[Misc] Retirement

[Garage_Doors]

Im 60 and been mortgage free for a good number of years, now self-employed and enjoy what I do, and am constantly being asked “why don’t you retire,

But to be honest, I don’t want to do anything different.

We have the 3-4 holidays a year etc, but I still worry about the pot I have accumulated running out,

We will both have full state pensions. Have a few old frozen pensions and since mortgage finished have been putting this money + a bit in to another pension.

But still worry if it will be enough.

A regular comment on this thread is having enough money to retire, how do calculate if I have enough? With rising cost of livings and not know what life expectancy is ?

I don’t see it as an easy calculation, is it?

 

[dazzer6666]

Im 60 and been mortgage free for a good number of years, now self-employed and enjoy what I do, and am constantly being asked “why don’t you retire,

But to be honest, I don’t want to do anything different.

We have the 3-4 holidays a year etc, but I still worry about the pot I have accumulated running out,

We will both have full state pensions. Have a few old frozen pensions and since mortgage finished have been putting this money + a bit in to another pension.

But still worry if it will be enough.

A regular comment on this thread is having enough money to retire, how do calculate if I have enough? With rising cost of livings and not know what life expectancy is ?

I don’t see it as an easy calculation, is it?

I think there’s often a tendency to over-complicate it, but obviously some care is needed. In simple terms I started with a budget - ie listing all living costs, then added a separate bit for other discretionary things like holidays, car changes and house maintenance etc - all of which together gave me a rough annual income requirement. Against that, obviously tot up your income - pensions, investment returns, investment growth etc - the two don’t necessarily need to balance out (I found psychologically getting over the mental hurdle of starting to run down your savings a big step) but it’ll give you a reasonable idea of whether your pot + pension income is sufficient. This is where seeing a financial adviser will help to be honest - any decent one will have tools to help refine the calculations and projections - but there are several online calculators that you can put your numbers into that help. Most IFAs will give you an initial free consultation, and there may be some merit in them looking at your old pensions as they may not be the most efficient setup for you In their current state.

 

[East Staffs Gull]

Im 60 and been mortgage free for a good number of years, now self-employed and enjoy what I do, and am constantly being asked “why don’t you retire,

But to be honest, I don’t want to do anything different.

We have the 3-4 holidays a year etc, but I still worry about the pot I have accumulated running out,

We will both have full state pensions. Have a few old frozen pensions and since mortgage finished have been putting this money + a bit in to another pension.

But still worry if it will be enough.

A regular comment on this thread is having enough money to retire, how do calculate if I have enough? With rising cost of livings and not know what life expectancy is ?

I don’t see it as an easy calculation, is it?

It certainly isn’t an easy calculation, unless you have a decent final salary pension, but there are calculations that you can do. I knocked up a spreadsheet to show what my potential income would be throughout my retirement. It required making a number of assumptions, all of which are likely to be proved wrong ultimately.
Firstly, I made a conservative assumption that I will survive until 100, but you can play around with different ages. I also conservatively assumed that I’d receive no interest or investment growth on my pension or savings. Against that I assumed that future inflation would be zero. This is of course completely unrealistic. However, there is a correlation between investment returns and inflation. If long term inflation is low, investment returns are likely to be low, and vice versa. The zero inflation assumption counteracts the conservative zero investment growth assumption. You can plug in to the spreadsheet your state pension, at its current value, for each year from state pension age to age 100 (or whatever age you choose). You can also spread the capital value of your savings and pensions over your remaining lifetime from retirement until death (100). I did this evenly over the period, buy you could factor in slightly higher cash needs for the first few years of your retirement for example.
I did my income forecasting on a net basis, based on current tax allowances and tax rates, and factoring in the 25% tax free pension lump sum. You can also factor in any other cash that you may receive, for example from endowment policies, property downsizing, any part time employment income, etc.
All of this will give you a good idea of how much you’ve got to live on each year. If you don’t think that is sufficient income to meet your needs, then maybe you need to continue working a while longer.
Of course no one can predict the future and my spreadsheet doesn’t factor in the possibility of future healthcare costs. In my case they’d likely have to be funded by selling my house. Neither have I factored in leaving any cash to my beneficiaries, unless I die before 100.
The spreadsheet has given me a good idea of my annual expenditure budget. I track my total annual expenditure and so far have managed to remain comfortably under budget, without compromising on our outgoings.

 

[Tim Over Whelmed]

A number of posters seem to be retired earlier than I am intending. 63-67 is my target age, but as far as I can see, the earlier it is the poorer I'll be.

Of course a redundancy could take it out of my hands as I really can't find much enthusiasm for the rigmarole of any more job interviews ( which I hate ).

Yes, 59 for me

 

[jakarta]

Im 60 and been mortgage free for a good number of years, now self-employed and enjoy what I do, and am constantly being asked “why don’t you retire,

But to be honest, I don’t want to do anything different.

We have the 3-4 holidays a year etc, but I still worry about the pot I have accumulated running out,

We will both have full state pensions. Have a few old frozen pensions and since mortgage finished have been putting this money + a bit in to another pension.

But still worry if it will be enough.

A regular comment on this thread is having enough money to retire, how do calculate if I have enough? With rising cost of livings and not know what life expectancy is ?

I don’t see it as an easy calculation, is it?

Mrs Jakarta will likely outlive me, even though she is 10 years older. My Dad died at 67 and his Dad at 70, so at 62 I have not got too long left!

 

[Shropshire Seagull]

It is a bit grim to say but my Uncle is now in his late 80's and he has told me I am getting everything when he dies.
Aside from any money he has it means a nice 3 bed semi in Holmes Chapel (Posh bit of Cheshire).
250 miles away so won't be thinking of renting it out.
Hope the Old Boy hangs on for a bit but it will probably double my pension when he goes!

That is truly lovely to hear - but just a word of caution - please don't bank on it.

It sounds like you may be his nearest living family, so the risk is that if he needs to go into care, the cost of that could eat up all bar about £14k of his net worth including putting a lien on his property to pay for his care after he eventually passes. This has just happened to my mum who had a severe stroke a year ago and since March has been living in a care home at £5k pcm. All her savings and premium bonds have gone now and if dad dies before her, they'll have the £600k house too.

I've set my expectation of an inheritance very low because of this - if I get anything, it'll be a bonus .... but I'd prefer my Mum & Dad to live forever.

 

[Shropshire Seagull]

I fully retired at 61, just a year ago now.

I went part-time at 47 - IT contracting, and in the 15 years until I fully retired, I actually worked just over 8 of them, so considered this semi-retirement.
In reality, it was all about work-life balance - I worked hard in bursts [3/9 months, sometimes a year] with lengthy breaks in-between - I had two gap-years in my 50's.

I paid what I could into a private pension [now a consolidated SIPP in drawdown], I have 3 [small-ish] deferred final salary pensions and my state pension starts when I turn 66 [3½ years to wait].

I consider myself to be quite fortunate but I have made financial sacrifices along the way to make this all possible. The 2015 Pension reforms also significantly contributed to making this all possible.

 

[Tim Over Whelmed]

I think the biggest challenge, and a significant commercial opportunity for our very fair and honest financial services environment, will be what "pensioners" do with what is normally their biggest asset, their home. At a simple return of 5% my the cost of an average home in the South East (£400k) could give us an income of £20,000, so it follows that people will start to look at downsizing, of course, but possibly equity release or using this asset in a different way. As to how much you need, I'd say not as much as you think. I guess a £100k of pension equates to around £5,000 income, so that may help some calculate what they need? But when calculating remember it's cheaper to be retired than working. I've retired but do some work, on an as and when required and as and when available basis, this brings in some income as well and, I found when retiring, as a nice occasional commitment which others may consider?

 

[sparkie]

Today :

"630,000 more working age inactive individuals than there were pre-pandemic".

"particularly acutely within those aged over 50."

Work and Pensions department to "thoroughly review workforce participation" by Jan 2023.

Will they launch a big stick war against early retirement ?

*Prays they won't delay my pension drawdown next summer*. ( A bit too short notice for that to be fair ? ).

 

[Tim Over Whelmed]

With rising unemployment and an inability to claim benefits for those that do choose early retirement I'm struggling to see why they mind? What have I missed other than not earning and paying income tax?

For those planning to retire, get IFA advice, of course, but consider filling ISA allowance before the pension pot, depending on where you are in terms of pot and lifetime limit

 

[GingerBeerMan]

Anyone in this thread under 35 and have no idea how they'll cope at 70? I'm still renting, single, earn an average wage of £30k/year. There's basically no way out of this in the current climate. I got a good degree and have an above average job for my age group.

 

[Weststander]

Today :

"630,000 more working age inactive individuals than there were pre-pandemic".

"particularly acutely within those aged over 50."

Work and Pensions department to "thoroughly review workforce participation" by Jan 2023.

Will they launch a big stick war against early retirement ?

*Prays they won't delay my pension drawdown next summer*. ( A bit too short notice for that to be fair ? ).

If those folk haven’t refrained from work to now live on benefits, they’ll be left alone.

Living on your own savings, pension monies, BTL income or inheritances, will always be a personal liberty.

 

[Weststander]

Anyone in this thread under 35 and have no idea how they'll cope at 70? I'm still renting, single, earn an average wage of £30k/year. There's basically no way out of this in the current climate. I got a good degree and have an above average job for my age group.

No government has the courage to deal with housing supply. There should be millions more genuine affordables to help people like you.

Reasons why not - not wanting to upset nimbies, a fear that real supply will dent the UK’s obsession with how much their home is worth.

If only your ilk could attain that, then they/you could think about saving significantly into a pension. You’re at a great age to do it, with 30 years of investment growth ahead.

All a pipe dream just now.

I think many only break out of it when with a partner they have the dual income in good jobs.

 

[LamieRobertson]

Im 60 and been mortgage free for a good number of years, now self-employed and enjoy what I do, and am constantly being asked “why don’t you retire,

But to be honest, I don’t want to do anything different.

We have the 3-4 holidays a year etc, but I still worry about the pot I have accumulated running out,

We will both have full state pensions. Have a few old frozen pensions and since mortgage finished have been putting this money + a bit in to another pension.

But still worry if it will be enough.

A regular comment on this thread is having enough money to retire, how do calculate if I have enough? With rising cost of livings and not know what life expectancy is ?

I don’t see it as an easy calculation, is it?

….financially I’ll never be in a position where i can choose retirement ….it‘ll be my body that tells me i cant do what ive been doing for the past 30 years ….I’ve already had to reduce the hours i work ….and when i qualify for state pension come March 2025 (if i am blessed enough to still be around), then I’d hope to be in a position to only work on average three days a week (hopefully my son will have finally left home so i can let his bedroom)….but i see an upside to still having to work…..structure/routine to day, meeting and talking to people ..being outdoors etc

 

[Weststander]

….financially I’ll never be in a position where i can choose retirement ….it‘ll be my body that tells me i cant do what ive been doing for the past 30 years ….I’ve already had to reduce the hours i work ….and when i qualify for state pension come March 2025 (if i am blessed enough to still be around), then I’d hope to be in a position to only work on average three days a week (hopefully my son will have finally left home so i can let his bedroom)….but i see an upside to still having to work…..structure/routine to day, meeting and talking to people ..being outdoors etc

I’m years away from being able to stop work, but thankfully I truly like my work and at the same time pleasing clients.

My career stamina and resilience I’m sure comes from working for myself and largely from home. I left the world of office politics and a backstabbing boss many years ago, it was a happy game-changer for me.

I have a broad overall plan, which I don’t obsess about. In the meantime, literally just taking every day and week as it happens, with fairly regular holidays to look forward to.

 

[LamieRobertson]

I’m years away from being able to stop work, but thankfully I truly like my work and at the same time pleasing clients.

My career stamina and resilience I’m sure comes from working for myself and largely from home. I left the world of office politics and a backstabbing boss many years ago, it was a happy game-changer for me.

I have a broad overall plan, which I don’t obsess about. In the meantime, literally just taking every day and week as it happens, with fairly regular holidays to look forward to.

I remind myself of those days when I’m having a particularly challenging time with my current employment and think …nah I’ll stick with what i am doing

 

[sparkie]

The Government is now mulling over bringing forward the date at which state pension only kicks in at age 68.

After having a state pension age of 65 when I started work, it was changed to 67 and now - depending on the specific timeframe change decided on - it looks likely to be 68.

Slavers.

 

[Doonhamer7]

I’ve spent the last couple of months doing all my incoming / outgoing calcs for retirement and I got a few surprises worth looking at, main one was my company DC pension where I had made my retirement age = 60, this had consequence I didn’t realise as it went into lifestyle retirement mode sticking everything into low (my opinion very low risk) state - cash, bonds, property, minerals. Went back in made my retirement age 70 and medium risk now pension is back into shares. Now got to do check on Mrs D7’s DC pension

 

[dazzer6666]

I’ve spent the last couple of months doing all my incoming / outgoing calcs for retirement and I got a few surprises worth looking at, main one was my company DC pension where I had made my retirement age = 60, this had consequence I didn’t realise as it went into lifestyle retirement mode sticking everything into low (my opinion very low risk) state - cash, bonds, property, minerals. Went back in made my retirement age 70 and medium risk now pension is back into shares. Now got to do check on Mrs D7’s DC pension

Well spotted……lots of company schemes do this automatically (some start de-risking even earlier - at one point I had a DC pot that the scheme started adjusting at 55), but that might not be appropriate for the individual as you’ve highlighted.

 

[GOM]

I think there’s often a tendency to over-complicate it, but obviously some care is needed. In simple terms I started with a budget - ie listing all living costs, then added a separate bit for other discretionary things like holidays, car changes and house maintenance etc - all of which together gave me a rough annual income requirement. Against that, obviously tot up your income - pensions, investment returns, investment growth etc - the two don’t necessarily need to balance out (I found psychologically getting over the mental hurdle of starting to run down your savings a big step) but it’ll give you a reasonable idea of whether your pot + pension income is sufficient. This is where seeing a financial adviser will help to be honest - any decent one will have tools to help refine the calculations and projections - but there are several online calculators that you can put your numbers into that help. Most IFAs will give you an initial free consultation, and there may be some merit in them looking at your old pensions as they may not be the most efficient setup for you In their current state.

Nail on the head there, as I highlighted above in the quote. getting over the mental hurdle of starting to run down your savings.

This is a big hurdle and one I (meaning my wife) still struggles with. There is no point in saving for a lifetime for your retirement and then not spending it.
I have found that the actually monthly income needed for day to day living is not actually that great, being mortgage free.
To try and simplify things work out your simple day to day living costs and then see if your savings can cover the rest, holdays etc. for the next 10 or 20 years. You will probably be happy enough to just potter around and not be bothered spending too much by the time you reach 75.

My wife and I are both on full state pension and find this adequate for our daily needs including a couple of small holidays per year. The rest is bonus.