement-standard

Pensions Planning: The NUMBER

Comments

Categories

Get our FREE Weekly email full of deals & guides - and it’s spam-free