Pension Pot

[ChicagoBlue]

As a rule of thumb it's what you'll get per year multiplied by 20.

25-30, in my book, unless you’re expecting to making 5% on your money or leave nothing to your heirs.

 

[ChicagoBlue]

I'm aiming for a total of around £350K in the next 8-10 years.

Currently got about £200K.

I never put too much in because you've always got to have one eye on the here and now and balance this against the chance that you might not make it!

Rule of 72 says you DOUBLE your money in 7.2 years at 10%, 8 years at 9%, 9 years at 8%, and 10 years at 7.2%, so £350K (75% increase) should be quite doable without too much risk.

 

[ChicagoBlue]

Such a hard call this one. There are no guarantees and covid has taught us we could have pots of money but not be able to spend it if places and countries are closed down. Also health issues could arise. The way Russia is sabre rattling we might all go up in a puff of smoke soon anyway.

My advice is to retire as early as possible. Party while you're still fit and able. Everyone is different of course. Mortgage paid off should be a minimum so you only have to worry about bills, food and general upkeep. The way inflation is going though that's going to hammer people's spending power.

….but increase their ability to sell an inflated priced home and downsize, if needed.

 

[paulchapo]

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"

I think they stopped it happening a few years ago but for many of us it was a bit too late. I had 43 years contributions when I took early retirement but many of those were classed as contracted out. I never remember having a choice but as a kid back then i never took much notice. I will get more than the basic state pension but not the top whack unfortunately.

 

[west didsblue]

25-30, in my book, unless you’re expecting to making 5% on your money or leave nothing to your heirs.

I’m on a DB scheme and the assumption for tax purposes is that the pot is equivalent to 20 times the annual pension accrued. For DC schemes it’s irrelevant because the pot is what it is.

 

[ChicagoBlue]

I’m on a DB scheme and the assumption for tax purposes is that the pot is equivalent to 20 times the annual pension accrued. For DC schemes it’s irrelevant because the pot is what it is.

Agreed. From here (DB), you just need an inflation-adjustment from personal savings or some other source.

When I lost my DB Plan and switched to a very small annuity plan and Defined Contribution Plan, I started thinking in terms of saving 25-30x additional income.

I will have two “annuity” type plans, with a very small “kicker” plan from my wife, that will bring in about $60,000 (~£45,000), so we have been trying to save sufficient additional income to supplement that to facilitate a non-drawdown income that would enable 80% replacement of income. I use my calculation for THAT money.

My apologies for making a statement (conclusion) from such incomplete information on my part. This is not really the topic for such statements.

 

[sky tot]

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.

I wish , I a joiner and never earnt big money , had a personal pension since I was 23 and it’s only worth £126k . I’m nearly 57 and the maturity date is 2026 . Is is what it is but my only concern is my body , slowly getting fucked . Bad back ect . No way can I see myself working to ll in 67

 

[Citizen of Legoland]

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"

Last time I checked they did some sort of re-calculation so even though I was contracted out for over ten years it only took me about 6 or 7 years to get back to parity. From memory it was something to do with the change of required contribution years rising from 30 to 35. So it might not be a case of having to match CO years with additional CI years for everyone.

 

[M18CTID]

Rule of 72 says you DOUBLE your money in 7.2 years at 10%, 8 years at 9%, 9 years at 8%, and 10 years at 7.2%, so £350K (75% increase) should be quite doable without too much risk.

Yeah, should be doable without him investing another penny. Obviously usual caveats about how the stock market performs in the next 8-10 years apply

 

[Citizen of Legoland]

I wish , I a joiner and never earnt big money , had a personal pension since I was 23 and it’s only worth £126k . I’m nearly 57 and the maturity date is 2026 . Is is what it is but my only concern is my body , slowly getting fucked . Bad back ect . No way can I see myself working to ll in 67

This talk of 300k to 500k is pie in the sky stuff*, fuelled by pension providers who are getting a cut from your deposits;) A £155k pot according to Which gives a comfortable retirement at state pension age, for one person who owns their home. I’d make a stab at adding 50% to the pot if you’re a couple.

The average UK pension pot, and what makes a good one

Telegraph Money reveals how much retirement income you need – and how to save for it

www.telegraph.co.uk

Obviously the more the better but every time I do my calculations I reckon 200k would do me plus whatever ‘er indoors adds. That’s at 67 though, just struggling to see how I can retire early.

*Unless that’s factoring in inflation