^^^ there was a lengthy discussion around that a few pages back. Currently, no, they are at early stages in their careers and we are trying to help them for now. They both need to drive to work, and both have cars which they fully finance and insure themselves. If they are still living at home by this time next years they will be contributing to the household costs.
Currently, no, they are at early stages in their careers and we are trying to help them for now.
That sounds about fair, but I think I'd want even a very small amount to show their appreciation (obviously depending on how much they are earning). We just had our first ever conversation with our two soon-to-be 17 yr olds about them paying us board money if they are still with us as adults. One of them said 'I'm not paying your mortgage for you' but we tried to explain how they would need to contribute something, even if it is simply to get them to understand that, as adults, not everything they earn goes on things they want to spend their money on – and that boarding with us would still be significantly cheaper than renting or buying...
Ours are a bit older, 19 and 23. A huge chunk of their money goes on car payments and insurance, but that will come down a bit this year (insurance that is) and the balance will be going to the house food and utility bills !
Don't ask about paying board - my son has paid it about 4 times in 6 years. Point blank refuses. Moved out now thank god. Couldn't even get him to help around the house despite him seeing me struggle the last 10 years with back injuries and this last year with a busted pelvis. Zero. He's 25.
I used to do loads for my folks at his age (we;; until I moved out at 25).
I paid board until I moved out at 21. My parents had saved some of it and used it to buy me a fridge and freezer for my own place.
We were clear with our two that they'd pay board if they were living at home after 18. Never expected them to pay when they were home on holiday, but they were/are encouraged to find a summer job.
My son has ADHD and just refused to pay it when he saw none of his mates did either. My daughter is doing her Masters, but I suspect she won't be able to get a job for a while in her chosen career (Digital Animation) so will end up doing shop work (she did 3 months at Superdrug before Christmas).
She's unlikely to be able to move out for a long time as her boyfriend is a professional benefits claimant. 22 nearly 23 never worked and bailed Uni 3 times after a month.
I can see my retirement being set back.
I paid board, a fair amount TBH from 16 to 25. I was paying more 40 years ago than we asked my son to pay !
One thing that would REALLY set them up well, if they're adults, is to charge a small amount for lodgings and then get them to put that in their pension in a high growth vehicle. The compounding effect by the time they need it would be amazing
I'm another one that paid board but my parents let me stop whilst I was saving for a deposit on my own house. They were always short of money so they couldn't help me financially get my own place, but put in loads of hours decorating and generally fixing the place up with me.
One thing that would REALLY set them up well, if they're adults, is to charge a small amount for lodgings and then get them to put that in their pension in a high growth vehicle.
That's a great idea - even if it wasn't the full amount, just doing something could make a huge difference.
to charge a small amount for lodgings and then get them to put that in their pension in a high growth vehicle. The compounding effect by the time they need it would be amazing
we discussed this with our youngest, who is in yr2 of a 4yr engineering apprenticeship in the defence industry. We agreed he’d increase his voluntary contribution to his employer scheme so gets the added tax benefit. He’s 19 so it’s a great start.
my son has paid it about 4 times in 6 years. Point blank refuses. Moved out now thank god. Couldn't even get him to help around the house despite him seeing me struggle the last 10 years with back injuries and this last year with a busted pelvis. Zero. He's 25.
My son has ADHD and just refused to pay it when he saw none of his mates did either
her boyfriend is a professional benefits claimant. 22 nearly 23 never worked and bailed Uni 3 times after a month.
<Checks whether these are posts from the same person.....
I can see my retirement being set back.
Can I respectfully suggest you stick up for yourself a bit more. It sounds like you are being taken advantage of
I made a quick and dirty monte carlo simulator for pension modelling. Let's you put in an age range you fancy retiring in, pension contributions, kids uni fees / gifts, etc. Then it runs a monte carlo simulation (I think the defaults are relatively plausible in terms of volatility and long term growth for a global tracker) and tells you what percentage of runs result in you being screwed or not.
My main take away is I need to put more in my pension (the defaults are not my numbers!)
https://mrhoney81.github.io/pension_monte_carlo/
Thats actually pretty good, I was using a professional version (Cashcalc) earlier today to plot my exit from the grind and the results tie up. Its really surprising how small a pot you can retire on if youre prepared to take investment risks and face the fact that some sort of employment may be required should markets be flat.
Good to hear it ties up! I got cursor to run various test cases, but i'm still treating it as a hint rather than definitive!
I made a quick and dirty monte carlo simulator for pension modelling. Let's you put in an age range you fancy retiring in, pension contributions, kids uni fees / gifts, etc. Then it runs a monte carlo simulation (I think the defaults are relatively plausible in terms of volatility and long term growth for a global tracker) and tells you what percentage of runs result in you being screwed or not.
Money lasts to 90: 97.3%
Ruin: 82 / 3,000 runs
Median retirement age: 55
Median pot at retirement: £1.05M (median of each run’s pot at the end of the year they retired)
Median estate at 90: £1.70M
Weirdly it asked for my wife's OAP but not her pension pot or how much she needs pcm. Is that because those are supposed to be joint figures?
Guess so.
How did you code it @ewan ?
I’ve viewed a few MC sims in recent months. What I haven’t had time to consider is whether a Markov chain is a better approach. Folks seem to settle on MC for its simulation value which seems neat. I’m interested in given this prior state what is the distribution. As I’m not a statistician I wonder which approach might be most realistic.
Your simulator told me to retire ;-).
I made a quick and dirty monte carlo simulator for pension modelling. Let's you put in an age range you fancy retiring in, pension contributions, kids uni fees / gifts, etc. Then it runs a monte carlo simulation (I think the defaults are relatively plausible in terms of volatility and long term growth for a global tracker) and tells you what percentage of runs result in you being screwed or not.
Money lasts to 90: 97.3%
Ruin: 82 / 3,000 runs
Median retirement age: 55
Median pot at retirement: £1.05M (median of each run’s pot at the end of the year they retired)
Median estate at 90: £1.70M
Weirdly it asked for my wife's OAP but not her pension pot or how much she needs pcm. Is that because those are supposed to be joint figures?
Guess so.
The honest answer is because my wife has a defined benefit pension - so that's what it does. Having two pension pots with different contribution rates / available dates is a fairly obvious enhancement now you've mentioned it! I've anchored it all off one person's age, so that'll stay. I'll add additional pots tomorrow.
How did you code it @ewan ?
I’ve viewed a few MC sims in recent months. What I haven’t had time to consider is whether a Markov chain is a better approach. Folks seem to settle on MC for its simulation value which seems neat. I’m interested in given this prior state what is the distribution. As I’m not a statistician I wonder which approach might be most realistic.
Initally, I just got claude opus to do it in a chat window when I was watching a video on stats which got me thinking. That was in python which I can do. I then chucked the python in cursor and told it to make me a JS version that would work on github pages - bit of back and forth to add new features and make it nicer on mobile. Claude code would have done a better job probably, but I had cursor open! I can't program JS at all!
From my limited understanding of markov chains, I assume the median would come out the same, but it'd better model the runs that go tits up as it'd have bad years clustering which is more realistic?
How did you code it @ewan ?
I’ve viewed a few MC sims in recent months. What I haven’t had time to consider is whether a Markov chain is a better approach. Folks seem to settle on MC for its simulation value which seems neat. I’m interested in given this prior state what is the distribution. As I’m not a statistician I wonder which approach might be most realistic.
Initally, I just got claude opus to do it in a chat window when I was watching a video on stats which got me thinking. That was in python which I can do. I then chucked the python in cursor and told it to make me a JS version that would work on github pages - bit of back and forth to add new features and make it nicer on mobile. Claude code would have done a better job probably, but I had cursor open! I can't program JS at all!
From my limited understanding of markov chains, I assume the median would come out the same, but it'd better model the runs that go tits up as it'd have bad years clustering which is more realistic?
cool. Thanks.
I’m aware there are some MC-based libraries for this kind of thing in R but due to ‘stuff’ I’ve not had the time to explore.
it’s that successive random ‘oh dear’ and ‘whoah’ events that I thought a Markov chain might simulate well. But, hey, no one knows the future. I suppose we just try and figure out what the acceptable risks are.
There are various good free online pension tools. Someone linked to this one a year or so back and I have found it helpful
I always fine the free online ones quite simplistic - i.e. don't do statistical modelling of a range of returns and don't allow you to factor in life events like wanting to pay for the kids uni.
^^^ there was a lengthy discussion around that a few pages back. Currently, no, they are at early stages in their careers and we are trying to help them for now. They both need to drive to work, and both have cars which they fully finance and insure themselves. If they are still living at home by this time next years they will be contributing to the household costs.
Thanks, apologies, must have missed the earlier entry about it.
Re 'I'm not paying your mortgage for you' and suchlike, an old mate had a son who initially paid what was asked, £25 a week I believe (Bed, breakfast, packed lunch, evening meal,clothes washed and ironed etc)...and after a few weeks questioned why the amount was so high. His dad said "There are two ways we can do this. One is you pay board, the other is that you become a partner in everything to do with the house...so there'll be 3 of us putting in and we'll work out what profit you'll get when we sell up"
'Ooh, that sounds good, what'll I have to pay ?'
By the time they'd put 1/3 of a £500 mortgage, £120 electric bill, £80 gas bill, £350 food bill...etc etc...he was happy to revert to £25 a week rather than c £200...to have a share of the house and the hassle.
The honest answer is because my wife has a defined benefit pension - so that's what it does. Having two pension pots with different contribution rates / available dates is a fairly obvious enhancement now you've mentioned it! I've anchored it all off one person's age, so that'll stay. I'll add additional pots tomorrow.
It now does partner DC pots as well with separate contributions. You can now tell it to either stop the contributions at the same age that you retire (wherever that is in the window) or you can tell it a different age (still your age, as everything else is anchored off that).
I’m aware there are some MC-based libraries for this kind of thing in R but due to ‘stuff’ I’ve not had the time to explore.
it’s that successive random ‘oh dear’ and ‘whoah’ events that I thought a Markov chain might simulate well. But, hey, no one knows the future. I suppose we just try and figure out what the acceptable risks are.
Well it does Markov Chains now - my sum knowledge about them is from discussing it with a LLM tho! It does seem to work and passes the tests. I told it to only do a two regime set up - the defaults are apparently reasonably representative. Can you display both on the graph if you want - it seems to cause ruin more often and also makes the 95th (significantly!) more successful!
https://mrhoney81.github.io/pension_monte_carlo/
How do the Uni costs feed in to your model, are you assuming that pension contributions are reduced by that amount?
How do the Uni costs feed in to your model, are you assuming that pension contributions are reduced by that amount?
Essentially yes. It assumes draw down so it'll just reduce the pot by 9k each year that uni fees are paid.
Personal bias coming in again tho - I'm 45 so my kids will be at uni after I've retired - I've not run a test case for uni fees whilst still contributing. It should work tho.
I got charged board by parents who didn't need the money. When I asked if they'd be prepared to lend us money while we got the business up to speed they said no (happily the business was making money within weeks) - typical of the social circles they mixed in and reading above still the attitude of some.
So I have never charged junior rent, we've paid his fares when he visits us, he left education with zero debt as we paid the lot, we paid for a year off in Berlin, I'm currently providing accomodation for him in the Alps, I've lent him my car for the Winter, I still pay his phone bill. Sure we'd have a bigger pension pot if we didn't support him financially but he's happy, we're happy and what elese would we do with the money? A world cruise, more stuff, a flasher house and car - no ta. I'd rather spend it on him now than leave it in a will for when he'll probably no longer need it.
Has this made him lazy? Nope, he's a grafter and successful. Would he have been so successful if he'd had to work in MacDo' while studying or done a succession of poorly paid jobs to keep a roof over his head? I doubt it.
History hasn't reapeated itself.
paying board...... learning to stand up for yourself.
left school in 1982. got on a YOP scheme. £25 per week. paid my mum £15.
1983 got a job as a coal merchant. £100 per week. paid my mum £25.
1988 worked as a blacksmith. £150 per week. paid my mum £30. saved £50 for upcoming mortgage which started in late 88.
Paying board also means you have less money which limits your choices. The thing I did appreciate my parents doing was letting me do A-levels when nearly all of the other kids at school were sent out to work. From 18 I've lived on what I've earned and/or the government generously handed out as a grant (today's kids get handed a pile of debt which amounts to a graduate tax on earnings above a certain amount). I think kids are for life and cutting them off financially and letting them fend for themselves at 18 or any age for that matter is counter productive. It'll limit and influence their choices, perhaps they'll decide they can't afford a qualification in the short term which will pay in the long term. Perhaps with a bit more cash in the bank they could set up a business and get out of that day job, and maybe strike rich. Perhaps they could turn a hobby/passion into a career. money is choice, not enough is a prison.
Standing up for yourself will get you so far, standing together I suggest will get all concerned further.
I'm strongly of the view that once an offspring is out of education they should be paying 'board and lodgings' at a realistic rate. It means they have an appreciation of how much things cost (that "stuff" is a limited resource), and make rational decisions about whether to stay living at home or to make their own way.
On the other hand, if the parents didn't actually need the money it's a perfectly rational thing to stick all that 'rental income' in a savings/investment account and give it back to the kid at some point in the future - whether it's for starting a business, deposit on their own home, wedding, travel or whatever.
So you have so little faith in your kids' ability to manage their affairs that you make them "save" by paying you board you might one day give back. Controlling behaviour, they can have their money back maybe if you approve.
Have faith, be generous, make them feel welcome.
How many of us are going to "need" all the wealth we have? No pockets in shrouds. Our kids on the other hand belong to a generation that for many means student debt increasing their tax burden, supressed wages, high rents, out of reach property, can't afford kids, low job security... . A bit of vertical solidarity from a generation that has done OK is an answer. I see covering costs as a transfer of wealth between generations that isn't just handing over lump sums.
Paying a share of expenses is not controlling behavior. It can actually help people learn about the reality of life and once they have paid a share it is not their money anymore so if a parent gives them some money down the line it's not giving them their money back. Different people have Different circumstances so it's not one size fits all.
If you haven't yet taken your PCLS you will get £4190 tax free on top of that £12570
Please correct me if i am wrong but by doing this your provider will automatically trigger your MPAA which may be important if you want to make contributions later (over £10k pa) the additional £4190 will also come out of your overall 25% tax free allowance so isnt really "new" tax free money. You can withdraw that at any time.
How many of us are going to "need" all the wealth we have?
MrsJ and I made a calculation of how much money we will need to see us into our graves and gave the rest to MissJ to buy a flat. We are bloody lucky to be in that position and we don't take it for granted. Of course our calculation may be wildly wrong and we may regret it, but for now we are thinking the same as Ed - that the current generation have it rough compared with us and we're grateful to be able to help.
I think it's more a case of different people have different perspectives and attitudes. Your kids, you decide whether to be a help or a hindrance. Some people are mean with their kids, some generous, anecdotally it depends little on their (financial) "circumstances" and more on their attitude. On this thread there's no correlation I can see between what people have declared their Income/pots to be and how generous they are - that goes for people I know IRL as well.
Some people are mean with their kids,
I think that's a bit unfair. Nobody is mean with their kids - well, except a few deplorable individuals - but people see different ways to help, maybe depending on the mentality of the kids themselves,
I think my wife and I are in a reasonable position for pension by the time we retire at around 60-65, but truthfully, I'm not as clued up on this as I should be. Both of us are in DB pension schemes, but neither of us started contributing until we were in our 30s (late to Uni) and whilst my wife's pension is the higher @ 1/57th vs mine at @ 1/100th, my higher salary should offset the delta. I think even without considering AVCs or State - we should be on a high enough combined income to be quite comfortable with the mortgage paid and significant renewables for energy.
Still not sure - it's all a bit of a minefield and I've never had the time to properly sit and sort it.
Nobody is mean with their kids - well, except a few deplorable individuals
I went to Aberystwyth university, I'd qualify several of the parents of fellow students as mean with their kids. Students making ends meet with poorly paid jobs then the parents roll up in a flash car and stay in the most expensive hotel, or they'd fallen out completely andweren't even paying what was due. In every country I've lived in student sex workers are fairly common, 56000 in the UK according to ITVx, 6% of students saying they'd do sex work if necessary and 3% actually doing sex work.
Which is more important, loading up your pension pot or your kids' future? I've made my choice and really won't miss that cruise.
If you spend the time to understand what you currently spend and what your income will be at different points when DB and State pensions kick in you may come to the conclusion you can retire earlier or not. Or if you need to add more to those pension or a SIPP now to allow for this.
Please correct me if i am wrong but by doing this your provider will automatically trigger your MPAA which may be important if you want to make contributions later (over £10k pa) the additional £4190 will also come out of your overall 25% tax free allowance so isnt really "new" tax free money. You can withdraw that at any time.
Yes, t seems this is UFPLS which does trigger MPAA.
Still not sure - it's all a bit of a minefield and I've never had the time to properly sit and sort it.
Unless you're really into financial planning as a hobby, as some are on here it seems, this is what independent financial advisors are for. Should take into account all your various investments and incomes rather than just the pension pots. I'm going to do this in a couple of years as I think I'll be able to start drawing a deferred pension at 55 while still working and paying into another.
I reckon you can live comfortably on £10,000 per year, so you've got what, like 40 years saved up? Do it, you're here once 😎 Work less, play more.
Really.....?
I don't think so!
I wouldn't really consider it a hobby, more a necessity. You're going to spend your whole working life investing for your retirement, which if you're lucky could be 30+ years, why wouldn't you spend some time exploring the options available to you before you reach the point you've had enough?
I've no issue with using an ifa, but I'd want to be walking into that meeting with enough knowledge to discuss the options they put forward. Getting to this point having done no/little research of your own and finding you haven't nearly enough funds to cover the lifestyle you've envisaged is going to be a bitter pill, almost as bad is finding you've more than enough and could have retired 5/10 years earlier.
I reckon you can live comfortably on £10,000 per year, so you've got what, like 40 years saved up? Do it, you're here once
Work less, play more.
https://www.retirementlivingstandards.org.uk/
As ever that link confuses me. Comfortable retirement includes a fortnight in the Med plus a few long weekends.
My naive intention was basically to be on holiday pretty much constantly, with occasional rests and even more occasional stints doing house/ admin.
Whatamimissing?
which if you're lucky could be 30+ years
Gawd no – I wouldn't want to live deep into my nineties. I'd rather shuffle off in my late 70s/early 80s.
Having been practicing for retirement since 2002 you're missing that constant holiday is wearing, thegeneralist. After a month of walking a GR or Compostelle it's nice to get on a bus and head for wherever you consider home, have a shower, unpack and set the washing machine spinning. Then get back into the routine of MTB club on Saturday, horse Thursday, roady club Tuesday, swim when it's sunny, play guitar with a mate... . When the weariness is replaced with new enthusiasm walk into the travel section of the library, pick up a pile of guides and start thinking about the next adventure, but not straight away.
I initially did too much, even though only 42 at the time my tendons and skeleton couldn't cope with unlimited free time, so I cooled it a bit and enjoyed it much more.
Madame Edukator has four months holiday a year, when she retires I don't think we'll spend any more time away, we'll just change the times of year when we go. We have a long list of things best done in September and January.
I'm mortgage free, small 2 bed house and child free...
I've worked out I need 18k per year net (at current prices) that includes 1x2week cheap holiday.
It doesn't include big ticket items though.. New car eventually when the current one becomes uneconomical to maintain... I think the pointing and a bit of maintenance needs done at some point on the house walls.. That'll probably be about ten grand. New roof for the house maybe at some point too.. Unforeseen expensive stuff.
So really I'm probably looking more like 25k net a year to have some contingency. And that's at current prices...
As we know prices always rise over time, or you get less goods and services per £ spent.
which if you're lucky could be 30+ years
Gawd no – I wouldn't want to live deep into my nineties. I'd rather shuffle off in my late 70s/early 80s.
I suppose it depends on when you knock it on the head, early to mid fifties, you're fit and healthy, it's quite possible you could have 30 years of active retirement.
you're missing that constant holiday is wearing, thegeneralist.
Oh no I'm not....;-)
pretty much constantly, with occasional rests
https://singletrackworld.com/forum/bike-forum/do-old-people-just-go-on-shorter-holidays/
Alas I'm well aware of it.
Good thread, thegeneralist, sorry I missed it.
Just looked back on that thread and I'm happy to report that we did it all and more. 😎
As ever that link confuses me. Comfortable retirement includes a fortnight in the Med plus a few long weekends.
My naive intention was basically to be on holiday pretty much constantly, with occasional rests and even more occasional stints doing house/ admin.
Whatamimissing?
TBH that link was a bit grim, didn’t seem to have provisions for the new bike fund and didn’t really sell retirement.
Is it funded by the Pension providers to make you retire late and save more,so they can pay out less 🙂
which if you're lucky could be 30+ years
Gawd no – I wouldn't want to live deep into my nineties. I'd rather shuffle off in my late 70s/early 80s.
I suppose it depends on when you knock it on the head, early to mid fifties, you're fit and healthy, it's quite possible you could have 30 years of active retirement.
TBH I don’t think you can pull stuff out your pension till 55(and I think this going up to 57), I think you’d have to think 15-20years and be pleasantly surprised if it’s longer.
That link says £600 a year for home maintenance….really? I pay a she’d load more than that now and I’m barely in it!
don’t think you can pull stuff out your pension till 55(and I think this going up to 57)
I think most people who are lucky/ organised enough to be retiring mid fifties will have a significant chunk of their money outside pension and so can use it when they want.
That link says £600 a year for home maintenance….really? I pay a she’d load more than that now and I’m barely in it!
Exactly my view. That's barely two days work on the house. No way that works over 30 years for the pile of shit I live in.
The most glaring assumption in that link is that people own thier own home when in fact 35% of households rent.
Rather than persuading people to save more it looks to me like they're trying to con people they can live on a state pension and still have a hot shower.
That link says £600 a year for home maintenance….really? I pay a she’d load more than that now and I’m barely in it!
Exactly my view. That's barely two days work on the house. No way that works over 30 years for the pile of shit I live in.
TBH I don’t remember seeing many old people living in homes that you’d go ‘love the decor’ in my life :-).
Yeah but repointing a chimney to stop it falling on people costs how much? Cleaning out the guttering now and then, a broken tile, a leaking joint somewhere, a broken drain, a problem with the electrics or heating - just a few of the bank breaking bills my mother has had to pay recently.
I read this recently:
"Retirement is wonderful if you have two essentials—much to live on and much to live for.”
The most glaring assumption in that link is that people own thier own home when in fact 35% of households rent.
Rather than persuading people to save more it looks to me like they're trying to con people they can live on a state pension and still have a hot shower.
Yep,I’d not really thought about till I was thinking retirement, the simple and brutal luxury of owning is that you don’t have rent to pay.
So ‘no shit Sherlock’ your able to live on far less of a pension and I doubt people renting aren’t probably pushing tons of money into a pension.
Makes the thread even grimmer reading for anyone not on the property ladder but then as a kid I wasn’t exactly sat with a spreadsheet working out my retirement plans.(it was more cars,sex and beer,which may or may not still be applicable.:-)
I read this recently:
"Retirement is wonderful if you have two essentials—much to live on and much to live for.”
TBH so is life in general,it’s not specific to retirement 🙂
the simple and brutal luxury of owning is that you don’t have rent to pay.
And add to that, the ability for many of those homeowners to be able to downsize and release a chunk of equity (as well as reduce other overheads like council tax, heating, maintenance etc).
I think most people who are lucky/ organised enough to be retiring mid fifties will have a significant chunk of their money outside pension and so can use it when they want.
A downside to pensions is that they cant be accessed until you are 55 (atm) if you are in a position to retire in your mid fifties then that is not an issue and therefore they are one of the most tax efficient ways to store and grow your cash, if your retirement is within a small number of years you are likely putting as much of your cash into them as you can, not taking money out.
That link says £600 a year for home maintenance….really? I pay a she’d load more than that now and I’m barely in it!
Exactly my view. That's barely two days work on the house. No way that works over 30 years for the pile of shit I live in.
TBH I don’t remember seeing many old people living in homes that you’d go ‘love the decor’ in my life :-).
Whereas I have paid far less than that over 35 years living where I do ( although I have dodged a £15000 bill but even that is under £500 a year)
I think most people who are lucky/ organised enough to be retiring mid fifties will have a significant chunk of their money outside pension and so can use it when they want.
A downside to pensions is that they cant be accessed until you are 55 (atm) if you are in a position to retire in your mid fifties then that is not an issue and therefore they are one of the most tax efficient ways to store and grow your cash, if your retirement is within a small number of years you are likely putting as much of your cash into them as you can, not taking money out.
Further to this, the age is due to rise to age 57 in April 2028, then be aligned to state pension age -10 years therafter. Its therfore wise to have some other assets that are accessible, e.g. an ISA if you are caught in this trap and want to go before the NMPA.
Another important consideration is taxation, as it can be onerous with large pension withdrawals. You can get a surising amount out a pension if you are careful how and when this is withdrawn.
e.g. If you retired at age 55 and had no other income until state pension at age 67, you could draw taxable income of £12,750 pa (up to Personal Allowance) free of income tax for 12 years that could be supplemented with Tax Free Cash and or ISA withdrawals. That a total of over £200k out the pension alone that you could draw tax free when accounting for the corresponding TFC from crrystallisation and thats assuming the personal allowance remains static.
Could I retire on forty quid?
Because I have that right now, and I have very little will to work left...
You can get a surising amount out a pension if you are careful how and when this is withdrawn.
Tax efficiency is good. And indeed, the less you take out of a pension pot the more likely it is to last. But as YMMV tax is an unavoidable thing if you want or need more money.
400k with no mortgage and no dependents is a very different picture than someone still carrying big monthly costs. The real question is not the headline number, it is what you actually spend per year. If your lifestyle sits around 20k to 25k a year, that pot can last a long time if invested sensibly. If you are closer to 35k plus, it gets tight fast and you either need part time income or a few more working years to build a buffer.Inspired by the thread with the chap talking about mortgage overpayments v investing, im interested in what others think they need for retirement.
Personally im sick to death of work & bored senseless. I own my own home, not married, no children or dependencies, early 50's. I have about 400k in savings, pensions & investments.Lately ive been trying to decide if this is enough to jack it all in? Although 1/2 of me thinks whilst its possible to earn good money then I should continue to do so, but at what point do you decide enough is enough.
I appreciate there will be those who have considerably more & those who have considerably less.And before anyone asks, I don't like to talk about my charity work.
A lot of people use the rough 4 percent rule as a sense check. On 400k that gives about 16k a year before tax, so you need to see how that lines up with your real spending, not guesses. Early 50s also means funding maybe 35 plus years, so sequence of returns matters more than people think.
If you are mentally done with work, a halfway option is often easier. Drop to something low stress for a few years, let the investments keep growing, and test living on your “retired” budget now. That tells you very quickly whether you are ready or just burned out and needing a reset.
The 4% rule was based on leaving the pot largely intact, through growth, to pass onto dependents. In the case of the poster, he has no dependents, so theoretically could work on a higher % figure.
400k with no mortgage and no dependents is a very different picture than someone still carrying big monthly costs. The real question is not the headline number, it is what you actually spend per year. If your lifestyle sits around 20k to 25k a year, that pot can last a long time if invested sensibly. If you are closer to 35k plus, it gets tight fast and you either need part time income or a few more working years to build a buffer.Inspired by the thread with the chap talking about mortgage overpayments v investing, im interested in what others think they need for retirement.
Personally im sick to death of work & bored senseless. I own my own home, not married, no children or dependencies, early 50's. I have about 400k in savings, pensions & investments.Lately ive been trying to decide if this is enough to jack it all in? Although 1/2 of me thinks whilst its possible to earn good money then I should continue to do so, but at what point do you decide enough is enough.
I appreciate there will be those who have considerably more & those who have considerably less.And before anyone asks, I don't like to talk about my charity work.
A lot of people use the rough 4 percent rule as a sense check. On 400k that gives about 16k a year before tax, so you need to see how that lines up with your real spending, not guesses. Early 50s also means funding maybe 35 plus years, so sequence of returns matters more than people think.
If you are mentally done with work, a halfway option is often easier. Drop to something low stress for a few years, let the investments keep growing, and test living on your “retired” budget now. That tells you very quickly whether you are ready or just burned out and needing a reset.
Hmmm Have you thought about ‘living the dream’.
Rent the house out and buy something sensible in Spain (or rent to see if it’s for you), not saying it’s easy and for everyone but the weather,lifestyle and although it’s not like it used to be the cost of living and things like council tax are much more manageable.
if you can’t crank up the the income the other option is to crank down the outgoings.
I’ve banged on that Brexit has meant you have to show more money than previously but it’s still possible and people are still coming over.
How do they do it dudeofdoom? A family member has said they can no longer do it. The Golden Visa scheme ended last year so unless you can get a very well paid job with a Spanish company how do you do it? Portugal has got a lot more complicated in the last year too.
Even as an EU couple we'd have to demonstrate a jointe income of 36 000e a year to be able to retire in Spain. So we could but having already lived in Spain I'll stick with France. There is no minimum in France BTW.
How do they do it dudeofdoom? A family member has said they can no longer do it. The Golden Visa scheme ended last year so unless you can get a very well paid job with a Spanish company how do you do it? Portugal has got a lot more complicated in the last year too.
Even as an EU couple we'd have to demonstrate a jointe income of 36 000e a year to be able to retire in Spain. So we could but having already lived in Spain I'll stick with France. There is no minimum in France BTW.
Presumably via the non lucrative visa
https://ageinspain.org/non-lucrative-visa-nlv-guide/
Thank you, julians. So I can tell my family member to apply. The requirement is the same as it would be for me, 36 000e income.
I'm currently floating ideas past my sister about retiring, or doing something different. She's 54 and recently diagnosed with breast cancer, and has just finished treatment and gone back to work. Except. They have turned round and said they are making her redundant - some reorganisation in the background. Possibly a chance of another job with them at the other end of the country. Husband works full time, no kids, no mortgage. She'll get a year and a half redundancy pay (she earns six figures), and she's already had critical life pay out. Work is 'her life'.
I've said, if they are going to treat you like this after 25 years, take the money. Work out how much you need a month and see what you will have for the next 6 years until you can draw your pension without penalties at 60 (she could retire with a pension in the next year at 55). Your husband can still work, you can go do something you want to do, part time/volunteer etc. She's currently knackered as she's literally finished treatment and gone back to work as she is dedicated. Then they do this to her.
We can't convince her there is more to life than work, and she's very well off financially. They are both skinflints though, so don't really spend much. I've asked her to consider just how much money do they need to live off. My wife isn't working now and we manage off my wages, and we have an adult child at home (Uni).
Her head isn't right at the moment as the cancer diagnosis really knocked her for six, but I wouldn't be working for a company that binned her off after 25 years. I'd be skipping down the road with a good pay out and doing stuff I wanted to do.
Anyway, we'll all chip away at her !
What seems logical and sensible to some can seem quite the wrong choice to others, we’re all wired differently. I do also think that for most of us, as we get into our 60’s and beyond, the fun of the work we may have done for 30 plus years has diminished.
The 4% rule was based on leaving the pot largely intact, through growth, to pass onto dependents. In the case of the poster, he has no dependents, so theoretically could work on a higher % figure.
This is not the case - broadly it is the safest withdrawal rate such that you are unlikely to run out of money after 30 years
It is also US based - for UK, 3% is a better starting point - see e.g. https://monevator.com/safe-withdrawal-rate-uk/
^^ that reads very like an article written by the investment industry…