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  • FIRST POST
    Money Advice Service
    How much do you think you値l need to save up to retire on?
    • #1
    • 9th Nov 18, 12:36 PM
    How much do you think you値l need to save up to retire on? 9th Nov 18 at 12:36 PM
    How close are you to that goal? Do you wish you started earlier?

    #TalkMoney

    This thread is part of a Hub post aimed at helping people new to personal finance start a conversation on it. It’s aimed at newbies, so please be patient with anyone posting on here.

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    We'd love it if you got involved with our other #TalkMoney week conversations we've started. Check out our hub with all the links - https://forums.moneysavingexpert.com/showthread.php?t=5921799
    Last edited by Money Advice Service; 12-11-2018 at 3:00 PM. Reason: typo
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Page 2
    • westv
    • By westv 9th Nov 18, 5:15 PM
    • 4,643 Posts
    • 2,238 Thanks
    westv
    When you consider the average pension pot in the UK is around 30,000 your doing very well with regards saving towards your retirement subject to your income expectations.

    Quick warning though. Accessing your pension before 55 will usually be treated as an unauthorised payment by HRMC and could be subject to a 55% tax charge.

    (MAS-Andrew DipPFS)
    Originally posted by Money Advice Service
    This 」30k average, does it allow for the fact that some/many will have more than one pot?
    • coyrls
    • By coyrls 9th Nov 18, 5:20 PM
    • 1,088 Posts
    • 1,163 Thanks
    coyrls
    50-60% of your current income is usually considered a good benchmark to aim for. This assumes you have paid off your mortgage and the majority of any outstanding debts though. (MAS Andrew - DipPFS)
    Originally posted by Money Advice Service
    But that doesn't answer the question of how much you'd need to "save" to provide a pension of 50-60% of your current income.


    There is a huge thread here: https://forums.moneysavingexpert.com/showthread.php?t=2146737&highlight=your+number concering what income is needed in retirement and what you need to "save" to achieve that income.
    • stehouk
    • By stehouk 9th Nov 18, 5:20 PM
    • 172 Posts
    • 70 Thanks
    stehouk
    Quick question can i pay monthly into an isa from my sipp cash funds on HL as there is a link to do it ?

    I ask because i was trying to invest monthly from my sipp in a vanguard fund but there isn't a link for monthly investments
    Last edited by stehouk; 09-11-2018 at 5:23 PM.
    • chucknorris
    • By chucknorris 9th Nov 18, 5:35 PM
    • 9,749 Posts
    • 14,521 Thanks
    chucknorris
    How close are you to that goal? Do you wish you started earlier?
    Originally posted by Money Advice Service
    Not really, we've got much more than we need, there is a good argument for us actually starting later and enjoying ourselves more when we were younger, but certainly not the other way.
    Last edited by chucknorris; 09-11-2018 at 5:54 PM.
    Chuck Norris can kill two stones with one bird
    The only time Chuck Norris was wrong was when he thought he had made a mistake
    Chuck Norris puts the "laughter" in "manslaughter".
    I've started running again, after several injuries had forced me to stop
    • crv1963
    • By crv1963 9th Nov 18, 5:47 PM
    • 537 Posts
    • 1,161 Thanks
    crv1963
    To retire safely and with no worries we'd like the equivalent of 2k pm after tax, this is our number. We'll use a mix of DB (me), DC (Mrs CRV and I) and probably draw down my DC pot to zero by the time SP kicks in. To keep Mrs CRV in a safe place financially we'll aim to have a DC pot of 300k drawing down at 3% pa, that 9k + 8.5K SP + 9k survivors pension should meet her needs.

    We're on target with my DB pension to meet 16k pa hopefully a bit more if I work for another 3 years, we'll probably need me to work 5 years if we're to meet the target of her having a 300k pot- we've reached 100k so far in it.

    I think that the auto-enrollment is disingenuous for the majority as it has many believing they are saving adequately when they nearly all are undersaving, all it will do is reduce the majority from being able to claim benefits to top up basic SP.

    When you look at the numbers who post on sites like this you get a glimpse at how few actually do think about the future and pensions. We certainly are in a very small minority.
    CRV1963- Light bulb moment Sept 15- Planning the great escape- aka retirement!
    • pinknsparkly
    • By pinknsparkly 9th Nov 18, 6:14 PM
    • 123 Posts
    • 301 Thanks
    pinknsparkly
    As it stands today, our savings rate will allow us to retire mortgage free at 55 (in 22 years) with a shade over 」400,000 in the bank (in today's money). This is money saved on top of SSP (via NI contributions) and employer pensions, and ignores the cost of bringing up kids. I am assuming that the pensions will not increase from their current value - obviously this is very much a worst case scenario as we will continue paying into them (and paying NI) until we retire. This amount of money will give us an annual income of a little over 」15k/annum (again, in today's money). If we have children, I expect this date to be pushed back due to reduced savings rate. but this would also reduce the savings pot required as the time between our early retirement and drawing our pensions will be decreased. I will be reviewing the figures on an annual basis and tweaking as we go. I actually expect our pensions to provide almost all, if not more, of the 」15k/annum which will drastically reduce the required size of our savings pot as it will only need to last until state retirement age, not beyond!
    Plan: buy a house in summer 2018 | spring 2019 | winter 2018

    Realistic savings goal: 10% house deposit. DONE
    Super ambitious savings goal: 15% house deposit. DONE
    Currently on 13.2% (2nd Apr '18) | 14.1% (2nd Jul '18) | 15.6% (31st Jul '18) | 16.9% (1st Sep '18) | 18.0% (6th Oct '18) | 18.4% (31st Oct '18) 23.9% (2nd Nov '18)
    • bugslet
    • By bugslet 9th Nov 18, 6:19 PM
    • 6,421 Posts
    • 30,393 Thanks
    bugslet
    Couldn't you sell the business on as a going concern and make a few extra quid from it??
    Originally posted by GunJack
    TL;DR :No. That would have been a great option.

    Long Version. It's unusual for a haulage company of our size to have a contract at all, but we do have one. However, and that would be a very long story, we couldn't agree terms, so I told them I was finishing. Our contract actually expired in March and we've been running without one since.

    As im 55 next year, I thought earlier that end of 2019 would be a good finishing point, as it is, it will be April.
    • nrsql
    • By nrsql 9th Nov 18, 6:25 PM
    • 1,825 Posts
    • 635 Thanks
    nrsql
    About 20 years ago I estimated about 」1 million for a single person, but that was assuming early retirement and a long time living off the capital.

    Now I'm coming up to retirement finally - I tried retiring a number of time but enjoy work so kept going back. It means I'm fairly comfortable.
    I find I'm spread between things that have capital growth and things that provide income. Didn't start pensions until I was over 50 as I considered them too risky.

    Now I value things by how long I think I can afford to live. At the moment it is to 105.55 years old.
    But who knows what will happen. Some things are inflation proofed (ish) but that's yet to be tested and it assumes downsizing. At some point (shortly) private health care will become too expensive and I suspect decent care homes will increase in cost so it's all really a gamble. I also don't know what I will want to do to fill in my time.
    Pointless trying to put a number on it.

    And no, I don't wish I'd started earlier. I wish I'd not paid anything off my first mortgage and just let inflation take care of it, I could have made better use of the money. 」28k seemed a lot at the time.
    Last edited by nrsql; 09-11-2018 at 6:28 PM.
    • Marine_life
    • By Marine_life 9th Nov 18, 8:55 PM
    • 915 Posts
    • 1,699 Thanks
    Marine_life
    50-60% of your current income is usually considered a good benchmark to aim for. This assumes you have paid off your mortgage and the majority of any outstanding debts though. (MAS Andrew - DipPFS)
    Originally posted by Money Advice Service
    You can't just throw random figures around like that without some logic.

    I suggest you read this:

    http://earlyretirefree.com/how-much-do-i-need-for-retirement-and-will-it-last/

    Chap really knows what he's talking about ;-)
    Money won't buy you happiness....but I have rarely if ever been in a situation where more money made things worse!
    • bostonerimus
    • By bostonerimus 9th Nov 18, 9:39 PM
    • 2,426 Posts
    • 1,718 Thanks
    bostonerimus
    The amount needed to retire will vary with each person according to their spending, lifespan and the ways they use their pension pot to generate income. You can come up with some average life expectancy, average income, estimate of inflation, but even then someone who buys an annuity will probably need more than someone with a 60/40 portfolio to generate the same income.

    Everyone should have a good idea of how much they spend each year as that is the starting point for any planning, only then can they work out how much they need to save to generate sufficient retirement income. One rule of thumb would take your annual spending and then subtract any income sources like state or DB pensions to give you a net figure. Then if you are in drawdown with a 60/40 portfolio your pension pot will need to be at least 25x that net figure to have a 95% chance of providing enough inflation linked income for a 30 year retirement.

    To directly answer the question my pension pot number is pretty simple, it's zero as I have a DB pension and rental income that cover my spending with a bit left over.
    Last edited by bostonerimus; 10-11-2018 at 4:46 PM.
    Misanthrope in search of similar for mutual loathing
    • MallyGirl
    • By MallyGirl 9th Nov 18, 9:46 PM
    • 3,046 Posts
    • 8,072 Thanks
    MallyGirl
    I am aiming for something near 」2m between us as a couple across DC pensions and ISAs. No DB pensions for either of us. That is at 60. This gives us what I think we need plus what we want to be able to enjoy some travel and leisure time.
    • michaels
    • By michaels 10th Nov 18, 12:09 AM
    • 21,580 Posts
    • 100,197 Thanks
    michaels
    I am aiming for something near 」2m between us as a couple across DC pensions and ISAs. No DB pensions for either of us. That is at 60. This gives us what I think we need plus what we want to be able to enjoy some travel and leisure time.
    Originally posted by MallyGirl
    Interesting, for us 1m at 55 would be quite sufficient and we would definitely put more value on extra years of retirement over more money in retirement but 5 less years of it. (All values assumed to be in 2018 pounds)
    Cool heads and compromise
    • hugheskevi
    • By hugheskevi 10th Nov 18, 12:15 AM
    • 2,067 Posts
    • 2,630 Thanks
    hugheskevi
    50-60% of your current income is usually considered a good benchmark to aim for. This assumes you have paid off your mortgage and the majority of any outstanding debts though. (MAS Andrew - DipPFS)
    This is not consistent with the Pension Commission benchmarks at lower income levels. The Pension Commission figures were later update by DWP in this report.

    DWP calculated those with gross income up to 」12,000 p/a (in 2012) should aim for a replacement rate of 80% whilst those with gross income over 」50,000 should aim for 50%.

    When you consider the average pension pot in the UK is around 30,000 your doing very well with regards saving towards your retirement subject to your income expectations.
    The average is around 」30,000 but this varies hugely by age.

    Median private pension wealth is 」34,500 but for those aged 25-34 the median is 」10,000 whilst for those aged 55-64 the median is 」90,000. The 3rd quartile figure for those aged 55-64 is 」343,600.

    Source: Wealth in GB, July 2014 to June 2016

    Quick warning though. Accessing your pension before 55 will usually be treated as an unauthorised payment by HRMC and could be subject to a 55% tax charge.
    Unless you are one of the many people with protection from the changes to minimum pension age. For example, the c500,000 Civil Servants in service in 2006.
    Last edited by hugheskevi; 10-11-2018 at 12:19 AM.
    • Alice Holt
    • By Alice Holt 10th Nov 18, 12:38 AM
    • 2,552 Posts
    • 2,951 Thanks
    Alice Holt
    Andrew - DipPFS,

    Have a careful read of this.
    http://monevator.com/try-saving-enough-to-replace-your-salary/

    I favour a combination of strategies to replace a salary -
    a) A pension (state pension or an annuity) to provide a base guaranteed level income to cover essential expenditure.
    b) Investing in one's human capital to derive a continuing part-time / self-employed income from activities that interest and engage. This has the additional advantage of maintaining social interaction and intellectual interest after SPA.
    c) Building up savings (within both retirement funds and ISA's) to provide both security for late life, and the luxury to enjoy early and mid retirement years to the full. My estimate would be a figure of 」500k as a good target to aim at (dependent on circumstances).
    Alice Holt Forest situated some 4 miles south of Farnham forms the most northerly gateway to the South Downs National Park.
    • Puddylove
    • By Puddylove 10th Nov 18, 6:36 AM
    • 497 Posts
    • 830 Thanks
    Puddylove
    I have to admit I have no money in a 'pension pot' so find it hard to understand what a pension pot of, say 」500k will mean in income terms. Y'all sound rich though.

    I'll not be rich - but I'll have the following;
    Full state pension
    TPS pension of about 」4K per year
    USS pension of around 」5k a year DB (current, increasing by 」800 pa)
    Paying extra into the DC part of the USS (is that a 'pension pot equivalent?)
    Putting 」200 a month into S & S ISA - started this last year.


    Not sure how this compares to normal people? I've got another 15 plus years to go until I retire.
    • Apodemus
    • By Apodemus 10th Nov 18, 7:49 AM
    • 1,140 Posts
    • 956 Thanks
    Apodemus
    Oh, no! Not another of these simplistic MAS questions! This is seriously harming the previously good reputation of the MAS! Has someone gone off on holiday leaving the interns in charge?

    If we assume no DB or DC pensions and no State Pension, I would want to save between 」790k and 」1.2m to fund our retirement as a couple.

    Our planning is on the basis of needing 50% of main earner’s salary and 100% of spouse’s salary.

    Depending on actual retirement date(s) for my wife and I we will need somewhere between 」0 and 」100k to cover the shortfall to state pension age and probably a further 」100k or so to cover for the shortfall caused by accessing DC and DB pensions early.
    Last edited by Apodemus; 10-11-2018 at 7:53 AM.
    • michaels
    • By michaels 10th Nov 18, 8:25 AM
    • 21,580 Posts
    • 100,197 Thanks
    michaels
    I have to admit I have no money in a 'pension pot' so find it hard to understand what a pension pot of, say 」500k will mean in income terms. Y'all sound rich though.

    I'll not be rich - but I'll have the following;
    Full state pension
    TPS pension of about 」4K per year
    USS pension of around 」5k a year DB (current, increasing by 」800 pa)
    Paying extra into the DC part of the USS (is that a 'pension pot equivalent?)
    Putting 」200 a month into S & S ISA - started this last year.


    Not sure how this compares to normal people? I've got another 15 plus years to go until I retire.
    Originally posted by Puddylove
    And yet your 9k of db pension is one equivalent to a pension pot of at least 300k so turns out that you are probably pretty much as rich as we'all sound!

    Edit and your extra 800 per year for 15 years will push your pension up to a similar value to a 1m DC pot so y'all is well loaded.
    Last edited by michaels; 10-11-2018 at 8:27 AM.
    Cool heads and compromise
    • justme111
    • By justme111 10th Nov 18, 9:01 AM
    • 3,042 Posts
    • 2,951 Thanks
    justme111
    This figure only applies if you have a good income when working , with some spare money every month to go into savings, pensions etc
    If you have a low paid job and struggling to make ends meet , then you need close to 100% of earnings in retirement otherwise you will not cope.
    Originally posted by Albermarle
    If you have a low paid job , pay mortgage and spend on children then chances are you will be better off on a state pension than during working life so no need to make any pension provision unless wanted to retire early
    • Spreadsheetman
    • By Spreadsheetman 10th Nov 18, 10:19 AM
    • 155 Posts
    • 165 Thanks
    Spreadsheetman
    The OP's question is a good one to ask people that haven't thought about pensions at all to start them thinking about it.

    It's actually a really tricky question to answer once you go into it in depth and it is also completely dependent on individual circumstances.
    • crv1963
    • By crv1963 10th Nov 18, 10:38 AM
    • 537 Posts
    • 1,161 Thanks
    crv1963
    The OP's question is a good one to ask people that haven't thought about pensions at all to start them thinking about it.

    It's actually a really tricky question to answer once you go into it in depth and it is also completely dependent on individual circumstances.
    Originally posted by Spreadsheetman
    It is a good question and when one of my sons asked what I was doing when I started (very late) our pensions planning I asked him the same question- as did his boss! He was 20 years old, now coming up 22 he's got 13% of his salary going into his pension, his boss advised him to use the company pension and he has maximised his employer contribution, started a LISA (aiming for a house).

    My other son has not increased his employer pension contributions beyond the minimum, but has a plan to be FIRE by 45- he's got his own path and plans.

    A lot of people never even think of pensions other than what they'll get at SPA, so anything that provokes discussion and planning is positive in my view. A lot of people have a fatalistic view of either there will be no pension when I get to 70 to I'll not live long enough to enjoy it so why worry about it? Not realising that their destiny is actually in their own hands.
    CRV1963- Light bulb moment Sept 15- Planning the great escape- aka retirement!
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