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  • FIRST POST
    • Gatser
    • By Gatser 14th Dec 09, 1:44 PM
    • 588Posts
    • 220Thanks
    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 65
    • atush
    • By atush 10th Sep 18, 10:19 AM
    • 17,419 Posts
    • 10,954 Thanks
    atush
    I use the little white text box above where you type your reply. Then copy paste the text into the middle between the 2 quotes

    ie
    Test
    • Marine_life
    • By Marine_life 10th Sep 18, 9:32 PM
    • 928 Posts
    • 1,736 Thanks
    Marine_life
    At the time I thought my wife and I needed 50k pa and I would retire at 60. My outlook has changed a little since then. I am now targeting retirement at 55, in 7 years time and have lowered my target income somewhat. I now feel that 35-40k will be sufficient based on current spending.
    Originally posted by PipPip
    For us this depends very much how much is in the discretionary spending bucket.

    Our normal living expenses come to around 25-30k per annum but I reckon we could easily double that with travel and other "non-essential" expenses which is why the "number" is such a personal thing.
    Money won't buy you happiness....but I have rarely if ever been in a situation where more money made things worse!
    • westv
    • By westv 10th Sep 18, 9:52 PM
    • 4,659 Posts
    • 2,247 Thanks
    westv
    That's the real unknown. How much will spending change once free time is unlimited?
    • Triumph13
    • By Triumph13 11th Sep 18, 8:59 AM
    • 1,404 Posts
    • 1,880 Thanks
    Triumph13
    That's the real unknown. How much will spending change once free time is unlimited?
    Originally posted by westv
    That's a key financial question, but for early retirement the key 'happiness' question is more how much spending ability are you willing to forgo to get that extra free time?
    • jerrysimon
    • By jerrysimon 11th Sep 18, 9:09 AM
    • 298 Posts
    • 247 Thanks
    jerrysimon
    18 months and counting, retired at 56. For me its more important to look at monthly income than the annual figure, given my annual figure is less than half my leaving salary but with no NI, Pension and little tax my monthly figure is nearer 2/3rds of what I was getting before I left. Also helps that we have paid off the mortgage.

    Voluntary work and two new grandchildren keeps the happiness factor high
    • westv
    • By westv 11th Sep 18, 9:40 AM
    • 4,659 Posts
    • 2,247 Thanks
    westv
    I'm not sure I see any difference between annual and monthly - one is just 12 times the other.


    My current figures indicate a pension income of 44% of my current salary end of this year or 50% in 2 years.
    However, after deduction of expenses getting to London for work each week, the net figure is 93% end of the year or 102% in 2 years.
    How much longer my wife wishes to work, when/if she will go part time and how she will take her CS pensions are also important aspects.
    • RuleTheWorld
    • By RuleTheWorld 11th Sep 18, 11:33 AM
    • 140 Posts
    • 37 Thanks
    RuleTheWorld
    pension planning the number?

    hopefully its the same as todays earnings

    ie earnings less mortgage less NI less pension contributions
    • jerrysimon
    • By jerrysimon 11th Sep 18, 12:04 PM
    • 298 Posts
    • 247 Thanks
    jerrysimon
    I'm not sure I see any difference between annual and monthly - one is just 12 times the other.
    Originally posted by westv

    Fair point, but I think many compare annual salary to retirement annual salary and forget that deductions like NI and Pension payements no longer apply which for me was over 700/month.
    • Triumph13
    • By Triumph13 11th Sep 18, 12:59 PM
    • 1,404 Posts
    • 1,880 Thanks
    Triumph13
    I'm not sure I see any difference between annual and monthly - one is just 12 times the other.
    Originally posted by westv
    I can see Jerry's point. I bet if you asked a random group of people their annual salary then most of them would tell you the gross as that's the number on their contract. If you asked their monthly salary they'd tend to tell you the net as that's what goes into their bank account.
    • SmashedAvacado
    • By SmashedAvacado 11th Sep 18, 3:04 PM
    • 548 Posts
    • 556 Thanks
    SmashedAvacado
    monthly current income
    less any saving
    less any mortgage and debt (assume debt fully repaid)
    less commuting costs (train, car park, suits, etc)
    add additional leisure costs (more golf balls and shoes)

    I think if you try to work it out on what you spend, then the problem is that larger items such as holidays, building works, cars, insurances get less accurate.
    • ams25
    • By ams25 11th Sep 18, 9:07 PM
    • 227 Posts
    • 302 Thanks
    ams25
    2 years "retired" - our actual spend is about 10% higher than when working...but about 50% of gross earnings. That's due to no NI, little tax, no pension contributions, no savings, no mortgage payments. You need to work these out...it might surprise.
    • Stubod
    • By Stubod 12th Sep 18, 8:50 AM
    • 533 Posts
    • 412 Thanks
    Stubod
    1 year in, and our expenditure has been 10% less over the year. We actually budgeted to spend 25% more, we need to catch up with our budget! (The problem is we ended up with some part time work that took out time when we would have been spending it rather than earning!)
    • Linton
    • By Linton 12th Sep 18, 9:09 AM
    • 10,183 Posts
    • 10,554 Thanks
    Linton
    monthly current income
    less any saving
    less any mortgage and debt (assume debt fully repaid)
    less commuting costs (train, car park, suits, etc)
    add additional leisure costs (more golf balls and shoes)

    I think if you try to work it out on what you spend, then the problem is that larger items such as holidays, building works, cars, insurances get less accurate.
    Originally posted by SmashedAvacado

    I dont see planning for these items as a real problem. Assume you replace your car every N years with one you would buy now at a price that increases with inflation. Insurance is what you pay now increasing with inflation. Urgent building works should be covered by your emergency fund. With discretionary large item expenditures such as expensive holidays and house extensions, if you keep a moderately large pot for long term investment etc then you can make a decision at the time.
    • SmashedAvacado
    • By SmashedAvacado 12th Sep 18, 9:18 AM
    • 548 Posts
    • 556 Thanks
    SmashedAvacado
    that might be the case, but working on the assumption that you can afford the kind of life you have now is more comforting that working out what kind of life you can have on X assuming i spend particular amounts on particular things.

    There are lots of hidden costs of life that we take for granted in being able to sort - for example a new fridge. Now you might say a new fridge is a once every ten years item. i would agree, but i also have a cooker, dishwasher, washing machine, vaccum, freezer, television, burglar alarm, tumble dryer and computer. If each of those has a life of 10 years, that's one a year.

    Houses typically need 2 or 3% of their capital value spent on them each year to maintain them - that's repairs plus things like painting.

    Rather than guessing what these cost, i simply assume i can afford these now (as i can) and work backwards in deducting things i wont have to spend money on. I am not saying either way is right
    • Flim
    • By Flim 12th Sep 18, 9:48 AM
    • 9 Posts
    • 13 Thanks
    Flim
    When I set up our annual retirement budget I assumed an annual expenditure for “general items”. Then every 3rd year I made an additional allowance (20k), for “high cost” items eg car / expensive hols etc. I also “kept” a spare “pot” (60k) to cover any ongoing unforeseen expenditure.

    2 years in and we have “underspent” and “ overearned” (managed to get some unplanned part time work), so currently we have increased rather than reduced our overall pot.
    Last edited by Flim; 12-09-2018 at 9:51 AM.
    • Triumph13
    • By Triumph13 12th Sep 18, 12:22 PM
    • 1,404 Posts
    • 1,880 Thanks
    Triumph13
    Houses typically need 2 or 3% of their capital value spent on them each year to maintain them - that's repairs plus things like painting.
    Originally posted by SmashedAvacado
    I think that rather depends on the property / area and whether you are trying to maintain a value reliant on everything being new and fashionable (ie new kitchen and bathroom every few years). The same house might be worth 600k in a popular part of the South or 200k in an unfashionable part of the North. Yes tradesmen will be more expensive down South, but not 3x more expensive.
    Personally I would expect maintenance on my house to be well below 1% pa on average.
    • crv1963
    • By crv1963 10th Nov 18, 1:48 PM
    • 621 Posts
    • 1,374 Thanks
    crv1963
    Boosting up the Board as I've suggested a couple of people have a look through this thread which was a great help to me when I started looking at our pensions seriously.

    Apologies if that upsets anyone.
    CRV1963- Light bulb moment Sept 15- Planning the great escape- aka retirement!
    • Chrism03
    • By Chrism03 7th Dec 18, 11:44 AM
    • 15 Posts
    • 5 Thanks
    Chrism03
    It's a long read but a very worth while one. I've learnt a heck of a lot and can now start planning the escape :-)
    • MallyGirl
    • By MallyGirl 7th Dec 18, 12:04 PM
    • 3,230 Posts
    • 8,300 Thanks
    MallyGirl
    I think that rather depends on the property / area and whether you are trying to maintain a value reliant on everything being new and fashionable (ie new kitchen and bathroom every few years). The same house might be worth 600k in a popular part of the South or 200k in an unfashionable part of the North. Yes tradesmen will be more expensive down South, but not 3x more expensive.
    Personally I would expect maintenance on my house to be well below 1% pa on average.
    Originally posted by Triumph13
    Me too - due to the joys of south east house prices 1% is still 10k and we don't spend anything like that annually
    • michaels
    • By michaels 7th Dec 18, 6:33 PM
    • 21,888 Posts
    • 101,651 Thanks
    michaels
    Me too - due to the joys of south east house prices 1% is still 10k and we don't spend anything like that annually
    Originally posted by MallyGirl
    Aren't we posh....still sounds like plenty of scope for downsizing! We budget about 0.15% of value per annum for general maintenance, this year that will be a new garage door!
    Cool heads and compromise
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