Pensions

Looking at it in todays money, i believe me and the missus could live a comfortabke life on £30k, fortunate to have no mortgage or debt. Both of us are 58 years old and would like to retire at 62. The wife has a DB scheme which if she took today would give her £5k a year and my DC pot has £325k in it roughly £65k in savings to call on if needed.

So, if i turned 67 today , the 2 x state pensions plus the wifes pension would get us to the £30k figure, obviously there would be tax payable above the wifes allowance. im hoping that my Pot will sll us to go early.
 
roubaixtuesday said:
General view is that *if* your savings are for the long term you should avoid cash. Over time it's historically been very poor compared to stocks and shares

eg from RBS

View attachment 170274
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There is one big caveat to that. Most of the time sitting on cash is inefficient, the exception being ahead of and during a big crash.

Are we about to have a huge crash? The Nasdaq is up over 120% since 2022. That's massive growth.

Screenshot_20250923-151613_Chrome.jpg
The above chart shows the sciller PE index. Stock values shown relative to inflation adjusted earnings. I.E. is the market over valued in relation to the underlying profits? The 3 times it's gone close to or over 100% of the mean are 1929, 2000 and 2024/5.
 
Gareth Barry Conlon said:
There is one big caveat to that. Most of the time sitting on cash is inefficient, the exception being ahead of and during a big crash.

Are we about to have a huge crash? The Nasdaq is up over 120% since 2022. That's massive growth.

View attachment 170287
The above chart shows the sciller PE index. Stock values shown relative to inflation adjusted earnings. I.E. is the market over valued in relation to the underlying profits? The 3 times it's gone close to or over 100% of the mean are 1929, 2000 and 2024/5.
Click to expand...

Absolutely. Anyone who can accurately call a crash is a billionaire; anyone who thinks they can is deluding themselves, IMO.
 
Gareth Barry Conlon said:
There is one big caveat to that. Most of the time sitting on cash is inefficient, the exception being ahead of and during a big crash.

Are we about to have a huge crash? The Nasdaq is up over 120% since 2022. That's massive growth.

View attachment 170287
The above chart shows the sciller PE index. Stock values shown relative to inflation adjusted earnings. I.E. is the market over valued in relation to the underlying profits? The 3 times it's gone close to or over 100% of the mean are 1929, 2000 and 2024/5.
Click to expand...
Sitting on cash you don't NEED is inefficient regardless of what is going on in the market

If you know you'll need cash in the short term (probably withing 2 years) then you should be de-risking regardless of what's going on in the market

The only decision you should make is when you'll need your money
 
abu13 said:
Looking at it in todays money, i believe me and the missus could live a comfortabke life on £30k, fortunate to have no mortgage or debt. Both of us are 58 years old and would like to retire at 62. The wife has a DB scheme which if she took today would give her £5k a year and my DC pot has £325k in it roughly £65k in savings to call on if needed.

So, if i turned 67 today , the 2 x state pensions plus the wifes pension would get us to the £30k figure, obviously there would be tax payable above the wifes allowance. im hoping that my Pot will sll us to go early.
Click to expand...

Your pot value does suggest that you could achieve what you want at 62.

Might be worth looking at getting some money in a personal pension for your wife for the next 4 years so that when she hits 62, she can utilise her personal allowance for 5 years if she only has the £5k one.

A pot size at 62 of say £50k would only cost you £40k if she is a basic rate tax payer and she could draw all of that out tax free over the 5 years using 25% TFC and her remaining personal allowance as income. A nice return on capital even without growth potential factored in. Obviously the figures are only approximate but not using a personal allowance fully if retiring early is a missed opportunity.

She has to have the earnings to be able to do this but you could use some of your savings to fund it if necessary.

Is her DB pension with her current employer?
 
This is something I think about far more than is healthy. I have a good amount across ISAs and Pensions. My wife has a DB pension which is currently at about £3k per year inflation-linked. We also have a decent amount of equity in the house. We're 34 and 31 and so for most this would be a pretty good start to life, but unfortunately my body is failing me fast, so I'm not expecting to be able to work full-time much past 40. I worry about it pretty much every day and I am putting everything I reasonably can away and working myself into the ground.

I reckon by 40 I can get to maybe £400-500k at a push, and I'm just hoping I am enough of a functional human at that point to work part-time and preserve that pot for as long as possible. I don't think it will be nearly enough to enjoy the level of comfort we have now and get me to pensionable age, but predicting my health is if anything harder than predicting gain on investments.

It's a weird position to be in, being lucky enough to be able to save a lot, but it feels like I must have done a deal with the devil in the past life.
 
Having a nightmare trying to get work to increase my personal contributions, they keep telling me to set up a direct debit but this wouldn’t make sense as I would have already been taxed on it.
 
Gareth Barry Conlon said:
I use AJ Bell. Its easy enough to use and compares well on fees.

Hargreaves Lansdown is the other option that comes up a lot. I haven't used it so can't comment.

End of the day you don't need to do much. Have a plan and just leave it grow is probably best. Its easy enough to find funds (just make sure they are intended for European investors as there can be tax issues on us funds).

In normal market conditions I'd just go 80% shares spread across US, Europe and global markets 20% bonds. However, right now the markets are all at peaks and there is very little value. If you take the view markets are in a bubble then putting 50% (or more) in a money market fund is the way to hedge a potential crash. Its a pretty dull strategy but I don't see a lot of positivity in the US or European economies. Money market funds are the best option if avoiding losses is important.
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Only problem with money market funds is you're literally treading water. They just about track inflation as it is today. 15yrs is still quite a long way from retirement. If short term volatility is a worry maybe look at a hedged equity fund. Yes it still goes down when the market goes down but not as steeply and you are not trying to time the market.

The way i look at it is if there is a market crash of 30 to 60% and you're 15 years out you still have a lot of time to buy equities at a reduced rate and gain as the market recovers. Even at retirement, im planning on sticking with a 70/30 mix of equity and bonds with a variable withdrawal rate of between 3.5 and 6% depending upon market performance. For the years when its down I am currently building an ISA fund which should give me a couple of years respite if it goes to shit. Im also lucky however that beyond my DC pension i also have other sources of income which will easily cover our basic outgoings in retirement so can take a bit more risk.

As to if the market is overvalued it all depends on the monetisation of AI, if it really takes off and gets even some of the promised productivity gains it might be a bargain at its current price but who knows. I would agree though that overexposure to tech stocks is dangerous game which is why an All world tracker is probably a safer bet, yes you will still have a 22 ish percent exposure to US tech but the other 78% will be in other sectors.
 
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ell said:
Having a nightmare trying to get work to increase my personal contributions, they keep telling me to set up a direct debit but this wouldn’t make sense as I would have already been taxed on it.
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If you are a 20% rate tax payer, the pension provider will automatically reclaim the 20% on top of your contribution. So for every £100 you put in, you will get an extra £20 added.

If you are a higher rate tax payer you need to reclaim it via HMRC as you should get 40% on top of your contributions but the pension provider will only do 20%.

This explains it pretty well.

https://getpenfold.com/news/claim-higher-rate-pension-tax-relief

This is the government guidance...

https://www.gov.uk/guidance/claim-tax-relief-on-your-private-pension-payments
 
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Millwallawayveteran1988 said:
Your pot value does suggest that you could achieve what you want at 62.

Might be worth looking at getting some money in a personal pension for your wife for the next 4 years so that when she hits 62, she can utilise her personal allowance for 5 years if she only has the £5k one.

A pot size at 62 of say £50k would only cost you £40k if she is a basic rate tax payer and she could draw all of that out tax free over the 5 years using 25% TFC and her remaining personal allowance as income. A nice return on capital even without growth potential factored in. Obviously the figures are only approximate but not using a personal allowance fully if retiring early is a missed opportunity.

She has to have the earnings to be able to do this but you could use some of your savings to fund it if necessary.

Is her DB pension with her current employer?
Click to expand...
It is, GMPF.

Thanks for the advice.
 
Kompany Car said:
Only problem with money market funds is you're literally treading water. They just about track inflation as it is today. 15yrs is still quite a long way from retirement. If short term volatility is a worry maybe look at a hedged equity fund. Yes it still goes down when the market goes down but not as steeply and you are not trying to time the market.

The way i look at it is if there is a market crash of 30 to 60% and you're 15 years out you still have a lot of time to buy equities at a reduced rate and gain as the market recovers. Even at retirement, im planning on sticking with a 70/30 mix of equity and bonds with a variable withdrawal rate of between 3.5 and 6% depending upon market performance. For the years when its down I am currently building an ISA fund which should give me a couple of years respite if it goes to shit. Im also lucky however that beyond my DC pension i also have other sources of income which will easily cover our basic outgoings in retirement so can take a bit more risk.

As to if the market is overvalued it all depends on the monetisation of AI, if it really takes off and gets even some of the promised productivity gains it might be a bargain at its current price but who knows. I would agree though that overexposure to tech stocks is dangerous game which is why an All world tracker is probably a safer bet, yes you will still have a 22 ish percent exposure to US tech but the other 78% will be in other sectors.
Click to expand...
Money market funds can buy some peace of mind though. I persuaded my IFA to put 3 years' worth into cash last year when it looked like it might kick off between Israel and Iran. It's earning just short of 5% as against, so far a gain of 8% over the same period had it been left in the rest of the portfolio. So I've had a "paper" but not tangible loss of 3% but I'm totally protected for 3 years if there is a major fall in equities. As it is the portfolio got to a level where I'm confident I won't run out so I've just drawn down a lump sum spread across the portfolio, paid the tax, bought my wife a nearly new car(no VAT).
 
Kompany Car said:
Only problem with money market funds is you're literally treading water. They just about track inflation as it is today. 15yrs is still quite a long way from retirement. If short term volatility is a worry maybe look at a hedged equity fund. Yes it still goes down when the market goes down but not as steeply and you are not trying to time the market.
Click to expand...

hampshireblue said:
Money market funds can buy some peace of mind though. I persuaded my IFA to put 3 years' worth into cash last year when it looked like it might kick off between Israel and Iran. It's earning just short of 5% as against, so far a gain of 8% over the same period had it been left in the rest of the portfolio. So I've had a "paper" but not tangible loss of 3% but I'm totally protected for 3 years if there is a major fall in equities. As it is the portfolio got to a level where I'm confident I won't run out so I've just drawn down a lump sum spread across the portfolio, paid the tax, bought my wife a nearly new car(no VAT).
Click to expand...

My current perspective is that I've had enough growth recently and I want to lock in the gains.

If you look on page 1 of this thread I had a pot of 380k in July. As of today I've got 413k. That's 33k (9%) up in less than 3 months. If I shift all of my funds into money markets now and leave it for 9 months I've guaranteed a stellar year of investment.

However I'm not quite doing that. I only manage circa 300k of my pot and with that I've just positioned it very defensively. 45% money mark and bonds, 40% global equity, 10% gold / mining, the rest in a defence industry fund and some individual shares.
 
abu13 said:
It is, GMPF.

Thanks for the advice.
Click to expand...

If that is her only pension then it will work. Just need to be careful on contribution levels as 100% of earnings is the most she can pay into a pension so would probably need to do over few years if her earnings are low ish. There is also something called pension input on defined benefit schemes that counts towards the figure so it may be worth her finding out this number from the scheme administrators too.
 
Gareth Barry Conlon said:
My current perspective is that I've had enough growth recently and I want to lock in the gains.

If you look on page 1 of this thread I had a pot of 380k in July. As of today I've got 413k. That's 33k (9%) up in less than 3 months. If I shift all of my funds into money markets now and leave it for 9 months I've guaranteed a stellar year of investment.

However I'm not quite doing that. I only manage circa 300k of my pot and with that I've just positioned it very defensively. 45% money mark and bonds, 40% global equity, 10% gold / mining, the rest in a defence industry fund and some individual shares.
Click to expand...
Perspective, the name of my IFA.
 
SkyBlueFlux said:
This is something I think about far more than is healthy. I have a good amount across ISAs and Pensions. My wife has a DB pension which is currently at about £3k per year inflation-linked. We also have a decent amount of equity in the house. We're 34 and 31 and so for most this would be a pretty good start to life, but unfortunately my body is failing me fast, so I'm not expecting to be able to work full-time much past 40. I worry about it pretty much every day and I am putting everything I reasonably can away and working myself into the ground.

I reckon by 40 I can get to maybe £400-500k at a push, and I'm just hoping I am enough of a functional human at that point to work part-time and preserve that pot for as long as possible. I don't think it will be nearly enough to enjoy the level of comfort we have now and get me to pensionable age, but predicting my health is if anything harder than predicting gain on investments.

It's a weird position to be in, being lucky enough to be able to save a lot, but it feels like I must have done a deal with the devil in the past life.
Click to expand...
Life is short mate, why will you not be able to work when older ?
 
I was very careful to make sure I paid my NI every year and then subscribed to work pensions throughout my working life. I also paid voluntary contributions as an insurance in case I need care towards the end of life, but hoped anything left over would help our offspring and grandkids benefit from anything left over. after retirement We spent the first ten years caring unpaid to support ill parents, and when they passed away there wasn’t much left. But we can probably muddle through, health permitting, but this Government is scaring us with every new policy, we are not rich but they seem to think people like us are.
 
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