Do things really change when you retire? (3 Viewers)

[Ivory55]

Surely you realised 3 kids was going to cost money

 

[Feltwell]

Funnily enough, yes. Worth every penny though. Hardly a financially based decision!

 

[Ivory55]

It was only you said 3 kids in school costs us a lot.

^{_{Subscribers  do not see these advertisements}}

 

[Feltwell]

Yes, they do, even in normal State schools. The crux of my post though is that I'm at the younger end of the scale for this forum - and at 46, it's a very rare now that I can say I'm at the young end of anything - so others on here must have been through the same process 10, 20+ years ago of being 10 or so years away from retirement and trying to work out what their retirement outgoings will be and trying to judge when they would be able to stop work and if their planning was adequate or not for the years they had left in work. I want to draw on the experiences of those who've been through it already!

 

[Paddywack]

How did you lot judge what annual income you'd need in retirement? Was it simply a case of waiting until you're close to the date and then basing it on your actual annual spend then, with any notable adjustments such as your mortgage finishing adjusted for ?

We were in a similar position five or so years ago. We set up a spreadsheet that we detailed every piece of expenditure we made and monitored over that time. The bottom line is that if we want to have the lifestyle we currently have and a suitable contingency for home improvements, replacement cars etc is that we need £40k pa. I accept that this seems a lot and we compared it with some of our friends and they'd settled on £30 and £35 after a similar process, so we're leaving that as the target figure. It is important though to remember that in the early days of retirement you will spend more on your "lifestyle" than in the latter years, although obviously this doesn't include care fees.

 

[Feltwell]

Thank you Fastpat. Yes, our pensions man said outgoings tend to be high as first as you're still relatively young & active, then drop as you get older and less active, then go up again with care costs etc as you get really elderly - which makes sense. I presume your £40k is gross, i.e. pre-tax?

^{_{Subscribers  do not see these advertisements}}

 

[Flook]

Feltwell said:-

• How much will I need when I retire? How the hell do you judge this? I earn a decent salary and live a pretty modest life, don't smoke, hardly drink, rarely eat out and am happy driving older cars - but still seem to need a lot more than the numbers some of you are quoting! 3 kids all in school - state school, but even so - still cost us a lot, how that will change by then I don't know, chances are it will be 1 in work, 1 in university, 1 doing A levels.
• And of course the biggest unknown of all, how long will I & Mrs F need a pension income for?

Taking the first dot, which I have placed in bold. Two big questions here. I was at a business meeting many years back, the subject of retirement income came up., the question the guest speaker asked us was basically what you have said and I have made bold. He told us this, work out what you feel you can live comfortably on, then work out what do you want to bring in for a pension which would be similar to what you earn, but to remember it will have to last to until the end of your lifetime. And remember this, all costs go up, including fuel, food, and anything you spend out. We were told that we needed in excess of 300K of income, and if anyone of us could afford it to pay in pension pots a certain amount towards that end. All this will now be out of date, I suppose one could say a decent pension would be a total around the 500K mark.

So how much do you need when you retire - around 500K, how the hell do you judge this, by your present yearly earnings, times the amount of years before you want to retire. And if that falls short of 500K, then...

The above is taken on an assumption, I may well be out here, I am no financial adviser. But to me it is basic workings out. Or look at it another way, take the 300K, Divide that by 20 (the 20 being years) you would roughly bring in per year? do the same with the 500K. would either be suitable... for you?

The last dot question is simple is simple, for the remainder of your days, or you wind up broke.

I hope I have been able to shed a little light on your questions.

Flook

 

[Four of us]

How did you lot judge what annual income you'd need in retirement? Was it simply a case of waiting until you're close to the date and then basing it on your actual annual spend then, with any notable adjustments such as your mortgage finishing adjusted for ?

When we first seriously thought about retiring early I started to check and question all our expenditure and was surprised, and rather ashamed, by how much wasn't really necessary. We then started to see how we would survive on our predicted pension income, and saving any surplus. Five years into retirement we haven't fallen into penury although we have dipped into our savings at times.....but we expected to do that until the state pensions kick in. We don't live a high life but don't do without either and we're certainly managing on rather less than the figures you were quoting.

 

[Flook]

I forgot to add, that 20 years was taken from when I retired at 65 (six years back), I gave my life span of 85 years, hence the 20 years. If you or any one is looking to retire, take a look at your family, if they have a long life span, then take an average, then take your age when you are looking at retiring, subtract the two, and that leaves you with a rough idea how long you may need your pension to last. The earlier you retire, the more you would need, unless you have a good inheritance left to you...

^{_{Subscribers  do not see these advertisements}}

 

[Paddywack]

I presume your £40k is gross, i.e. pre-tax?

No net.

 

[Garfields]

Trouble is if you work longer you hopefully can build up your pension but that reduces the time you can enjoy retirement
Striking the right balance is the difficult bit

 

[Feltwell]

Indeed! And thank you to all who have replied. One thing's for sure, I've no intention of working to 67 as our beloved Government would like me to! Ahh well, we shall see - at the moment it looks like being able to retire at 55 is optimistic (but not out of the question), 57/58 is realistic, and 60 is highly likely. But it could all change.........

^{_{Subscribers  do not see these advertisements}}

 

[gus-lopez]

I wish..

Basic State Pension weekly rate for 2017 to 2018

Maximum qualifying years £125.95

https://www.nidirect.gov.uk/articles/basic-state-pension-rate

But @Techno meant 'capped ' as in " maximum " you can get .Not basic amount.

am aware of that.. but it is Not pegged at £164.35.. I can assure you..

I have max qualifying years and only get £130.52

You are under the old system. My ma-in-law ,as I posted before ,is 84 & paid in all her working life + serps + graduated ,etc; & receives around £280 then + other benefits. attendance allowance ( no idea why ?) etc. That's under the same old system you are on.

I see now Jim
That is my forecast rather than the current pension

You have to be careful as " the current pension" depends on whether the person retired prior to april 2016 = old system = lower amount but entitlement to any benefits going , subject to status OR post April 2016 = new system = a flat amount ,at present what you posted, but increases around 3% each year . No entitlement to any benefits though except housing support . ( why I've no idea?)

My state pension forecast is based on today’s pension, by the time I retire that could have risen by 3% year on year

It will do as the new pension april 2016 forward started at £155/week

Yes, they do, even in normal State schools. The crux of my post though is that I'm at the younger end of the scale for this forum - and at 46, it's a very rare now that I can say I'm at the young end of anything - so others on here must have been through the same process 10, 20+ years ago of being 10 or so years away from retirement and trying to work out what their retirement outgoings will be and trying to judge when they would be able to stop work and if their planning was adequate or not for the years they had left in work. I want to draw on the experiences of those who've been through it already!

We were in a similar position five or so years ago. We set up a spreadsheet that we detailed every piece of expenditure we made and monitored over that time. The bottom line is that if we want to have the lifestyle we currently have and a suitable contingency for home improvements, replacement cars etc is that we need £40k pa. I accept that this seems a lot and we compared it with some of our friends and they'd settled on £30 and £35 after a similar process, so we're leaving that as the target figure. It is important though to remember that in the early days of retirement you will spend more on your "lifestyle" than in the latter years, although obviously this doesn't include care fees.

I've never met anyone of my era who even remotely thought about pensions or what amount they needed to live on after retirement ?
I certainly didn't .

 

[Techno]

We can manage on Jac's pension. When we both get state pensions they're a bonus

 

[Ivory55]

I would think a lot now days on zero hours could not put away as much as they used to for pensions

^{_{Subscribers  do not see these advertisements}}

 

[Odd job]

My pension was built up over many years, but about 20 years ago I stopped paying in as anuity rates were so poor. If I had know it would change to cash draw-down I would have payed a lot more in. Now I am part time I'm not able to put much more in. So the longer I leave it before I draw it, the longer it will last. I will let you all know how it woked out. In about 20 years

 

[Techno]

I prefer premium bonds and it’s all there safe if we need it quick

 

[Nicepix]

We retired 7 years ago at the age of 55 and using my meagre police pension as a sole means of income we moved to France. We had a lump sum, enough to buy a house, car and cheap motor home over here, and the plan was to eat into the rest of our lump sum each year until we reached the age when the old age pensions would be payable. Then we'd be quids in!

But within a few months of arriving over here I accidentally become a mole trapper and the income from that, whilst not huge bearing in mind I only do two days a week at most, is enough to stop us needing to erode our savings. In fact we are now adding too them year on year, and we sold our apartment in Cyprus last year enabling us to fund a better motor home and put a bit more into the bank.

Being self-employed means that we don't have as much to pay into the French health care system and the taxes I pay for my work in will entitle me to a small French pension when I hang up the mole traps in a couple of years time.

The only down side to retirement is that I honestly do not have enough spare time. I used to work 40 hours a week on a three-shift system, do pest control on a small pheasant shoot, do my share of the house work and I still had more time to go fishing than I have now. It is unbelievable just how little spare time I have.

But when I think back to my youth and remember seeing all those retired miners wheezing and coughing their guts up, barely able to walk to the club, I count my blessings that I had the opportunity to get out of my work early while still fit.

You can't buy your life back so if you do get the chance, don't even think about it. Just do it!

^{_{Subscribers  do not see these advertisements}}

 

[Bognor Saint]

I worked in the NHS and was lucky enough to retire at 55 in 2009. I had what was called mental health officer status which meant that after 20 years service each year was doubled up. This condition of service is no longer available. It meant that after 30 years I had reached maximum pension of 40 years. I then returned to work 2/3 days a week until last year when gave up for good. My wife, younger than me also took nhs pension but chose to go early.
I have to say that because my parents scrimped and saved and because I was the only beneficiary I have a lot to be thankful for, likewise our 3 children.

 

[gus-lopez]

in will entitle me to a small French pension

You will actually come under 'EU pension' rules which means that it will be combined with the UK one & have to be claimed in the country you reside in , or last country worked in if you never worked where you live when claiming, & both will be 25-30% greater than if you had only worked in one country.

 

[DL42846]

I retired two years ago and have spent the last two years dodging peoples request for me to go and work for them for free. They seem to think I might get bored on my own during the day. How wrong can they be.

^{_{Subscribers  do not see these advertisements}}

 

[Paddywack]

Had the discussion with the chairman today, plan is phased retirement from 1st April next year through to 2020, if the board agree. If they don't I'll finish next September at 56. Either way I hope things do change!

 

[Tanya_and_Mick]

I plan to get out of Dodge Dec, 2019 - already had discussion if there is flexibility for another 6 months....

Flattering, but I will resist...

 

[Neilfg]

Not sure if this helps but it helped me, the 4% rule, if not familiar then Google it or see:

https://www.investopedia.com/terms/f/four-percent-rule.asp, explains it.

There are lots of calculators to see the effects of rates and amounts, e.g. http://www.fourpercentrule.com

You could argue that it should be 3%, but it gave us a feel for what amounts were needed.

^{_{Subscribers  do not see these advertisements}}