Retirement – Evaluation of Your Plans

“The minimum is £14k for single and £22k for a couple”

Is that before, or after, tax ?

(Something that ice not seen clearly stated ! Same on the ‘higher’ standards.of living figures  too.   As obviously that.makes a big difference !

It doesn’t make much difference at the lower level. The tax on 14K is only £286 (less in Scotland) and on £22K no tax is payable assuming two tax allowances.

Sorry to be pedantic (or thick or whatever).  When you say ‘includes tax’ – do you mean the £14k figure is BEFORE tax (ie gross income) or AFTER tax (Net income).

(Understood re..assuming no mortgage etc)

I believe it’s a gross amount, before any tax.

Don’t get too hung up on the exact figures,  they are a useful guide only.  There will be big variations for geography and personal circumstances.  As you get closer to retirement you’ll probably want to try and work out your own figures.

The figures are built up from spending requirements and are therefore net of tax.

https://www.retirementlivingstandards.org.uk/How-to-estimate-likely-RLS-2024.pdf

As i have noted in previous threads, financial planners observe that retirees tend to spend more in their first few years as they make the most of their new time, the spending then drops off a bit as they become more sedentary, and then it tends to ramp up in later years due to care costs.  But everyone’s experience is unique.

ahh, thanks.

Thanks too folks.

I know the tax difference if income of £14k isn’t much (give the threshold to start paying is £12570.  I was more wanting to know so I understood  comparison on the higher figures suggested for ‘comfortable’ etc).

I’m my case I have a pretty much gold plated as-secure-as-could-be pension coming in  now of a reasonable amount – we’d not starve if just stopped tomorrow – but would have to be careful (and will have that income til dead – no government would dare try to screw this one over).

I now have a additional ‘defined contribution’ pension at my new place (I’m shoving 1/3 of my pay into that, employer pays some too, and it’s growing each month, but will never be half a million quid pot or anything near in total as Im defo not working to 65 or more).

What I’m trying to suss out is the ‘working backwards’ of how much we (I’m married) will want/need, and in turn how much longer to work.

And we do have a couple of fairly expensive things to do on the house (re-roof, re-do block drive, replace double glazing).  I reckon I’ll buy no more than 1 more car in my life.

Part of the calcs is looking at a decrease in working hours over the next few years. I just dropped to 4 days/wk, and will prob drop to 3 next year or the year after. A slow controlled decline !    There’s also plenty other work for me in what I do, if I wanted to drop to a zero hours / ad hoc pin money role.

Also as I’m the major earner in the house (and the one with a pension several times that of my wife), there’s a slightly morbid set of calcs to do, if I was to croak it before the Mrs. As what she will get as a widow from my gold plated final salary pension will HALVE when I die. The household bills will reduce (but not by half, maybe 35-40 % ?? Still 1 car,  still costs the same to heat and elec, etc) the income overall of my wife will drop significantly.  Whereas in reality the other way around I could cope fine on just my pension + 0.5 of hers.

Historically my family live to a goodly age – dad to late 80s, mum still going at 90+, grandma to 99, other aunties and uncles to 90s too. Only ones with lower ages were heavy smokers.

Anyway- lots to go into the melting pot.

And I bought a lovely Shand with a Rohloff hub with some of my pension, so that’ll outlive me !

This thread has been very informative.

Annuity pensions seem to be very unpopular. A friend’s mum got left with just £50 per month to top up her monthly pension when her husband died, everything gone in a flash, shame he was from a generation where there wasn’t much choice and you more or less had to take out an annuity.

Even though I’ve always had a low paid job, it’s been important to put away some pension money from an early age (then it isn’t missed). As someone who’s much older than most of you here, I’m so pleased and relieved that I do have a small private pension to start taking very soon, this will tide me over until the state pension kicks in. Meanwhile I’m still working, but only part time in my 60’s and more importantly trying to stay healthy and fit (this has not been easy).

Cruises are not for me. Not even a ‘lying on the beach type holiday’ several times a year. But, skiing is something I hope to still carry on with as long as possible, if it means tightening in the belt even more, then so be it.

what she will get as a widow from my gold plated final salary pension will HALVE when I die

this is typical of DB pensions. Perhaps the thinking was that with half the number of people only half the money would be needed? As you describe, the outgoings will not necessarily halve but this is something that you can plan for.

It was the case when one of my parents died that the other got a 50% spouse’s pension from the civil service in due course. It could be the same for me with my SO’s top-notch NHS pension.

given where pensions have gone in terms of DCs, DBs based on average earnings, etc half of a good pension seems like a good deal.

 I reckon I’ll buy no more than 1 more car in my life.

So you’re not working past 65 and your folks have already +20 years on that – does this mean you’re somehow expecting your ‘retirement’ car to last +12years and the next one the same length of time or that you live somewhere where a car isn’t really required?

How many cars have you owned in the last 20 years out of interest?

what she will get as a widow from my gold plated final salary pension will HALVE when I die

This has pretty much happened for ever, it’s YOUR pension, not your OH’s.

FWIW my Dad had 20 years at 100% from his DB pension, and currently my Mum has had another 10 years at 50% from it – and +25 years of 100% from her own.

Coincidentally, I got my letter from HM Pensions yesterday, confirming how much I’ll be getting come November. Given we’re currently managing on my company pension plus Mrs Scotroutes salary, she’s going to drop down to two days out of eight and maybe even retire herself when we see how that goes. Might be time to upgrade the campervan to something slightly (very slightly) bigger.

what she will get as a widow from my gold plated final salary pension will HALVE when I die

some of the pensions die with you as well – your spouse gets nothing

yes, half seems like an excellent deal to me.  I’ve got a fancy-pants public sector DB pension, and my spouse will get 30.625% when I cark it.

I thought that was good!  It’s better than what I’ll get if she dies before me!

MrsF has already packed in he rat race mid 50’s after the last few employers being somewhat ‘shonkey’ to put it politely. She’s doing a day or so a week, minimum wage, in a fabric shop – she’s loving it as sewing etc etc is her main hobby.

Started ‘looking’ at vans for next year for our day vehicle/bike/camping lugger. Fortunately MrsF quite happy with the ‘example’ I showed her, as it happened to be in a really nice colour (phew). I did warn her most come in ‘grey’.

So you’re not working past 65 and your folks have already +20 years on that – does this mean you’re somehow expecting your ‘retirement’ car to last +12years and the next one the same length of time or that you live somewhere where a car isn’t really required?

Not me, but 12 years for a car seems perfectly reasonable? My mondeo is 17 years old and fine, esp as a runaround. You’ll use it less as you get older anyway.

On the Q of ‘how many cars til I’m in a box… (or care home – or quite possibly I’m not fit/safe enough to drive).

I tend to run a car til it’s dead.

How many in my life… think I’m on my 10th, in 38 or 39 years of driving. So you could say ‘1 in every 4 years.  But…

– historically had relatively old cars when bought, most of the time.  Say typically bought at 70-80k miles and dead at 130k miles.  Whereas I’m now on a fairly new car (as I can afford it now with daughter flown the coop + mortgage paid off  and higher income than ever before). So rather than a 80k mile car lasting 4 years, I’ve now got a 20k mile car that should last another 8-10 years til it’s scrap.

– a couple of those 10 cars were written off c/o someone else hitting me (I do note that could happen any time and everyone is always out of pocket aeach time – my ‘1 more car’ assumes not being accident written off early)

Big IF, but if this car gets me another say 9 years, that’ll put me at 66.  If i get a new car then, at my Mr-average 12k miles a year, that new car will take me to about 78.

Then I’m assuming at that age I’ll probably not be driving due to not being fit to (or dead).  Whilst there’s some public transport where I am, inc a bus stop across the road from the house, it’s not exactly London Underground levels of service.

Though you’re maybe right to question whether it’s 1  more car or 2 left for me.

some of the pensions die with you as well – your spouse gets nothing

If you are unfortunate to have significant health problems meaning you are not looking at a big number beyond retirement you may be able to transfer out of your final salary scheme into a SIPP before you start taking your pension which can then be passed tax free to your dependants if the worst happens.

So you’re not working past 65 and your folks have already +20 years on that – does this mean you’re somehow expecting your ‘retirement’ car to last +12years and the next one the same length of time or that you live somewhere where a car isn’t really required?

How many cars have you owned in the last 20 years out of interest?

You could easily achieve that.

Seven cars so far at the age of 52. Cars six and seven we still own and the ownership of cars five, six and seven spans the last twenty years.

I’m waiting for a verdict on two local government pension schemes for retirement due to ill health. I’ve had my initial discussion with occupational health and know they’ve contacted my GP for reports, but it’s been 2 months now since I’ve heard anything. Anyone else been through this?

If I get a ‘no’ from them I’ll be applying for standard early retirement next year when I’m 55. Though I can’t really see how given my GP has even commented on the thickness of my file and number of issues. Been on ESA support group and ADP for 2.5 years now.

Occupational health said if I get the ill health retirement I’ll not get all the deductions I’d get with straight early retirement which is obviously great.

I’m certainly lucky that I’m in the railway pension scheme, and it’s about as cast iron as it gets.  Luckily for us railwaymen and women who were in BR in the early 1990s or before,  Bob Maxwell jumped/fell/got pushed off his boat at the right time for us- all the fall out about the Mirror Group pension having been plundered by that ****, meant the railway pension got seperate legislation put in place to protect it when the railways were broken up in 1994. As the BR board was made up if career railwaymen at the time, with a serious stake in that same pension scheme. (Not like today’s corporate boards where they don’t give a **** about the normal workers and have seperate schemes and huge pay and bonuses in their revolving-door world).

Another question, this one very specific.

On this thread it was pointed out that my Standard Life Stakeholder pension was charging a lot. 0.8% to be precise, but no other fees for changing funds etc.

I have found out I can change to an Active Money Personal Pension (AMPP) or SIPP with Standard life. Both would bring a flat fee around 0.5%, so saving each year.

Both the AMPP and SIPP allow more flexibility, both are cheaper annually by a few hundred quid. I have looked and I could *maybe* save a few pence by moving provider, but that opens up a whole new world of decisions and I believe that Standard Life are a pretty good provider.

Stakeholder: https://www.standardlife.co.uk/pensions/stakeholder-pension
AMPP: https://www.standardlife.co.uk/pensions/personal-pension
SIPP: https://www.standardlife.co.uk/pensions/sipp

I think:
SIPP = more control, more funds and other investment options.
AMPP = likely better for me to chose pre-made funds / simpler selection.

I invest in sustainable & ethical funds and Standard Life have a good few options. I am 17 years from retirement, have a pot of over £100k, salary sacrifice scheme from work, likely to be upping payments in over the next year. Currently enjoying reasonable returns on a slightly riskier than average set of funds, aiming to reduce from that in 7 years and move into more stable funds for the last decade.

What am I missing / problems with switching to an AMPP or SIPP? It seems a win all around.
Should I bother with another provider who could save a few pounds more in fees?

Might be cheaper in fees but are the returns as good? Of course there’s a risk / benefit but no sense saving 0.3% in fees if return is 1% lower.

Any set up fees for moving, that you need to factor in?

Another point, having had a prelim appt with an IFA recently (family firm with 5 advisors).  Prob not relevant for you yet but may be; your final scheme, the one you finally want to pull your pension from, needs to be flexible enough to accommodate the removal mechanisms you want. Acc to the guy I saw, a lot of co schemes are good for putting into but some lack flexibility for taking out, OK if you just want to buy an annuity or whatever but if you want to take your money out in more esoteric ways, or a mix of ways you need to make sure the scheme allows it otherwise you’ll need to move funds again to a scheme that allows the removal you want.

Doesn’t help that I have 6 pensions (plus two for my wife, plus the two fully paid state pensions) so him assessing, projecting against retirement needs and desires, and making recommendations for which / where to move them to if there is a need to move isn’t going to be cheap – have been quoted £7k but will do an offer for £5k plus a 0.5% annual charge to manage the portfolio annually and recommend moves. That £5k is about 1.25% of my portfolio as a one off, then obv 0.5% going on but their returns are typically about 3% above ‘market’ on their balanced portfolio so nett should still be more cost effective even with what I’m paying for the advice.

Another question, this one very specific

If you’re talking about a fair chunk of cash then this sounds like the sort of question for an IFA.

Edit – after a bit of playing with excel to get an idea of the likely effect of changing.

By all means use an IFA, but you don’t need one, and IME they’re generally they’re trying to sell you something that they make money on.

I’m pretty confident I don’t need an IFA.

No fees to move.

Same funds (and more) on offer if I stay with Standard Life.

I’ve played with a compound interest calculator – that few hundred quid a year in fees adds up over 17 years, particularly as my pot grows in size and the fee difference becomes larger in cash terms.

^ Conversely, I had a smallish pension doing sweet FA with SJPP, moved it to a smaller IFA and it has seen almost 8% growth in the last 10 months after seeing around 2-3% over the last few years – both pension funds were/are on similar medium/high risk plans. Yes, I know SJPP have a dreadful reputation – life just got in the way of me sorting my shit out.

Eight funds is quite a lot of work I think as each will have its own rules (IANIFA).  It’s not the £5k but the 0.5% pa thereafter which will likely do the most damage to returns; I would try and just pay the one off fee, but i suspect you will get push back.  Or agree to the terms but pull the plug after a year if he hasn’t added value and manage it yourself if you are confident enough.  Are they all DB schemes..?, you might be able to merge trivial DC pots without IFA interference.

As a slight tangent. What’s the consensus on opening Junior SIPP’s for my kids (6 & 3) They have some cash in savings and in S&S / Cash ISAs. I’m thinking along the lines of encouraging them to get into savings from a young age, (which I wasn’t really encouraged to do).

My retirement plantook me to a cycle ride here.  I have less than 14000pa and libe a far more than comfortable lifestyle

Sorry, I feel I’ve derailed MOAA’s question.

By all means use an IFA, but you don’t need one, and IME they’re generally they’re trying to sell you something that they make money on.

It’s a bit like my discs and pads thread from a couple of days ago, I probably could do it myself. And i might bugger it up and regret it.

I don’t mind them making something from it (0.5% on my current portfolio is about £2000 per year) and if it grows well for another 10 years (to my 65th and tentative retirement plan) could be £4000. So yes, take the average and I could end up paying £3k per year / £30k for the advice but by my illustration, a growth rate of 6% for the next 10 years will give me 1.78x my pot; if they outperform by 2% then that becomes 2.1x and the 30k cost results in about 150k additional return. If they did 3% above (as per current track record) they’d deliver almost 2.4x and 230k extra return. I hope they make a mint out of me because it’ll mean I’m doing well too! [In fact I just realised all those deltas in returns are understated, that is the diff on the 400k approx i already have, I’d also do better on the as yet to be paid in of my current scheme, which could be another £100k in. Compound interest, the 8th wonder of the world.]

Eight funds is quite a lot of work I think as each will have its own rules (IANIFA).  It’s not the £5k but the 0.5% pa thereafter which will likely do the most damage to returns; I would try and just pay the one off fee, but i suspect you will get push back.  Or agree to the terms but pull the plug after a year if he hasn’t added value and manage it yourself if you are confident enough.  Are they all DB schemes..?, you might be able to merge trivial DC pots without IFA interference.

My wife’s two are both DB, and prob no plans to touch (one is past employer, one’s her local authority school CARE one that she’s still in)
My 6 are all DC, three small 10k-ish, one medium 65k, one large 300k (spent 18 years there) and then another 50k and growing in my current scheme with good Eer conts that I’d be an idiot to miss out on. So likelihood is that a 5x consolidation of mine and keep the current one going; or may be possible to shovel over most of the existing value from the current but keep it going still and then do the same in another couple of years and then again etc…. but that’s the sort of advice I’d be paying 0.5% for, if you don’t do anything in the year you paid 0.5% for nothing (rather – to be told to do nothing) but if they suggest moving funds then no costs for the selection and setup, etc.

And also a proper retirement plan, they might tell me on the basis of my lifestyle, and as a lot of my pension would stay invested and growing (unlikely to buy annuity) I might be closer to retirement than I think!!

My retirement plantook me to a cycle ride here.  I have less than 14000pa and libe a far more than comfortable lifestyle

And two properties with no dependents nor grandkids etc?

Paying an ifa a lump sum plus ongoing commission is daft. With the access to market nowadays there is enough information and huge array of funds that you could sort out your own future.
Just because they are a qualified ifa does not give them any power of time travel , their guess as to what they think the market will do is as good as yours .
Your mind is telling you they are giving you great information because you are paying for it.

From the above numbers you are in a great place and could probably retire soon, if you can either reduce your hours or do a 3 day week doing low intensity work somewhere else.

Look at AJ bell , Vanguard and Hargreaves Lansdowne. All offer low cost funds , online portals , free transfers.

It’s usually a case of opening an account , filling in a transfer in form. This triggers a due diligence transfer out form from your current provider. Fill that in and return it. Then wait for a couple of weeks and it’s done.

It’s very , very satisfying to amalgamate into 1 provider. Instant fund values with 1 click , less mail , less chance of fraud . It’s all there , plus the savings are nicely compounded so more money is left invested.

The only real decision is where to invest within the wrapper . Look at charges , diversity , your own risk aversion, ethical stance. I would probably avoid emerging markets if your in your 50s.

I’m a vanguard fan , not dissimilar amount of cash , approx 300k . It’s in 6 funds . Lifestyle 100 , European market, 2 X north American, Japan , Asia exc Japan.

Don’t pay an ifa to do this . Waste of money . There’s a book called Where are all the investors super yachts. Basic jist is you pay stock brokers , ifas etc alot of money and they are teflon coated . Bad investments mean they keep all the commission and you have lost money with zero comeback , unless they are buying derivatives or other high risk products with your money.

There’s a implication that it’s a like-for-like comparison, if so it’s pretty alarming (and not just for folk retired or just retiring) as the costs are for stuff we all spend on.

According to the researchers, the average pension pot required for a basic standard of living in older age has jumped from £68,300 in 2020-21 to £107,800 in 2023-24.

https://www.theguardian.com/uk-news/article/2024/sep/04/pension-pot-amount-needed-for-basic-retirement-rises-60-in-three-years

Not sure about the rest of you but neither my pension pot nor my current earnings have increased anywhere near the same rate.

Averages PA:

Just living £19,300

Moderate £31,300

Comfortable £43,100

So pretty much what a worker needs.

I’m not far off retirement and it dawned on me that unlike in the past when I had considerable work costs, now they’re pretty much zero (WFH), therefore my costs during (initial) retirement will stay at the same rate as they are while working – have those who recently retired found this?

It’s a bit like my discs and pads thread from a couple of days ago, I probably could do it myself. And i might bugger it up and regret it.

Except it’s not.  Investing has never been simpler with access to ‘lifestyle’ type funds based on a couple of simple questions  around age and risk.  Yes, you have some degree of complexity in your situation but if I did use an IFA I would be paying them a fixed hourly fee in the same way you do with a solicitor which should cost ~£150/hour.

There’s also a ton of good advice on YouTube to get your knowledge up.

I know that’s just a clipped quote , but that’s meaningless.
Is it per annum? , per person? Overall fund value?
Also it’s uncannily close to the average UK single person retirement pot at £107k
Depends on too many variables as well. What your expectations are , your lifestyle , your equity, health , age , family health history .

Yes, I know SJPP have a dreadful reputation – life just got in the way of me sorting my shit out.

1. Yes, anyone still with SJPP needs to give their head a wobble.
2. Your second point is so true and probably applies to the vast majority of us.

You definitely need alot less if not ‘going to work, although mine are minimal as I cycle and try and make sure lunch etc is taken with me – coffee is from the Dolce Gusto, not Starbucks.

Main costs for us are having two adult children at home and things like paying for an extra car, and food – they aren’t financially independent yet. Hopefully they will bugger off before I retire.

I was quite surprised at the ‘average pension pot’ figure. Thats about the amount I’ve fortunately got in two ‘spare’ pots I contributed to many years ago. I’ve 27 years in another couple of schemes which will be my main pension.

It’s very , very satisfying to amalgamate into 1 provider. Instant fund values with 1 click , less mail , less chance of fraud . It’s all there , plus the savings are nicely compounded so more money is left invested.

More chance of losing it all…

 their returns are typically about 3% above ‘market’ on their balanced portfolio

On average, nobody can beat the market – the market is the average, after all. With good diversification you can reduce the risk a bit for a given return, but to get 3% extra return the only way is to take on more risk (derivatives, junk bonds, etc.). That’s great when things are going well (i.e. the last few years), and arguably good over long periods of time (~15-20 years) when the risk evens out leaving you with only a return. On anything less than 15 years investment horizon I’d suggest that 3% above market is exposing you to a downside that the IFA might not be being clear about. I’d be looking to get some details on the holdings in their balanced portfolio.