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The next one is ‘I’m not buying xyz as I won’t get my wear out of it…’. I’ve heard this from a number of people talking about big capital things to a pair of trousers…
My father-in-law was always really cautious about spending money (despite not needing to be). It took him over two years and much deliberating to take the leap and buy a new 40" smart TV. Two months after he got it he passed away - the TV now sits in our bedroom and the wife and me often nostalgically say 'he never did get his money's worth out of that TV'.
to the prospect of slowly chipping away at the metaphorical pile....
It’s the move from earning with some flexibility to more finite resources. Big mindset change.
but you want to enjoy it. It seems quite common to be excessively cautious, and also to get freaked out by the 'cash cost' of things as you age. Prices go up with inflation - so yes, say, a pair of shoes will cost more in cash terms than when you were young.
My parents always moaned about being poor pensioners and wasted money on cheap throwaway crap after they retired. They had enough money to have lived better - more/nicer holidays. To have bought quality stuff for the house that might have been of use to someone else rather then Dunelm crap that all went in a skip. My Dad's dead and my mum now in a care home and what they did have is fast depleting on her fees. This was not sensible financial planning.
The key to happiness in life is having 'enough' and that's far less an absolute figure than a state of mind. We're back to watch collections, status symbol cars and second homes - if you feel you need all that you'll probably never have 'enough'. And I see that in peoples retirement plans as well - theres a risk/reward balance on life - how much of your life are you going to spend trying to accumulate wealth that you might never have a chance to enjoy?
Hi
Everyone's situation is different so its difficult to say go for it. I've been planning ours since 2011... Partner is hopefully handing her notice in with the NHS this month we both turn 55 in May. Using partners pension and small pensions I have along with some money we get from a rental property and drawing some cash from money we have saved - no mortgages and no children.
Enough to "run the house" - cover bills etc and we are planning on building or getting a camper van to go travelling. We both have 35 years NI contributions so if we can do this for 12 years (67) but I've allocated for 13 years (68) for out state pension.
Reasons to do - NHS job is extremely stressful, mine job OK but I have some recent issues with my eye sight (double vision) and back and more recently shoulder and neck problems. I'm paying money to the Government for nothing (NI) as you don't get anymore state pension and my taxes are being squandered by successive Governments. The environment is going down hill and I think in the next 5 to 10 years western Governments are going to have real problems. We're getting out and doing some travelling.
Its a scary thing to do and we are both nervous about it - but we simply can't keep going on like this.
lol.......only just seen this
We can’t all be happy-go-lucky Jack-the-lad.
trust me, this is so far off the mark it made me giggle.
i am just not a man driven by money.
my wife made sure we had a decent safety net prior to us both retiring.
we have a couple of ISA's each, and a nice lump in capitol when we downsize houses.
our meagre amount is the monthly income. less than half of what we were on when working. but we are managing fine.
PLEASE take advice from your financial advisor. They will be able to calculate within a few pound what you’ll receive each year
I find that extremely hard to believe.
I doubt your financial advisor can tell you when you will die, get cancer, loose the ability to enjoy life. If you think you can do it go now. If you run out of cash get a new job. Life is happening now not some vague point in the future.
I;m taking a big salary cut in March and retiring at 55.
I cant wait.
Won’t have 1 million in the pension though.
Very few will.
Won’t have 1 million in the pension though.
Is this a well known piece of financial advice that we should be aspiring towards? I have a friend who is always going on about trying to get £1M in his pension pot and works crazy hard to try and achieve that and expects to work till 66. No way I'll be working till then - I will not have £1M in pension... is there a reason that that conveniently round number seems to get plucked out as the target?
^^ many online pension planning guides, and financial advisors, will say this is the right ballpark number if you wish for a 'comfortable ' lifestyle. It's all in the detail though of one person's 'comfortable', and of course their personal situation and outgoings.
Is this a well known piece of financial advice that we should be aspiring towards? I have a friend who is always going on about trying to get £1M in his pension pot and works crazy hard to try and achieve that and expects to work till 66. No way I’ll be working till then – I will not have £1M in pension… is there a reason that that conveniently round number seems to get plucked out as the target?
I've seen it mentioned on STW a few times - supposed to return 40-50k (don't forget the state pension, though).
1million will earn 50 to 60 k interest pa for ever and you will still have the 1 million so i guess its the amount you need to buy 50 to 60k.
Oddly it is deemed very little on here or average.
Just see premium bond thread for all the spare 50k full pots, and the shares threads.
Well done to those i have to say and good luck
I have a mate who could have retired 10 years ago on way more than our combined gross pay, he still says its not enough to live on, and grumbled his wifes 16k bonus was ONLY 12k after tax, at the same time he grumbles minimum wage is too high as it affects his profit related bonus.
I guess we all look at life differently
Is this a well known piece of financial advice that we should be aspiring towards?
It's either a loaf of bollocks, or was previously a load of bollocks
It was much spouted years ago and given the insane cost of living increase over the last six years it can't have been true then and now.
Oddly it is deemed very little on here or average
Source?
yes, there are many websites that insist for a 'comfortable' retirement you need £50k each, so best get investing! They often seem to be sponsored or run by wealth management companies, mind.
TBF I would indeed be extremely comfortable on 50k, what with it being far higher than my salary now (or ever), so I can't really argue that point. But still, they do like to over-egg it a bit.
1million will earn 50 to 60 k interest pa for ever and you will still have the 1 million so i guess its the amount you need to buy 50 to 60k.
I suppose it’s fine if your going to live forever 🙂
IMHO makes more sense in the game of life to have a lesser pension and draw more of it and have a fuller more active life, unless you have the health you can’t truly enjoy the wealth 🙂
The game of life does not reward prudent financial investors with guaranteed health and time to spend it 🙂
This is a great thread and possibly timely as I hit 55 this year, and start asking myself about packing in. We have had the unfortunate scenario where Mrs Rock and I have lost all our parents in the last 18 months so any pot has been boosted by unwelcome inheritance. But inheritance it is and we are looking to see how that changes things.
I already had an IFA assisting and we are due to see him again for revised forecasts in a couple of weeks. I expect he will ask us what the desired income is, which we are starting to think about, but it feels I’d need to know, for example, with a £250k pension pot, you could safely draw £ xxx per month. I, personally, sort of feel that would be a clearer target to start on, then see if you can adjust to that.
grumbled his wifes 16k bonus was ONLY 12k after tax
would have been worth more as a direct contribution to her pension [wink emoji]. Unless they need the cash, bonuses make a nice lump contribution. Unless your allowance is already maxed out.
it’s quite difficult to get information to say, for example, with a £250k pension lot, you could safely draw £ xxx per month
One reason being that the value of investments for DC pensions can go (way) down as well as up. While the general trend of an index is upward, there are fluctuations that can have an immediate, and devastating, effect on the value of a pension pot.
edit - you could make some projections using notional rates of interest to extrapolate the possible pot value alongside notional withdrawals. A few runs of that with various values, pick your level of appetite for risk, and then decide.
I expect he will ask us what the desired income is, which we are starting to think about, but it feels I’d need to know, for example, with a £250k pension pot, you could safely draw £ xxx per month.
some decent online calculators, I like this one :
A MILLION!
I remember when £100k was a fortune 🙂
I too watched many videos where they were talking about only taking enough so as not to impact the capital - stuff that, we're going to spend the money we've earned while we can (and then live off our various DB and State Pensions).
I did stealt edit my post after only six seconds, acknowledging that I need to ask that, rather than implying the IFA can’t provide that. I suppose the sensible starting point is how much do you need. But how much can you receive, and see if that is feasible.
Things like running two cars could probably be knocked on the head.
I'll be doing well to get to a £100k pension pot! 🙂
House is paid for though.
Won’t have 1 million in the pension though.
Very few will.
At the risk of restating the same thing, the best way to get a big pension pot isn't by putting a lot in, it's by starting early. It might be too late for some but if you have kids, or work with / manage younger staff PLEASE try to get them started on the Cpd Interest magic carpet.
If an individual was to start saving £100 a month at the age of 30 and continued until they were 60, they would have deposited £36,000 and saved, with 10% annual interest, a sum of £217,132.11.
However, if they started saving £100 a month at the age of 20, stopped when they were 30 and left the money in the account until they turned 60, they would have deposited £12,000 but accumulated £367,090.06 The ‘magic’ of compound interest, in this example, means that saving for 10 years can be more profitable than 30 years, if it starts earlier.
I did a rough calc. I've been paying in 5-6% of salary - depending on who I've been with I've had anywhere from 6-12% added by employer. A rough estimate so far therefore is that I've paid in say 6% of average salary for 34 years = 204% of average salary (6x34), but my current pot is about 5x that value - the rest is from employer contribs (about 1.5x) and the other half is cpd interest.
In theory I have another 12 years to go, if I just took my current pot and just expand that by 5% pa with no more inputs at all, it'll reach 180% ie: 9x my input.
900k for about 100k paid in, because I started at 21. And I got tax relief on it. Mad.
People always under estimate net worth. Nothing stopping realising sale of home as income and then renting that villa in Spain.
When you add everything together I suspect for some of the STW demographic it can easily be a fair few million quid. So go and enjoy yourself you’ve worked for it.
PS not eating into the capital just in case is crazy talk.
However, if they started saving £100 a month at the age of 20, stopped when they were 30 and left the money in the account until they turned 60, they would have deposited £12,000 but accumulated £367,090.06 The ‘magic’ of compound interest, in this example, means that saving for 10 years can be more profitable than 30 years, if it starts earlier
indeed. Sadly, inflation is also compounding and the value of investments can do down as well as up.
Nonetheless your ‘start early’ advice is very good. As is taking advantage of employer additions to pension contributions. And using bonuses as AVCs. That’s if you’re in a job that has such things.
900k off 100k investement? I’ve been paying into my pension and have invested around 100k and it’s worth nothing like that!
People always under estimate net worth. Nothing stopping realising sale of home as income and then renting that villa in Spain.
Or rent out the U.K. one to pay for the rent on a Spanish one 🙂
Unfortunately you have to show a fair few quid for a NLV post Brexit if you don’t want the 90/180 days farf.
900k off 100k investement? I’ve been paying into my pension and have invested around 100k and it’s worth nothing like that!
Not yet - at the moment it's just under £500k, for £100k of my own money, 150k of company contributions, and 250k of interest accrued over 34 years.
500 x 1.05^12 (12 years to official retirement of 67) = 900, without putting any more of my own in.
Lots of good stuff on this thread. Having called it a day aged 59 - because I could afford to and I had just had had enough of being accountable to lots of people I didn’t feel had earned the right to call the shots - it’s been one of the best decisions of all time.
for those chuntering about the size of pension pots, it’s worth reflecting that the State pension at current levels has an implied pot value of c£250k.
The problem now is most young people having just left Uni will be some 50k in debt so won't have too much for either a mortgage or pension. Unless mother and father bail them out.
AIUI pension payments come out usually as salary deductions; hence before / impact to reduce the repayment of student loans - on that point Martin Lewis does a good piece about not paying that back any earlier than you need to, and we shouldn't call it a loan, rather an additional tax on 'higher earners'. Anyway, digression.
won’t have too much for either a mortgage or pension.
I know, has been a counter by some of the young scientists I have talked to. But simple fact is that even a small amount is matched by 1.5x by our firm, and then you get the longer CI as per above - doing something, anything, now is better than nothing and thinking it's not worth it for the small amount is badly wrong.
yes, there are many websites that insist for a ‘comfortable’ retirement you need £50k each, so best get investing! They often seem to be sponsored or run by wealth management companies, mind.
It does seem that we ask the companies who make money out of us handing out money to them. And so the answer to 'how much?' is 'Yes'.
And definitely do the 'start early' thing. One of mine has been in a company pension since age 20 and also managed to drop in a lump sum at age 21... He's also looking at buying a house in early 2026 at age 23, and is currently saving over half his wage towards that goal.
I wish I started earlier...but I spent it all on boats, boots and bikes...
The problem now is most young people having just left Uni will be some 50k in debt so won’t have too much for either a mortgage or pension. Unless mother and father bail them out.
not correct reasoning. Irrespective of how much student loan you’ve taken in England, the amount you pay back is only determined by how much you earn. The loan value is not classed as debt by lenders. The effect of paying back on net income is a consideration for lenders.
https://www.moneysavingexpert.com/students/student-loans-england-plan-5/#pricetag
mortgages may be out of their reach for other reasons like house price inflation, uncompetitive wages, lack of capital, and so on. Pension contributions beyond the minimum may be tough because of uncompetitive wages.
The effect of paying back on net income is a consideration for lenders.
So the student loan WILL effect the mortgage you can get and the amount you can put into a pension as once above the threshold you WILL be making those payment
Yes - but not due to the size of the debt.
Whether you owe £50 or £50,000, you pay back 9% of what you earn above £25k (latest plan, earlier ones differ). You only pay the debt back if you eventually earn enough (supposedly the benefit of going in the first place, among other things) or it's written off if you don't.
So affordability of mortgages, based on your net income is lowest for those who aren't paying any back, because their income is the lowest. If it's a significant factor then it's because you're earning substantially more than the threshold, but you get to keep 90% of what you earn above that threshold (normal T&NI applies as for everyone) so while you're right that it does Affect the affordability calc and the mortgage you can get, having a big student loan repayment indicates more affordability for mortgages.
The average graduate entry salary acc to HESA was about 28.7, so £370 a year in 'Grad Tax' And AIUI pensions deductions come before calculations so have the effect of reducing that.
There's lots to dislike about the student loan situation, but the way it's repaid (or not) is lower down the list. Watch ML video on it, gives a really good perspective.
Surely the most worrying aspect of all of this chat is the impending death of the vast majority of financially contributing forum members...
Singletrack Towers is due a stannah.
Unless mother and father bail them out
There's more than a few reports saying that parents wealth rather than earned is the defining factor in wealth for anyone under 25 in the UK now. And the inheritance figures are quite startling - for those who do have wealthy parents, the amounts and age at which they get help also matters hugely, not just a lump sum inheritance when you're 50+...
Surely the most worrying aspect of all of this chat is the impending death of the vast majority of financially contributing forum members…
Singletrack Towers is due a stannah
First rule of 502 Club....
DoD mum has a good tale of someone she knew who was bought a stannah stairlift by her children and did nothing but moan about how she didn’t need it and only used it for sending the laundry upstairs until the day she tripped over it at the top of the stairs and never said a bad word about it (or anything else) again 🙁
It’s not the worst DoD mum story 🙂
None of them have happy endings but it’s knowing when to stop telling the story that gives you them 🙂