Its all guesswork all you can do is manage the risks. If you have DB pension then you need to be honest about the risks (health, death etc) as pointed out above DBs can disappear very quickly if you die.

If you hate your job then find something that interests you for less hours. The UK is a grim place in the winter to retire- you have to spend money (shopping, pubs, cafes) just to stop yourself going mad. A part time job on 10 quid an hour for 20 hours keeps you entertained and puts entertainment money in the bank.

Hanging onto property and not downsizing too soon makes sense as property is still good growth.

If you are going to retire at 55 as a couple and travel, do sports and socialise then you are going to need a million quid in pensions/cash thats well invested and a 500k house thats paid for… that assumes 18k state pension for a couple and a 50% downsize at state pension age.

You cant say i can live on 12k – Well you can but its an existence, even a modest lifestyle is around 24k per annum after tax – 36k before tax is adequate as you will need capital items like a car and replace lots of household stuff.

So 30 years of retirement x 36k = a million quid (less tax), the downsize to free up 250k and the state pension will absorb inflation care at home and some additional years. The 250k left in your house will be stolen by the government.

Trying to plan 30 years out economically is not possible, if you can do it you need to tell Rishi Sunak how. Being realistic 10 years is a guess, 5 years is a forecast and if you had forecast 5 years ahead in 2015 how close would you have been?

I am fortunate by the time i have sold up cashed in i can make the above numbers but i plan to have a business that takes a couple of days a week of effort to create some disposal income.

1979 2008 2016 2020 – every 10 years there is a big one so a typical retirement will see at least 2 big **** ups.

’m honestly not thinking of “i must have XYZ left” , my boy will get a ridiculous chunk of money when i’m out of here from the sale of the house (ok, ridiculous isn’t right, but lets just say it’s a reasonable chunk) so he’ll be fine and dandy.

Not if you last few years are in care he won’t (and that is fairly likely unless he is going to give up his job to look after you for 2 years?)

I actually enjoy my job. It mentally challenges me, pays very well and has many positive benefits that I would lose if not working at all and at 53 I have no desire to retire yet but I would like to do the same job part job in a few years time.
Don’t see this happening/being offered as much as it should though as be better to do half the time in well paid job rather than scratchy around for work at B&Q for a pittance. Probably because I would still be counted in the headcount figures but not doing the work of a full headcount.

You have NO MONEY in a final salary scheme, only benefits.

Yep, but YOUR pension when you’ve moved it out will run out, whereas a DB scheme doesn’t.

When my Dad died a few years ago his annual pension was more than his entire history of contributions, and Mum now is getting 50% of that too. It paid out 20 years to my Dad and now has paid out 5 years to Mum, and she’s a fit as a fiddle +80 y/o.

There’s a reason that the various companies offer vast sums to buy them out – I’m not taken them up on their offers.

It’s going back a page or two, but I’ve just had a look at that Which ‘how much do I need’ article, and I’m amazed that no one has yet pointed out that you need to add £5k – £10k to their numbers to cover your bicycle-related spending. Also their alcohol number is low because it clearly isn’t based on the price of craft beer, and their groceries number is pitifully inadequate to cover the cost of artisan cheese, coffee, and sourdough.

Not if you last few years are in care he won’t (and that is fairly likely unless he is going to give up his job to look after you for 2 years?)

Well no, but i may never end up in a care home, or i may end up in one for 15 years, who knows, you can’t allocate your life completely on ‘what if’

If this thread shows anything it is that there is know right answer and one size does not fit all.

So as I’m approaching my late forties and want to get some professional help but how do you choose a IFA?

Obviously I can look online and historically I would have gone for someone local who we could actually go and see but no chance of that these days and perhaps it doesn’t matter. I’m at the point of wanting advice, know I need a IFA, no idea how to pick one?

I’m at the point of wanting advice, know I need a IFA, no idea how to pick one?

Absolute minefield.

Personal recommendation?

There’s a free government advice thing, I’d start there.

https://www.pensionwise.gov.uk/en

If you IFA recomends a set of investments, I’d get it double checked first – a quick read of the Sunday Times Money section will remind you there are plenty of fully qualified crooks out there.

Door is closing fast for those in DB schemes

Can you please back this comment up with evidence, or is it just a guess? Because it genuinely has me worried.

IANAFA but… I have managed my own money and pensions and never used one. I am 56 and still need a bit more before I would be happy retiring so will likely stop work at 60 if nothing happens in the meantime. I approached an IFA recently as I wanted to make sure I made the correct decisions in the final few years of work. I didnt want investment advice (more around tax) and he told me there was little he could add. I think if you research thoroughly there is a lot you can do yourself. Of course there is always risk but I dont think you need to pay someone to tell you how to manage your pension/sipp/ISA etc I think it can be done largely independent of experts.

Door is closing fast for those in DB schemes

Can you please back this comment up with evidence, or is it just a guess? Because it genuinely has me worried.

The FCA is clamping down on people cashing out of DB pensions as there has been a lot of people very badly advised (generating massive commissions for IFA crooks) e.g. British Steel etc.

If you follow the finance pages, lots of articles about it. As for will they ban it out right – unlikely, but who knows.

https://www.ftadviser.com/pensions/2020/09/09/half-of-pension-transfers-trigger-scam-warnings/

https://www.fca.org.uk/news/press-releases/fca-sets-out-next-steps-improve-defined-benefit-pension-transfer-market

It’s more and more difficult to find an IFA now. They are out there and some good ones, but they aren’t easy to find or deal with.

Yep, but YOUR pension when you’ve moved it out will run out, whereas a DB scheme doesn’t.

When my Dad died a few years ago his annual pension was more than his entire history of contributions, and Mum now is getting 50% of that too. It paid out 20 years to my Dad and now has paid out 5 years to Mum, and she’s a fit as a fiddle +80 y/o.

My transfer figure was more than 40yrs worth of payments. And it’s grown and grown, it’s now worth 50 yrs of my annual pension figure. 25yrs worth doesn’t sound all that good to me, and you won’t see any of it.
I’m not being critical, but it isn’t the same for everyone and it’s at least worth a check to see if it’s for you.

If there is anything when we both die, my children get it.
I have a team in my pension company that do all my financial planning for me for free and I never have to think hard about what I’m doing with my SIPP.

I’m aware this thread is drifting but going by PM’s etc it seems to be of interest to a lot of folk.

I think oldmanmtb has hit the nail on the realistic head. Also makes a fair point that the UK is pretty grim in winter, and if you want to go abroad you’re going to need fairly substantial minimal income + health insurance etc (thanks Brexit!).

1979 2008 2016 2020 – every 10 years there is a big one so a typical retirement will see at least 2 big **** ups.

Although the last one recovered incredibly quickly (under a year) compared to the 2008 one. OK UK stocks not so much, but the Dow Jones is above 2020.

I think oldmanmtb has hit the nail on the realistic head. Also makes a fair point that the UK is pretty grim in winter, and if you want to go abroad you’re going to need fairly substantial minimal income + health insurance etc (thanks Brexit!).

I think he has come up with his figures, which of course are different for everyone.
I have now gone through my expenditure over the past 3 years and its approx 20k a year(no mortgage), but with 8k of that being new bikes each year. So a figure of 12k per year with less new bikes is very achievable for myself, as a single person, to continue living pretty much as I do now.

I have now gone through my expenditure over the past 3 years and its approx 20k a year(no mortgage), but with 8k of that being new bikes each year. So a figure of 12k per year with less new bikes is very achievable for myself, as a single person, to continue living pretty much as I do now.

I am surprised by both figures!

£8k a year on bikes seems really high and £12k seems quite low!

I spent £5k on a new roadbike last year, but I don’t expect to replace it for a long time eg 5 years minimum.

You cant say i can live on 12k – Well you can but its an existence, even a modest lifestyle is around 24k per annum after tax – 36k before tax is adequate as you will need capital items like a car and replace lots of household stuff.

That’s for a couple, though? 12k each. Pretty limited amount of income tax.

the downsize to free up 250k and the state pension will absorb inflation

If you keep funds invested, they should at least keep up with inflation. You shouldn’t need to account for more. House prices have generally also at least kept up with inflation.

I have now gone through my expenditure over the past 3 years and its approx 20k a year(no mortgage), but with 8k of that being new bikes each year.

Congratulations on having your priorities sorted

Over the last 12 months I have been through exactly this. My approach was firstly to ensure that, broadly speaking, it was feasible to retire before then doing the calculations properly.

Key points to me were:
– Be realistic about how much you spend and look over a longer time period than 12 months as there are costs which you may only incur every few years (e.g. new cars, significant work on the house).
– Build in a margin for risk as having too little money in retirement is of far greater significance than having more than you need (law of diminishing marginal utility).
– Calculate the savings/pension fund you will require at age 67. In broad terms this is your annual spend less your state pension less any DB pension, multiplied by 30 (this implies only taking c.3% yield from investments so as to preserve them in real terms).
– Calculate the savings you require to get to age 67. Very simplistically, this is your annual spend x years to 67 x 110% for each decade (to take account of inflation) plus any outstanding debts (mortgage etc) as they will need to be repaid.

This let me know whether it was realistic to retire before doing the calculations properly (e.g. taking account of tax, which the foregoing does not, or a DB pension that vests prior to 67).

For me I was well within any sensible risk parameters so come 1 April I will be stopping work (at age 57).

Thanks for the equity release comments and experiences. Downsizing will definitely the first part of that process

I know its very individual but I’m not convinced I can live on less money than I do now for the following reasons.

1. Going to work is cheap, we are out of the house so the heating is turned down, and whilst there we cant do anything else and our commuting costs are tiny circa £20 per week

2. When we are no longer working we intend to spend considerably more than our current annual leave entitlement on holiday and travelling which will cost more than sitting at my office desk.

3. We don’t have a mortgage anymore and no kids so our outgoings paying for the generalities of life are not going to materially drop in the future.

I’m 40 and assuming that State Pension will be means tested by the time I get there (or much later than 68) in my calculations. Something to bare in mind perhaps.

I know its very individual but I’m not convinced I can live on less money than I do now for the following reasons.

…

3. We don’t have a mortgage anymore and no kids so our outgoings paying for the generalities of life are not going to materially drop in the future.

Are you still spending all of your income with no mortgage?

Your outgoings should drop because… you no longer need to pay into a pension fund.

Re IFAs – what surfer said. I started out reading Motley Fool and Alvin Hall just for general common sense (of which I have little!) guidance, then the Tim Hayle book for ideas about how to spread your investments, Mr Monevator blog, citywire investment forums. And ask your older mates what they do if (I mean we ARE British so you would have to have known them a while!) you’re on good enough terms.

I’m 40 and assuming that State Pension will be means tested by the time I get there (or much later than 68) in my calculations. Something to bare in mind perhaps

That’s a pretty negative outlook. I think a government would have a hard time removing a benefit that people have been paying towards for their whole working life. UK state pension is already amongst the worst in the world

Are you still spending all of your income with no mortgage?

Your outgoings should drop because… you no longer need to pay into a pension fund.

Im working from take home pay so pension has already been paid before we see it

We don’t spend everything we earn at the moment and do save because we will need to replace the car at some point, there will be work on the house that needs doing that don’t come out of the everyday cost of living. I agree that will taper as we get older and either become less bothered about the age of the kitchen and bathroom. At some point we wont need to replace a car.

My thoughts are based on an expectation of being retired for 30+ years and judging by both sets of parents who are 25 years into their retirements are still active and travelling widely when they can. We hope to be the same and don’t want to be stuck at home because we have run out of money to fund the lifestyle we want.

As both of us spent time in the public sector we are basically interested in how long before our pensions kick can we quit working.  Our pensions and then state pension will be enough from there on. So it’s all about how soon can we quit working and self fund the gap to pensions being released given that we will young enough to make the most of the time

That’s a pretty negative outlook. I think a government would have a hard time removing a benefit that people have been paying towards for their whole working life. UK state pension is already amongst the worst in the world

Well they moved back pension ages with minimal complaint. I reckon if they turned around and said in 25 years time the state pension will be means tested to ‘make sure that limited resources go where they’re needed most’ they’d get away with it. Hopefully i’m wrong, but just assuming it won’t get any worse is overly positive – hope for the best, plan for the worse.

At some point we wont need to replace a car will buy a Nissan Micra and leave the polythene on the seats

^FTFY 😉

And then there’s the prospect on needing care…
AFAICT, in Wales, you’ll be expected to use all but the last £50k of any capital and assets (including your house), and all of your pension income except £32/week pocket money to fund residential or nursing care at £30k -£40k PA. (I think the limits may be lower in Ingerlund?). Should very quickly polish off any remaining lump sums…:(

Sometimes I wonder, when it comes to pensions, whether there is a tendency to be very pessimistic and only look at the downside risks. The problem is there are so many potential individual risks if you include them all you may never retire or die much too wealthy.

Like building a car – each individual component may have a tolerance of +/-1%. However, if all the uncertainty goes in the same direction, loads of things would not fit together. In practice you have to assume a certain randomness in the uncertainty and cars do generally fit together. Indeed, to do otherwise would make uncertainties less uncertain.

So, when it come to whether the state pension will disappear, whether there will be an unprecedented stock market crash(s), interest rates soaring etc. There are plenty of unforeseeable upside risks too: promotion at work, inheritance, win £20 in beauty contest etc. which could offset them.

Pensioners all vote tho!

The focus on downside risk is appropriate as running out of money late in life is hard to recover from.

The focus on downside risk is appropriate as running out of money late in life is hard to recover from.

So is dying the day after you retire.

I have considered this recently as I moved jobs and had to make some pension decisions.

Part of me thinks I can live on not very much as there will only be 2 of us at home, no commuting costs or mortgage.

The other part of me thinks that I don’t plan on sitting at home having beans on toast with the heating off to keep my living costs reasonable.

I came to the conclusion that I’ll need a lot more money for the first part of my retirement than the second. I’d like to think that I’d have the health and energy to keep cycling, hillwalking and would like to travel a bit.

Lets assume the state pension sticks at roughly where it is – for a couple at state pension age that is £18,200. Assuming no mortgage, I am pretty sure I could get by fairly well on that, a few grand would be nice but I doubt there would be much correlation between additional money and happiness above that figure.

The reality is, as you get older the value of money to you diminishes – there is less and less to enjoy spending it on. So it seems a bit arse about tit, that a lot of people think the biggest risk to their retirement plan is outliving their live expectancy. To me, I think the biggest risk is not been able to spend the money in a meaningful way.

Well they moved back pension ages with minimal complaint.

There was a huge fuss (and rightly so) about the huge jump in women’s retirement age. Men only got knocked back a year or so…

Hardly a murmur

https://www.waspi.co.uk/

The focus on downside risk is appropriate as running out of money late in life is hard to recover from.

But you need alot less money to live on when you’re 80+ than when you’re 55 – 70 or so. You want 80% or so of your pension pot before 70.

This is the rub…you do need to make some sort of assumption or guess about what age you’re going to die and when you think you’re going to deteriorate physically, and mentally which you can judge by other members of your family. For me I know that once I’m into my 70’s its irrelevant how good I might be physically as all the members of my family start to loose it mentally into their 70’s. So for me I’ve the bulk of my living in retirement to get done and dusted before 70 and anything after 70 is a bonus. Once my mind starts going then just put me out of my misery as I’ve seen the misery of a slow mental decline in too many of my family members to want that for myself. They all live to a ripe old age…into their 80’s and 90’s and my gran made 100, but from some time in their 70’s they all stared to succumb to mental deterioration then you’re screwed. You have zero quality of life and become a burden on the rest of your family.

So for me pull the entire pension pot and self invest and I’ll aim to spend most of it by 70 or so and after that the state can look after me – or put me out of my misery and make dog food out of me. I’ll be beyond caring by that stage – I’ll certainly not be in any fit state to be riding bikes, driving around in motorhomes or going on foreign holidays. But if you’re from better stock than me and expect to be dancing the jig and completing fiendishly difficult Soduku puzzles in under 5 minutes into your 90’s, then you need a very different pension plan.

There was a huge fuss (and rightly so) about the huge jump in women’s retirement age. Men only got knocked back a year or so…

Womens retirement age was brought in-line with mens, something that should have been corrected a long time ago.

Womens retirement age was brought in-line with mens, something that should have been corrected a long time ago.

It was a big jump at relatively late notice. So right end result, buy managed very badly.

Changes to things like retirment ages should be phased in with plenty of notice.

@wobbliscott – I agree. I was more thinking about being cautious about the rate of growth and inflation why drawing down, independent of how long you decide you’re doing to be drawing down on your pot.

I wouldn’t call 1995 late notice, and it was phased in over the last ten years, not a sudden jump.

If anyone should have been complaining it should have been the men having to wait five years longer to reach their retirement age and lower chance of surviving long enough to spend it.