Pension Pot

[abu13]

Understanding what you need to live on is something very few people actually know, i can't advise strongly enough how important this is and now is an ideal time to check as you need a datum point such as the stat of the year,

Each January I record how much income after tax we have brought into the household in the previous year, I then deduct any money I have spent increasing savings, paying off any debt and any exceptional expenses such as home improvement (not maintenance). This then gives me a good idea of how much I need to live my current lifestyle. This is based on being debt free without needing to top up any savings and with a well maintained house.

I have found that for me and my wife we need around £26k in today's money, based on us getting a combined state pension of £19k then we need around another £10k - £12k a year before tax that we need to fund ourselves each year. I am hoping to retire early in about 8 years and fingers crossed my pension pot should be more than enough to allow me to do so.

I have read that the average person in the UK doesn't have any retirement plan in place until they get into their 60's and assume the State Pension will see them through. At 55 the average person in the UK only has around £80k in pensions savings, this is really concerning and lots of people are in for a real shock.

Everything I have read indicates that a pension pot between £300k - £500k should be enough to enjoy a comfortable if not lavish retirement. A lot depends on if people want to work until they receive the State Pension or retire early.

 

[Gareth Barry Conlon]

Understanding what you need to live on is something very few people actually know, i can't advise strongly enough how important this is and now is an ideal time to check as you need a datum point such as the stat of the year,

Each January I record how much income after tax we have brought into the household in the previous year, I then deduct any money I have spent increasing savings, paying off any dept and any exceptional expenses such as home improvement (not maintenance). This then gives me a good idea of how much I need to live my current lifestyle. This is based on being debt free without needing to top up any savings and with a well maintained house.

I have found that for me and my wife we need around £26k in today's money, based on us getting a combined state pension of £19k then we need around another £10k - £12k a year before tax that we need to fund ourselves each year. I am hoping to retire early in about 8 years and fingers crossed my pension pot should be more than enough to allow me to do so.

I have read that the average person in the UK doesn't have any retirement plan in place until they get into their 60's and assume the State Pension will see them through. At 55 the average person in the UK only has around £80k in pensions savings, this is really concerning and lots of people are in for a real shock.

Everything I have read indicates that a pension pot between £300k - £500k should be enough to enjoy a comfortable if not lavish retirement. A lot depends on if people want to work until they receive the State Pension or retire early.

I work it out as a bit more than that.

Currently our basic cost of living is around £2k per month. Roughly £1k on bills and fixed costs the other on food and other general 'stuff'.

I add to that another £1k per month which is the cost of maintaining the house and keeping a modest car running.

There is a bit of headroom in that but its before any holidays and pricey hobbies etc so £36k per year for the two of us. Note that cost doesn't really change if its just 1 of us.

 

[abu13]

I work it out as a bit more than that.

Currently our basic cost of living is around £2k per month. Roughly £1k on bills and fixed costs the other on food and other general 'stuff'.

I add to that another £1k per month which is the cost of maintaining the house and keeping a modest car running.

There is a bit of headroom in that but its before any holidays and pricey hobbies etc so £36k per year for the two of us. Note that cost doesn't really change if its just 1 of us.

The good thing is that you have a really good handle on what you need each year, it's amazing how few know this.

 

[denislawsbackheel]

The illustrations that the providers send make no sense whatsoever so I wouldn’t worry about them too much.

State pension is £9627 per year from April as long as you qualify for it. You can check this online. The age you get it will depend on how old you are now. You need 35 years worth of NI payments or credits to get the full amount usually. Some people qualify for more than the above depending on their contracted out status over the years.

Check your State Pension forecast

Find out how much State Pension you could get (your forecast), when you could get it and how you could increase it

www.gov.uk

Your pot will then give you up to 25% tax-free and the rest of the fund will be used to buy an annuity (income for life) or you will be able to draw an income from it and leave the funds invested (drawdown)

Surely the only people who will get the figure quoted for a state pension will be those who never contracted out.

 

[denislawsbackheel]

Does this only apply when you have retired or is it something you are able to do while still working?

You can do it from 55 with most defined contribution private pensions working or not.

When can I take money from my pension? | MoneyHelper

Find out when you'll be able to take money from your pension and how taking your pension early will impact your finances in later life.

www.moneyhelper.org.uk

 

[flook]

Surely the only people who will get the figure quoted for a state pension will be those who never contracted out.

not quite, it's a little complicated but my understanding is that the contracted out thing is now gone from consideration, and as long as you contribute 35 years you get the max state pension. i contracted out for 2 years in the 90's, but I've paid in 38 years in total so I'm golden.....I think

On the other hand if you were CO for 10 or 15 years you'll struggle to hit the 35 year figure and hence will lose out on the state pension....again "I think"

 

[Tommy_Catons_Perm]

Pension contribution limits | PensionBee

Find out how much you can contribute to your pension and receive a tax top up from HMRC, and learn what happens if you exceed the contribution limit.

www.pensionbee.com

 

[Tommy_Catons_Perm]

Surely everybody knows how much they need to live on per year? Simply look at your bank statements and sum up the out column?

 

[paulchapo]

I said to a mate a wile back that mortgages have a bit pschological element but in reality they are just another cost. The way energy prices are going and the general cost of living its less of an issue. You need a shit load of cash to retire comfortably.

Not really. I feel for those who rent as that £600+ a month to find as well as everything else. If a mortgage is paid off you don't have that, plus you could sell and downsize. I need to try and make my savings work harder.

 

[paulchapo]

Surely everybody knows how much they need to live on per year? Simply look at your bank statements and sum up the out column?

Most do but inflation soon puts a spoke in your planned budget. Also house repairs etcetera. When I worked my salary coped easily, now it comes out of my savings which I can't top up as I'm not working.