Pension planning

[Racehorse-80s]

Three quarters of workers not on track for 'moderate' pension income, report suggests

A newly-published report suggests a moderate lifestyle in retirement costs £32,700 for one person and £45,400 for two.

www.bbc.co.uk

Are these pension figures really accurate , The amounts are net not gross , If you compare them to the average take home pay for the average worker I’m not surprised few will reach even a moderate pension payout on retirement ..

 

[chris123]

I'd have thought they were post tax numbers.

 

[Racehorse-80s]

I'd have thought they were post tax numbers.

Here are the detailed numbers , All the figures are Net ( After tax deducted )

Home - Retirement Living Standards

Home - The Retirement Living Standards have been developed to help us to picture what kind of lifestyle we could have in retirement.

www.retirementlivingstandards.org.uk

These are estimated costs, not income. They show what different lifestyles could cost.

To cover these costs, you’ll need enough income after tax. As retirement income may be taxed, you may need a higher income to meet these spending levels

 

[ASCPFC]

Hardly any of us are going to have that much in retirement. And hardly anyone is going to be able to ensure they have that much.
Hilariously, off the top of my head I can pretty safely say that the majority of workers don't earn that much.
I do, and I'll probably be looking at a lump sum of a few tens of thousands and maybe the equivalent of 5-600 a week in retirement. If I'm lucky. So I won't be getting that much either.

 

[Badger11]

Three quarters of workers not on track for 'moderate' pension income, report suggests

A newly-published report suggests a moderate lifestyle in retirement costs £32,700 for one person and £45,400 for two.

www.bbc.co.uk

Are these pension figures really accurate , The amounts are net not gross , If you compare them to the average take home pay for the average worker I’m not surprised few will reach even a moderate pension payout on retirement ..

I would agree with these numbers. I am lucky to have a good pension. Being mortgage and rent free and not owning a car makes a major difference. I get by on about 28k pa which includes 3 holidays pa so a comfortable life.

I could survive on 18k but wouldn't have much of a social life. For those who still have a mortgage or pay rent the number would be much higher.

 

[Racehorse-80s]

I would agree with these numbers. I am lucky to have a good pension. Being mortgage and rent free and not owning a car makes a major difference. I get by on about 28k pa which includes 3 holidays pa so a comfortable life.

I could survive on 18k but wouldn't have much of a social life. For those who still have a mortgage or pay rent the number would be much higher.

Glad to hear you are doing good on 28k , I’m retired but the wife still earns a hefty wage so a kept man , Obviously when she retires the drop in income will be huge until we can claim our state pensions ..

 

[PalazioVecchio]

worried about being very elderly and skint ? you need not worry if you smoke & drink your head off for most of your younger years. Winston Churchill (90) was a one-in-a-million statistical outlier.

 

[Badger11]

Glad to hear you are doing good on 28k , I’m retired but the wife still earns a hefty wage so a kept man , Obviously when she retires the drop in income will be huge until we can claim our state pensions ..

I get my state pension next year at which point I will reduce my income from my private pension (I've been taking too much).

My backup plan is equity release (not for a lot of people though).

 

[Racehorse-80s]

I get my state pension next year at which point I will reduce my income from my private pension (I've been taking too much).

My backup plan is equity release (not for a lot of people though).

I took a reduced lump sum and a higher pension when I retired , Yes equity release is controversial but it does suit some individuals .

 

[chris123]

I get my state pension next year at which point I will reduce my income from my private pension (I've been taking too much).

My backup plan is equity release (not for a lot of people though).

Being nosey, but curious as to the attraction of equity release rather than remortgage?

 

[Badger11]

Being nosey, but curious as to the attraction of equity release rather than remortgage?

Well firstly I have only had one brief conversation with my IFA as I am not planning on doing anything if at all. It's my backup plan.

His question was what do I actually need.

I explained I am not looking for a large lump sum (refurb the home or buy a Ferrari) rather it's an income gap. So theoretically I was looking for an extra 5k pa to supplement my income.

As I would be income poor it would not make sense to have a plan where I have to make a monthly payment.

So he suggested an Equity Release drawdown plan.

Say I have an overdraft of £150k. Then each year I would borrow 5k up to £150k. This would mean only paying interest* on the amount I actually used, rather than borrowing the whole 150k and paying massive interest on that from day 1.

I'm not sure what the difference would be between remortgage and a drawdown but I am guessing it would be paying interest on a lump sum. You can put the unused bit into savings but my guess is that the mortgage rate would be higher than the savings rate so would cost a lot.

Anyway like I said it was a brief conversation.

*By paying I actually mean when I die or sell the home the bill is due.

 

[cryrst]

My pension is risk rated about 7/10 my choice.
My returns are averaging about 20%-25% annually after fees. Also took out some uncrystallised dosh and paid the remainder of my mortgage and today I’m mortgage free. Repoed in 1990 and today own my home. It can get rough but keep the faith you will see light
👍👍👍👌

 

[beak]

The only way to hit a decent pension target is by AVCs or salary sacrifice most people have a period in life where this is achievable like when kids fly the nest, both are very attractive options as the amount contributed comes from the bottom line pre tax .

 

[Racehorse-80s]

My pension is risk rated about 7/10 my choice.
My returns are averaging about 20%-25% annually after fees. Also took out some uncrystallised dosh and paid the remainder of my mortgage and today I’m mortgage free. Repoed in 1990 and today own my home. It can get rough but keep the faith you will see light
👍👍👍👌

1989-91 was probably the worst recessionary period , I can remember , Certainly for me personally , Once I got back on my feet , I became very risk adverse and mot conscience of having rainy day money ..

 

[Casual]

I put a decent monthly amount in my pension, plus a lump sum each year, as it comes off my tax bill, self employed.

I had a good plan regarding pension/IHT , until last year when labour made your pension pot part of your estate and liable for inheritance tax.
Hopefully that will change in future.

 

[beak]

I put a decent monthly amount in my pension, plus a lump sum each year, as it comes off my tax bill, self employed.

I had a good plan regarding pension/IHT , until last year when labour made your pension pot part of your estate and liable for inheritance tax.
Hopefully that will change in future.

I'm not sure about self employed but there is a lifetime limit which you must be careful not to breech.Taxes have to be raised somehow Petrol taxes are waning as is the smoking tax.

 

[martin2412]

Well firstly I have only had one brief conversation with my IFA as I am not planning on doing anything if at all. It's my backup plan.

His question was what do I actually need.

I explained I am not looking for a large lump sum (refurb the home or buy a Ferrari) rather it's an income gap. So theoretically I was looking for an extra 5k pa to supplement my income.

As I would be income poor it would not make sense to have a plan where I have to make a monthly payment.

So he suggested an Equity Release drawdown plan.

Say I have an overdraft of £150k. Then each year I would borrow 5k up to £150k. This would mean only paying interest* on the amount I actually used, rather than borrowing the whole 150k and paying massive interest on that from day 1.

I'm not sure what the difference would be between remortgage and a drawdown but I am guessing it would be paying interest on a lump sum. You can put the unused bit into savings but my guess is that the mortgage rate would be higher than the savings rate so would cost a lot.

Anyway like I said it was a brief conversation.

*By paying I actually mean when I die or sell the home the bill is due.

I'm looking at retiring in about 4 years, and have a moderate personal pension pot. Is it really worth paying for an IFA ?
Genuine question - Can they really tell me anything that most people don't already know regarding annuities, drawdown etc. , and can they really find better deals than can be found doing an internet search ? Would actually paying them generate more than they cost ?

 

[beak]

I'm looking at retiring in about 4 years, and have a moderate personal pension pot. Is it really worth paying for an IFA ?
Genuine question - Can they really tell me anything that most people don't already know regarding annuities, drawdown etc. , and can they really find better deals than can be found doing an internet search ? Would actually paying them generate more than they cost ?

Best to do your own research there are some rules that must be adhered to otherwise it might be calamitous,do not take too much as a lump sum (commutation) draconian taxation would kick in, always leave enough in the pot allowing for heavy periods of inflation,the full stamp paid state pension is about £12,700 paid every four weeks (13 payments a year) and is inflation linked (triple lock) you get this and your other half the same, if you don't have the required amount of years ask it is probably worth buying in the missing years unless your health is particularly bad. Martin Lewis is quite hot on pensions as is PensionBee.

 

[Casual]

£60,000 per year is the maximum into a personal pension (think it was £40,000) when I started it.
Assume the government give people good tax breaks for pensions as they are sorting themselves out in retirement, rather than tapping up the government.
I pay my Mrs as an employee, so put some in hers, so we can both fully use our yearly allowance when we start drawing it.
Currently about £2000 per month before we’d start paying the basic rate tax. So getting 40% relief now is a massive incentive.
Wish I’d started years ago, but 3 kids and getting a decent house sorted was the priority.
I worked for a firm for a few years in my early 20s contacted them last year and I’ve got 50 grand in a pot that I never new about.
Fully paid up stamps for both of us, but we are in our 40s so the age that will kick in will probably be in our 90s 🤦‍♂️

I'm not sure about self employed

but there is a lifetime limit which you must be careful not to breech.Taxes have to be raised somehow Petrol taxes are waning as is the smoking tax.

 

[cryrst]

£60,000 per year is the maximum into a personal pension (think it was £40,000) when I started it.
Assume the government give people good tax breaks for pensions as they are sorting themselves out in retirement, rather than tapping up the government.
I pay my Mrs as an employee, so put some in hers, so we can both fully use our yearly allowance when we start drawing it.
Currently about £2000 per month before we’d start paying the basic rate tax. So getting 40% relief now is a massive incentive.
Wish I’d started years ago, but 3 kids and getting a decent house sorted was the priority.
I worked for a firm for a few years in my early 20s contacted them last year and I’ve got 50 grand in a pot that I never new about.
Fully paid up stamps for both of us, but we are in our 40s so the age that will kick in will probably be in our 90s 🤦‍♂️

NI will need paying until retirement if you are working. Time I reach it in 8 years I have paid NI for about 47 years. The qualifying years are 35.