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Hitting my numbers into a compound interest calculator says my 200k should be around 450k when I’m 57 (based on 5% annual growth (up till now I’ve averaged between 7-10% growth pa))
I think 5% is a sensible number to use, but don't forget to throw in the effects of compounding inflation. 2% pa inflation takes net growth down to around 3% per year (effective spending power), and if doing drawdown the same thing needs to be considered
I don’t know how pensions work in Germany, but there must be some tax breaks for pension input. It might be worth some professional advice to find a way of inputting money from your savings to your pension & reducing your tax liability.
If it was the uk, you could pay money into your pension, and claim tax relief via your tax return.
There is talk that next year there'll be a rule meaning all self employed in Germany have to pay into a state pension pot.
Mate just got given advice from a pension adviser. The funds he was suggested had an average growth of an amazing 3.5%!
Need to talk to my accountant regarding tax breaks and pensions/efficient savings.
However, speaking to friends a good 15 years older than me I would say I’m in a good position.
Scary isn't it, I'm 49 now and have been saving into a DC pension since I was 25. I'm not going to be rolling in it when I decide to retire but we'll be ok, but the number of friends my age and older who have nothing other than the state pension, some of them banking on inheritance to save them...
Sadly that’s all too common. For some, money is so tight there is no choice, but many have chosen to live for now instead. Every penny spent on booze, fags, holidays, bikes, satellite tv, Netflix, iPhones etc is a choice. With choice comes consequences.
If you plan on inheritance, hope your elderly relatives don’t need care for another two years. Because social caremageddon is coming with increased NI payments and a lifetime cap of £80k (per person of course).
When is an 80k cap not an £80k cap? When you add the accommodation & food costs too! The £80,000 social care cap is only for actual care costs, so you will pay double that in total. Each.
Alpin can u buy some gap years back from uk good, I think u can buy back up to the last 7 but that may have changed. I m not sure what the min years is to get something, it's 15 here in Spain and you can add years from another country.
I would be making my own provision then you can do what you want.
if i had done what some of you fellas are doing, looking into figures and percentages, i dont ever think i would have retired. would have confused the hell out of my self.
stop overthinking it all. just do it. spend less, spend time doing nice things. it is easy.
stop overthinking it all.
very much this
stop overthinking it all. just do it. spend less, spend time doing nice things. it is easy.
Pah, we've read loads of books and Internet posts on investment and money advisors. What makes you think you know anything about retiring, enjoying yourself and getting on with living the best life you can?
😉
stop overthinking it all. just do it. spend less, spend time doing nice things. it is easy.
Most definitely this IMHO
Well, I retired yesterday - for the second time. This time I'm going to do it properly.
My previous experience was probably a bit spoiled by the first lockdown coming soon after, so I didn't get a lot done, and ended up letting tasks expand to fill the time available. I got a bit bored so went back to making furniture for money. See the "What have you made" thread for pictures of what might be my last job. But that's given me a much better perspective, so there'll be no time-wasting now. I spent today tidying up the workshop and fitting mudguards to a couple of bikes so there'll be no excuse not to ride. I've sorted out the neck of my winter wetsuit so I can windsurf all year round without cold water pouring in and my first day of a "make your own guitar" course is booked for Tuesday. Wish me luck, guys!
^^ think if you're handy with your hands then there's always the option of carrying on working.... you just get to be a little more selective with what you do.
For all the "just do it" comments, here's a confession. I'm a bit scared of retiring. I am fortunate to be in a financial position where I could quit tomorrow but something is stopping me and I think it's the fear of boredom, isolation and depression (I've got lots of history with the black dog and am not good with people). So at the moment my plan is to drop to 3 days a week next spring then see how I'm going in the autumn.
one thing I’ve not seen anyone mention is the advantage of having free time to look after your parents
That's an interesting idea that had never occurred to me, and I've never considered that my parents might still be alive when I retire.
But as the average UK retirement age is 64, I imagine it's only a consideration for the lucky few who are wealthy enough to retire significantly earlier than that, or perhaps people whose parents were young.
My dad was 28 when I was born- not particularly old but he will/would be about 90 if I manage to retire in my early 60s, as I currently hope. Which, statistically, him reaching that age is unlikely to happen.
That’s an interesting idea that had never occurred to me, and I’ve never considered that my parents might still be alive when I retire.
The other point I mentioned is the health of your partner - and that definitely applies to more of us.
Yep, true, and as MrsDoris is a few years older than me I'm quite mindful of that. Hence being very keen on retiring by at least 62, i.e. when she reaches state pension age.
I’m 47, and not allowed to draw my pension until 57 under current rules so no matter what I can’t retire until then. My window to choose is between 57 & 60.
is that true though? best buy annuitys seem to sit around 3.5% for a fixed amount (and dropping significantly for one that tracks inflation). The same amount is generally considered “safe” to withdraw from a fund with no reduction of the funds value over the long term. how are annuity providers losing out unless they invest really badly?
There's absolutely no guarentee with the 4% rule, if the market dips 40% (happens every so often), you have to either reduce the 4% or eat into your capital faster. An annuity provider looks after billions and has to pay our the annuity rate come rain or shine, year after year for decades. Investing in stocks would be too risky, so they tend to go for safe assets eg utilities which have a reliable income across the market ups and down.
but I’m starting to think he’s just arguing for the sake of it.
Not really, but these throw away statements like "all DB pensions are rip offs" etc can't go unchallenged. There is no one right answer but there is a lot of nonsense written on this thread.
I’ve no UK state pension as I left the UK with only 9 out of the required 10 years of NI contribution.
Have you looked into buying missing years? I know nothing about the rules if you live overseas but in the UK you can buy missing years to top up the state pension. You might be able to buy one year and then qualify for 10/35ths or whatever the ratio is / will be.
Not really, but these throw away statements like “all DB pensions are rip offs” etc can’t go unchallenged.
Who said that @footflaps?
I understood that you could only backtrack so many years and I've exceeded that.
Just tried to log on to HMRC to find out, but they need to verify who I am... Passport (which I have), credit reference (never had a phone contact, never had a credit card) or Northern Ireland driving licence (grew up in Essex).
Regarding drawdown versus annuities it's not an all or nothing decision. You can keep some in drawdown and use the rest to buy an annuity for the guaranteed income. And you can buy an annuity up to the age of 75 so another degree of flexibility. I'm happy to have everything in drawdown for the moment and take the risk of a correction by having 2 years worth of money in 'cash' to ride out any corrections.
Anyway, on to more pressing things with a walk planned later this morning from Beaston Castle along the Sandstone Trail to The Pheasant at Buwardsley for a spot of lunch and a return stroll. Not a bad start to the week 🙂
The great benefit of drawdown over annuity is growing your investments whilst in drawdown.
Lets say I have a pot of a million, and want to withdraw 4%/yr, £40k.(pot size made up)
10% of the pot kept in liquid assets (cash/bonds) from where my income ins generated and the remainder fully invested.
5% investment return on the £900,000 is £45k, so actually my pension after 1 year of drawdown is now worth £1,005,000, even after withdrawing the 4%.
As you are investing for a 30 year retirement, you can still afford to ride out the shocks.
All of this is purely my opinion, Im not an IFA, and your appetite to risk may well be far different to mine.
An annuity with RPI protection, guaranteed, with 50% spouse payment if I die will pay £10,000 a year, give or take.
@dantsw13 I am using the same approach.
Depending on your platform its not necessary to "de-invest" to take drawdown or a lump sum. You can move part of your pot into drawdown, take you 25% lump sum from that and for it to remain invested. You can actually get more than 25% cash free legitimately using this method. This vide explains it.
I’m going to (hopefully!) break the LTA so the max tax free lump sum is 25% of the LTA I believe.
Lets say I have a pot of a million…
If you have a pot of a million, you don’t need to fanny about - just do it!
It’s the rest of us that need to agonise about whether we’ve got “enough”.
Most company pensions won't let you retire until 55 (57 for me now) without penalty.
How the other half live...
Bill Morin, 82, a retired chief executive, was not happy with his run-of-the-mill nursing home on the Upper West Side. The elevators were always broken, his small room faced a brick building and he needed permission every time he wanted to venture out.
So last year, during the height of the pandemic, he traded up to the Watermark at Brooklyn Heights, a new luxury “senior living community” housed in a former 16-story hotel from the 1920s, with colonnaded towers that evoke an Italian palazzo, an indoor swimming pool and a small army of caregivers to anticipate his needs.
https://www.nytimes.com/2021/11/27/style/growing-old-in-high-style.html
So anyone nearing retirement had a change of heart given the year we've had so far?
I was planning to give up work at 55 later this year, currently consulting HR about reducing my hours instead, in the hope that things settle down sooner rather than later and I can safely stop altogether.
I'm in regular arguments with the missus about it. I reckon 55 is doable, she says I'm deluded.
She's just so overcautious about money.
Other than my ISA has lost half it's value in the last few months - everything is bang on track!
my ISA has lost half it’s value in the last few months
on the IsA front, been meaning to ask....
My shares ISA was down last week at only 20% up from when I set it up two years ago. Sorry, crap explanation. I put £10k in. It went up to around £13.5k, then dropped to £12k.
Which i thought was pisch, but then I've seen posts from various people saying that theirs are actually down down. ..
Is your ISA genuinely down on what you put into it, or just not as up as is was?
( just looked and mine is now at +10% overall, which is crap but perhaps not soooo crap
Given all the sage words from footflaps on investments, I refuse to believe his ISA is actually down down.
So anyone nearing retirement had a change of heart given the year we’ve had so far?
Currently, I'm thinking it might be sensible for me to defer for a year but I'm not in a position where I have to make a decision on way or the other...
My Pension pot is down about 12% this year, but still well above the target retirement fund projected for me 15 years or so ago. ISA losses nearer 20%, but still in the green.
Guess it's taken the edge off my plans and expect many folk get reservations about taking the jump when the time comes, and for me walking away from a relatively secure and well paid job.
A little worried that we're clearly not yet at the bottom of the current slump and who knows where prices are heading, but just wondered if others are adjusting their plans?
My s&s pension and ISA have
taken a heavy hit but both still up overall. If it had carried on going up I'd have pretty happy to call or a day at 55. On the current trajectory that's not looking quite so clear cut. No decision made, just have to see how it goes. Don't mind too much, work is ok. The flip side is that rents are way up so if I put my modest property portfolio up to market rate I could probably quit today. Not quite ready to do that yet.
So anyone nearing retirement had a change of heart given the year we’ve had so far?
I was planning to give up work at 55 later this year, currently consulting HR about reducing my hours instead, in the hope that things settle down sooner rather than later and I can safely stop altogether.
We (55 and 53) made this decision early last year, didn't feel 'sensible' to give up two very well paid jobs at the time AND Covid WFH had taken the 'sting' out of work (especially for me not needing a long/expensive commute).
We're still looking looking at going at 60 or before, as we do have decent pension provision etc, but not rushing.
I haven’t made any decisions but did make the mistake of looking at my SIPPS recently. The currently situation means we are about 1/3 of our pension pot lower today than we were in January. Still, I’m aiming not to work full time from 60 so have just under 10 years for that to hopefully correct itself. I’m lucky enough for our mortgage to be ending in 2yrs and on 1.3% fixed rate until so then so right now I’m focussing on staying with my current employer until at least that point.
The thought of working for another 17yrs is not one I want to entertain.
Is your ISA genuinely down on what you put into it, or just not as up as is was?
( just looked and mine is now at +10% overall, which is crap but perhaps not soooo crap
Quite hard to tell as my phone App just shows how you've done based on your last set of purchases, so if you sell all of Shares 'A' and buy Shares 'B' it sort of resets the clock.
Given all the sage words from footflaps on investments, I refuse to believe his ISA is actually down down.
Honest answer is I got greedy and ignored all the sage advice about eggs and baskets and bought too much Scottish Mortgage Trust and have been badly burnt as a result.....
My pot is 25% off it’s peak last year. I’m not swapping out though - I will ride it out, with 12 years to go.
Honest answer is I got greedy and ignored all the sage advice about eggs and baskets and bought too much Scottish Mortgage
Ah OK. I also looked at that as a way of getting Musk, but luckily didn't.
Ah OK. I also looked at that as a way of getting Musk, but luckily didn’t.
I don't think I've done too badly, thanks to Tesla, SMT doubled in value in 2020 IIRC, so halving in the last few months only means it's lost quite recent gains...
The irony is, after Tesla 8x in a year, SMT rebalanced selling £18bn of Tesla shares and adjusting back down to 5%, so I didn't think I needed to necessarily rebalance my portfolio as SMT had sort of done that for me.
After reading this and Vanguard thread today I dared to go an look at our “pot”. So although I’ve suffered a significant Bailie Gifford loss, that fund is still up 26% on what what was invested (via an employer SIPP) and my overall pot when you look at in totem is down 14%.
So although the bailie Gifford loss is 10’s of thousands of pounds which causes me to chew my gums in an eye watering manner, a 14% over loss to our pension pot now with 10 years before I want the money I think is quite fortunate and not as bad as looking at the BG loss in isolation.
Unusually for me, I’m more optimistic than I was.