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  • FIRST POST
    • Gatser
    • By Gatser 14th Dec 09, 1:44 PM
    • 578Posts
    • 213Thanks
    Gatser
    Pensions Planning: The NUMBER
    • #1
    • 14th Dec 09, 1:44 PM
    Pensions Planning: The NUMBER 14th Dec 09 at 1:44 PM
    The NUMBER is how much income you need to "live comfortably"
    So What's your number?
    Very important for pensions planning, to know what you are aiming for.

    My Number? (for a couple)
    I calculated: 22,000
    based on
    Food 5,000
    Car/transport 5,000
    Bills/Utilities 4,500
    Holidays/Leisure 4,500
    Clothing/Cash/Xmas/Other 2,000
    Repairs/replacements 1,000
Page 61
    • cloud_dog
    • By cloud_dog 6th Feb 18, 4:23 PM
    • 3,726 Posts
    • 2,215 Thanks
    cloud_dog
    Total Lump sum value ranging from 145,835* to 184,085, use lower amount for investment calculation:

    145,835 x 3% interest pa = 4,375
    Originally posted by DCB1967
    Hi

    A little unsure where this 'lump sum' comes from? Is this pre-existing savings, or existing savings plus the TFLS (90k)??

    One thought would be to draw down from your pension whilst you are not working and not claiming the SP, that way all / a large part of your pension income would be tax-free. You can then retain / continue growing the 'lump sum' pot and draw on that as the pension pot diminishes / you are in receipt of SP due hopefully to it being in an ISA and therefore tax free (????)
    Personal Responsibility - Sad but True

    Sometimes.... I am like a dog with a bone
    • cloud_dog
    • By cloud_dog 6th Feb 18, 4:26 PM
    • 3,726 Posts
    • 2,215 Thanks
    cloud_dog
    Do you need to take your lump sum immediately?
    Originally posted by stoozie1
    It depends on the OP and OP wife ISA situation and if they have any ongoing space in their ISAs. If they do, then it probably makes sense to take it and start stuffing it in to ISAs (potentially S&S ISAs).
    Personal Responsibility - Sad but True

    Sometimes.... I am like a dog with a bone
    • cloud_dog
    • By cloud_dog 6th Feb 18, 4:35 PM
    • 3,726 Posts
    • 2,215 Thanks
    cloud_dog
    Me
    Retire at 55 with pension pot of 362,000*.
    Take 25% lump sum = 90,500
    Balance = 271,500

    Need to fund 12 years gap until State Retirement Age (SRA).
    Originally posted by DCB1967
    Over the 12 years I would certainly withdraw the maximum upto my personal income tax allowance (17/18 11500) from the pension pot, with any spare monies being placed in to a S&S ISA (simply moving the pension investment in to a ISA investment; of the same).

    I might even be tempted to withdraw more than the personal allowance and again place this increased excess in to a S&S ISA. You'd need to work through the number etc and a lot depends on your ISA situations, now and ongoing. Part of the reason for considering this would be whether you could get to the position of being able to gift your wife some of your personal allowance at some point.
    Personal Responsibility - Sad but True

    Sometimes.... I am like a dog with a bone
    • DCB1967
    • By DCB1967 6th Feb 18, 4:52 PM
    • 10 Posts
    • 18 Thanks
    DCB1967
    Hi

    A little unsure where this 'lump sum' comes from? Is this pre-existing savings, or existing savings plus the TFLS (90k)??

    One thought would be to draw down from your pension whilst you are not working and not claiming the SP, that way all / a large part of your pension income would be tax-free. You can then retain / continue growing the 'lump sum' pot and draw on that as the pension pot diminishes / you are in receipt of SP due hopefully to it being in an ISA and therefore tax free (????)
    Originally posted by cloud_dog



    Hi


    The lump sum is the sum of my wife's forecasted NHS lump sum and my lower end calculation of 25% of the pot.
    • cloud_dog
    • By cloud_dog 6th Feb 18, 4:57 PM
    • 3,726 Posts
    • 2,215 Thanks
    cloud_dog
    Ok, so what existing utilisation of your ISA allowances do you make? You could shelter 40k per year in to an ISA, and if (as I mentioned) your were drawing additional money from your pension (which I am assuming is invested) you would simply place it in to the same / similar investment within an ISA that you are comfortable with.
    Personal Responsibility - Sad but True

    Sometimes.... I am like a dog with a bone
    • stoozie1
    • By stoozie1 6th Feb 18, 6:11 PM
    • 555 Posts
    • 497 Thanks
    stoozie1
    It depends on the OP and OP wife ISA situation and if they have any ongoing space in their ISAs. If they do, then it probably makes sense to take it and start stuffing it in to ISAs (potentially S&S ISAs).
    Originally posted by cloud_dog
    Unless OP can use it spread out over more years to effectively increase his personal allowance?
    Save 12 k in 2018 challenge member #79
    Target 2018: 24k Jan 2018- 560 April 2670
    • cloud_dog
    • By cloud_dog 6th Feb 18, 6:22 PM
    • 3,726 Posts
    • 2,215 Thanks
    cloud_dog
    Unless OP can use it spread out over more years to effectively increase his personal allowance?
    Originally posted by stoozie1
    Yes, I agree. As mentioned early on the OP needs to work through the scenarios and numbers to identify what is best for them.

    As a bare minimum they should ensure they do not leave any unused personal tax allowance on the table.
    Personal Responsibility - Sad but True

    Sometimes.... I am like a dog with a bone
    • DCB1967
    • By DCB1967 7th Feb 18, 9:14 AM
    • 10 Posts
    • 18 Thanks
    DCB1967
    Ok, so what existing utilisation of your ISA allowances do you make? You could shelter 40k per year in to an ISA, and if (as I mentioned) your were drawing additional money from your pension (which I am assuming is invested) you would simply place it in to the same / similar investment within an ISA that you are comfortable with.
    Originally posted by cloud_dog

    I have been concentrating on making the maximum contribution to my pension so shall have very little in ISA's .


    No one has blown me out of the water with this calculation, so I hope that the basis of my plan is feasible?
    • stoozie1
    • By stoozie1 7th Feb 18, 9:29 AM
    • 555 Posts
    • 497 Thanks
    stoozie1
    in the years where all of 'your' component of the joint income is coming from tax-free/below personal allowance income, remember that you can give some of your unused personal allowance to your wife, thus increasing her net pay.
    Save 12 k in 2018 challenge member #79
    Target 2018: 24k Jan 2018- 560 April 2670
    • DCB1967
    • By DCB1967 7th Feb 18, 9:56 AM
    • 10 Posts
    • 18 Thanks
    DCB1967
    in the years where all of 'your' component of the joint income is coming from tax-free/below personal allowance income, remember that you can give some of your unused personal allowance to your wife, thus increasing her net pay.
    Originally posted by stoozie1



    Thanks, I didn't realize this was possible.
    • DCB1967
    • By DCB1967 7th Feb 18, 1:45 PM
    • 10 Posts
    • 18 Thanks
    DCB1967
    Thanks, I didn't realize this was possible.
    Originally posted by DCB1967

    While number crunching and eating my lunch, I have realised that I should also add the interest on the lumps sum at SRA too. That is if it hasn't all been spent in the intervening 12 years of early retirement.
    • gadgetmind
    • By gadgetmind 7th Feb 18, 4:22 PM
    • 10,795 Posts
    • 8,668 Thanks
    gadgetmind
    That is if it hasn't all been spent in the intervening 12 years of early retirement.
    Originally posted by DCB1967
    Spend unwrapped funds first and also "ISA up" like crazy to get it all tax free before state pension kicks in.
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
    • Gatser
    • By Gatser 8th Feb 18, 2:49 PM
    • 578 Posts
    • 213 Thanks
    Gatser
    Spend unwrapped funds first and also "ISA up" like crazy to get it all tax free before state pension kicks in.
    Originally posted by gadgetmind


    I agree that if you are investing into shares/funds, then an ISA makes sense, but I cannot get enthusiastic about cash ISA's... their low returns are not compensated by the potential tax saving. Or am I missing something?
    THE NUMBER is how much you need to live comfortably: very IMPORTANT as part 1 of Retirement Planning. (Average response to my thread is 23k pa)
    My Other NUMBER: ZERO Working Days to SEMI-retirement: Achieved!
    • gadgetmind
    • By gadgetmind 8th Feb 18, 4:19 PM
    • 10,795 Posts
    • 8,668 Thanks
    gadgetmind
    I cannot get enthusiastic about cash ISA's... their low returns are not compensated by the potential tax saving. Or am I missing something?
    Originally posted by Gatser
    If you're missing something, then you won't learn it from me as we've never done cash ISAs! Cash is for emergency funds and nothing more. We have a couple of years of essential spending in NS&I linkers and a fully offset mortgage as backup.
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
    • gadgetmind
    • By gadgetmind 8th Feb 18, 4:38 PM
    • 10,795 Posts
    • 8,668 Thanks
    gadgetmind
    Hmmm, we may have done some AA ones at 4% pa for a year, but I moved them to the S&S ISAs once the NS&I "rainy day" was in place.
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
    • stoozie1
    • By stoozie1 9th Feb 18, 7:34 AM
    • 555 Posts
    • 497 Thanks
    stoozie1
    4% a year on a cash ISA?

    What is this magic of which you speak?
    Save 12 k in 2018 challenge member #79
    Target 2018: 24k Jan 2018- 560 April 2670
    • gadgetmind
    • By gadgetmind 9th Feb 18, 7:44 AM
    • 10,795 Posts
    • 8,668 Thanks
    gadgetmind
    4% a year on a cash ISA?

    What is this magic of which you speak?
    Originally posted by stoozie1
    It was a *long* time ago so memory rather hazy TBH! We started with some TESSAs that managed to accidentally get in some splendid "carpet bagging", as did 50k I had with the Leeds Perm to cover a tax bill, but the days of demutualisation and decent savings rates are long gone.

    Other than that, it's been S&S PEPs/ISAs since the late 80s.

    Our NS&I linkers are starting to look perkier and we plan to hang on to those for now.
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
    • Stubod
    • By Stubod 9th Feb 18, 9:06 AM
    • 485 Posts
    • 338 Thanks
    Stubod
    ..as our "cash" pot draws down we re trying to decide which "pot" to start taking money from. We have some nsi index linked and I think they will be the last to go. Cash first, SIPPS next, SS ISA's followed by Premium bonds then NSI Index linked.....then sell the house!!!...(at least I think thats the plan...)
    • gadgetmind
    • By gadgetmind 9th Feb 18, 10:16 AM
    • 10,795 Posts
    • 8,668 Thanks
    gadgetmind
    My plan is -

    Hammer the SIPPs as much as tax bands allow (personal allowance for my wife, this and 20% band for me).
    Sell down unwrapped assets (currently held and acquired with PCLS) as fast as CGT allowances permit.
    ISA up to use these limits (which I expect to get greatly reduced if Labour get into power).

    By the time state pensions hit, we should have pretty much everything in ISA wrappers, my wife's pension gone, and mine given a serious talking to. We should then be able to still take pensions/etc. income tax efficiently and our ISAs can plug any gaps.

    Dunno about NS&I linkers. We have max of last issue each and ditto for each other held in trust, so a fair chunk of change, and TBH it should probably be working harder elsewhere rather than sitting in cash.
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
    • aphill24
    • By aphill24 10th Feb 18, 2:54 PM
    • 90 Posts
    • 35 Thanks
    aphill24
    MFW = Mortgage Free Wannabe, DFW = Debt Free Wannabe. They're two boards on MSE that attract quite a few people. The strategies there seem to consist of making your life miserable and scraping by in order to meet some financial target. In DFW the target is to get rid of debt and on the MFW the target is to get rid of a mortgage. It's been said many times before that it's the financial equivalent of crash dieting, and usually has the same outcome.

    Often you people on the DFW board confessing that they have 'fallen off the wagon' (and have blown a load of cash) just as crash dieters do when they participate on a super strict diet plan that they get bored with and end up gorging themselves.

    I can understand scrimping and saving and blitzing your finances for upto 1 year to get debt under control, but some of these guys are at it for 2 to 3 years with their debts and then move onto their mortgage for a further 5 years and then some of them realise that they have no retirement provision so spend a further 5 years or more blitzing that.

    All the time they're doing challenges like 'living off 1 per day" or "living off 4k per year" and IMHO are spending the better part of their lives living like paupers. In the example above, it could be that someone spends a total of 12 years 'blitzing' their debts, mortgage and pension and being miserable while they could have simply done what everyone else does and split their money and do all three at the same time, giving themselves a longer period for pension investment and therefore a longer period for the pension to grow. Plus they get to spend a little on themselves while they're young enough to enjoy it.

    They seem incapable of seeing that the net effect of spending 2 years exclusively paying down debt, 5 years exclusively paying down a mortgage and then 5 years exclusively paying into a pension is exactly the same as spending 12 years contributing to all three. Except that if anything goes wrong in year 6 in the second scenario, (say job loss or illness) at least they will have some pension savings that can grow while they look for work or get well.

    Much better surely, to save a little, overpay a little and spend a little to achieve your financial targets? :confused:
    Originally posted by Harry Powell
    This reply should be pinned and available to read by everyone. It's really common sense but it seems lot's of people in the world today can't grasp the notion of save a little spend a little and borrow a little if you can afford to pay it back. AS Martin say's good debt is okay it's the bad debt that gets people in trouble..
    I am 53 yrs old now and had this advice given to me & my wife at our wedding by an Auntie, best present ever. Yes we have had car loans, credit cards and mortgages but always we have felt in control because credit was only a certain amount of our take home pay and we have always tried to avoid any bank charges for whatever reason.
    I am lucky that I have a final salary pension scheme which will be enough to live off as I have a long service of 30 yrs this year and probably at least another two. The Number that we need is taken care of really and I feel it is just reward for working shifts for 30 odd years. I also pay AVC and have some savings for emergencies but never miss a year without a nice holiday with the family that is paid for before we go.
    Sorry for the long reply but after losing my mother before christmas it really hits home what life is all about. Enjoying it with the family is far more important than being in too much debt to the banks.
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