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This thread genuinely changed my life.
Back in October 2021, I found myself trapped in reverse quarantine—everyone in the house had COVID, and I was about to go in for knee surgery. So, I lived in the loft for a week or so while they all isolated. It was a pretty boring time, and I ended up spending a lot of it on here, including reading through the early pages of this thread.
It prompted me to sort out our pensions—mine and my wife's. Right then and there. With a combination of good luck and a few sacrifices, we've been able to substantially grow our pension pots. We've always been good savers when the kids finished nursery which peaked at over 2k and month, we didn't suddenly start going on big hols, buying flash cars or bikes. I drive an 8-year-old i10, I get nothing from cars, so it's not a big deal to me.
As things stand now, it looks like i'll be able to retire at 54—just three years from now—after my wife hits 55 in August 2027. That’s two years earlier than I ever thought possible a few years ago, and a full seven years earlier than I was planning back in 2021.
What’s interesting is how many of my colleagues can’t understand why I’d want to retire so young. I love my job—I really do. I’ve got loads of energy for it, it’s demanding but rewarding, and my team and I work on some of the most important projects for one of the biggest companies in Europe.
But I also know that if I keep working, I’ll just be building up wealth I don’t need and increasing my kids’ inheritance. You can’t buy back healthy years to do the things you wish you’d done. And I’ve got so much I still want to do—things that work just gets in the way of.
I consider myself lucky that my self-worth isn’t tied up in my job, which I think will make walking away a lot easier than it has been for some of my friends. I’ve seen people struggle with retirement or late redundancy, or carry on as consultants just to feel relevant, despite not needing the money.
This year, at 51, I learned to ski—so I can finally do it with my wife, who loves it. She’s just gotten into gravel biking, so we can share that too. I’ve got a YouTube channel I never have time to edit footage for. No one watches it—I’ve never told anyone it exists.
I’ve got synths I had to put away because I’ve never had the time to learn them properly. I’m itching to get back into birdwatching—I've got all the gear, just not the time. I’ve got some beautiful bikes I hardly get to ride—especially my Ti Broken Road Pinion, which I bought for adventures, but this year I’ve only managed one evening out on it.
And it’s not because I’m a workaholic—far from it. I’ve got a great work-life balance. I ride 4–5 times a week, go to the gym 4–5 times a week, and spend a lot of time with family and friends. But I just want those extra 40 hours a week—to do everything else. To finally tackle the house and garden jobs that never seem to get done.
Anyway, thanks to Singletrack i should be free by 2028.
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There is definitely a case for expectation management, your own and your family if applicable
Interesting reading this thread . I'm currently moving my UK pensions to New Zealand where we now live . Pretty lucky in the scheme of things , had one job for 26 years from 16 years old putting in to a DB scheme untill it was closed then 8 ISH years of a DC has left me with a reasonable size pot at 45 that I will be able to access at 57 .
There's no tax on that pot in NZ so in there's a great deal of flexibility in how I end up using it which is handy .
My question for people who are closer to retirement and looking to go a bit early is if you've got kids have you thought about being able to help them out with house deposits, tuition fees etc etc .
Not suggesting that there is a wrong way or a right way or that someone doesn't love their kids , just wondering what people's thoughts are on it .
I quite fancy retiring as soon as I can but I also want to give my kids a chance at a decent start to adult life and I'm thinking that will involve me putting a few more years in .
if you've got kids have you thought about being able to help them out with house deposits, tuition fees etc etc .
Tuition fees? In England these are much better dealt with by the student ‘loan’ than giving away £1,000s of today’s valuable money instead of tomorrow’s discounted money.
otherwise, we’ve thought about these things but the children need to stand on their own.
^ this. If you have student age kids, now or in your future I urge you to watch this video. It's almost an hour, I know, but really does a job on understanding when paying back is worthwhile and also when not.
It's also 5 years ago, so some of the %s and links to inflation are changed but premise is the same.
I've just been rewatching to make sure I understood the repayment bit now my daughter has finished; the bit about "Tuition fees? In England these are much better dealt with by the student ‘loan’ than giving away £1,000s of today’s valuable money instead of tomorrow’s discounted money" is all around 30-odd mins onwards.
But it is worth watching right through.
if I remember correctly there was an MSE podcast earlier this year where he went through the different versions/editions of the student loan scheme.
I quite fancy retiring as soon as I can but I also want to give my kids a chance at a decent start to adult life and I'm thinking that will involve me putting a few more years in .
I've got 3 sons & 2 step kids, 2 sons & 1 step kid are doing fine and despite us trying to treat them all equally, life doesn't quite work out like that, so I'm expecting to work till I'm 70 (albeit 4 day weeks since my late 50s) to help out the 2 who've been less fortunate so far & I'm entirely happy with that.
despite us trying to treat them all equally, life doesn't quite work out like that,
Absolutely. Equally is easy, but wrong IMHO. You need to treat them fairly, and if you have kids that for whatever reason have done well and don't need supporting and others that do then you should give help where needed. If the 'well off' kids don't realise that - well, it's a valuable life lesson.
otherwise, we’ve thought about these things but the children need to stand on their own.
An honourable principle but given how the property market is stacked against young people these days, it's a nobrainer financial decision to help your kids onto the property ladder at the earliest opportunity if you have the means. Why pay (tens of) thousands to landlords in rent just because you don't like the idea of giving your kids handouts?
it's a nobrainer financial decision to help your kids onto the property ladder at the earliest opportunity if you have the means. Why pay (tens of) thousands to landlords in rent just because you don't like the idea of giving your kids handouts?
I would agree, but more on the principle of having them bugger off out of my house ASAP rather than the rent issue. 😁 3 adults + a regular boyfriend visitor, (not mine) is too many if you don't own a mansion!
but the children need to stand on their own
Why?
Fair enough you may be the exception, but most people in their fifties and sixties had the gift of relatively low house prices, almost free education, a job without AI/ insane globalisation. Etc
Why wouldn't you want UI help offset some of that for people that you chose to bring into the world...
Why wouldn't you want UI help offset some of that for people that you chose to bring into the world...
It's a very odd outlook to see your kids as completely separate economic entities who need to support themselves. I prefer to think of it like a family cooperative. What I own my kids own, so why would I pass up the opportunity to minimise unnecessary financial costs to the family if I'm in a position to? Doesn't make a lot of sense..
*And yes I know it's not fair to families who don't have a lot of money but that's not something that can be solved with individual action.
Absolutely agree. When it comes to time, I'll give mine whatever I can to get him started out on the housing lark. Assuming that's the route he wants to take.
I'm already pulling a large chunk out of my pension shortly for him. (Us) Along with moving house to make his commute 5 mins instead of 2 hours
We are going to be able to retire soon due to Mrs Zips mum's auntie who somehow came into some money. Her money meant Mrs Zips mum got given a big house. That house will now help us and when we go, that house will help my neice and nephew.
That distant relative has made a lot of people's live more comfortable.
This thread has me thinking about my own future. Not sure where i stand with regards to retiring but it would be nice to slow down a bit in the not too distant future.
So at just turned 50 me and my wife have
About £100k in pension contributions which will increase gradually but we dont tend to concentrate too much on
No mortgage on a nice 4 bed house.
£30k in savings
Average income
Own our cars outright etc
About £2-250k in inheritence to come in next 5-10 years
We are starting a new business which my wife will be doing in conjunction with her current job which we are hoping in the next 12-18 months will replace her current income to the point she can quit and the new business would be something she can do well into retirement. She never has been high pay so we hope this will ensure her levels without stress.
My own situation is i want to maybe go part time when i hit 60 in some kind of delivery/grass cutting menial work that pays minimum rate and just keeps me mentally and physically active.
So what i worked on was getting to 60 and about 7 years of having to cover about 20k per annum until we get our government pensions. We are not big spenders and if i am bringing in £1000 per month and my wifes business is bringing in say £1-1500 per month that should give us a combined income of £4166 without children expenses and any debts. I figured i could save for the next decade without a mortgage at upto £1000 per month but it will probably be more realistic to say £500. Even then its another £60k in the kitty giving me nearly £350k in the bank which should more than cover £20k per annum at 60.
I know there will be things that crop up from time to time that will stretch budgets but my job includes some rather nice bonus payments on a quarterly basis which would cover anything house/child marriage/suprises over the decade im working.
Happy to hear of any flaws in my workings to slow down at 60
About £2-250k in inheritence to come in next 5-10 years
Expect to get none of that. With care costs running at £1-2k a week, depending on needs, that will be burnt through in no time
An honourable principle
Not sure it’s particularly honourable or really a principle. Closer to a pragmatic heuristic? I expect a greater sense of achievement and potentially greater happiness to come from ‘I did this’ than ‘my parents bought me this’
In the retirement thread discussions on ‘how big a pot’ and tax avoidance I must have previously ignored any strong emphasis on ensuring inherited wealth and descendent’s property ownership. Otherwise I’d not have offered such a disagreeable and unwelcome view.
In preparing for these giveaways are folks signposting them to children ‘I have £n,000 put aside for your first house’, suggesting that help may be forthcoming on request, or another approach?
MIL's care costs burnt through her 4 bed detached value in the 3 years she was in a home. She was worried the 3 daughters would get nothing, but that's the way it is. I'm not expecting anything from my folks unless they suddenly pass away - both 79 and 80 so things will start going wrong soon. Dad can't walk that far with dodgy knees (won't get them replaced). I'm expecting that to go into providing care. My kids will get some help, but I won't have enough to give them wads of cash unless we both die 'quickly' then they will have a house to split.
I'm not giving money to daughter unless her boyfriend bothers to go out and get work. Fortunately, 22 at present and living at home , but he's done nothing since leaving college. My 'pensions' won't be going to him. Son isn't sensible enough with money - he's 25 next (ADHD). Both adult kids get a lot of support currently with daughter at Uni, son working/not working/working, and we currently pay and insure a car for him as his keeps breaking.
In preparing for these giveaways are folks signposting them to children ‘I have £n,000 put aside for your first house’, suggesting that help may be forthcoming on request, or another approach?
We watched MissJ struggle with landlords and rentals for years, having no money or security, and made a calculation of how much we could spare, and told her that we'd put it towards buying her own place. At first she didn't want to accept it but we sold it as a "pre-inheritance" and she saw that made sense. Yes, we were lucky to be able to do that - lucky that during our working lives working hard and making sacrifices were rewarded.
In preparing for these giveaways are folks signposting them to children ‘I have £n,000 put aside for your first house’, suggesting that help may be forthcoming on request, or another approach?
I've pretty much told my kids that I'll offer whatever help I can when I can. Haven't quantified it because it's dependent on too many factors (future income, health, inheritance, random events etc) but they know they can focus on following their own interests in life, careers etc with a decent safety net behind them if required.
We have been close to getting my elderly mum into a care home a couple of times, but she has rallied a bit, though now has full time care at home, and meals delivered. She is on her own, 92, with some dementia and a 40 minute drive away from us. I have full POA.
Care homes in our area, South Lanarkshire, are generally around £1700 a week, so whilst she has decent amount of savings, 4 or 5 years in a home would see that wiped out. The doctors recommend keeping her at home, with current care package for as long as possible as they reckon an upheaval of environment would lead to rapid worsening of her dementia.
I’m not counting on any inheritance in my planning, although it would be a nice buffer. I reckon I can just about afford to not work anymore, having finished up last month, 6 months short of turning 60, however I will need something interesting and worthwhile for a day a week or so come the winter I reckon, with the added benefit of some extra cash.
My wife and I have always been open about finances/saving etc with our two daughters. They each received a couple of grand at 18 from their grandads estate. Their grandma wanted to put stipulations on it but we had a family chat including my two sisters and it was agreed that as it wasn't a life changing sum, they could do what they wanted with it. (6 grandkids) All spent it relatively wisely, into savings, towards a car to enable them to get to work etc.
When we retired we talked about whether we'd prefer £100k at 55 or older, or £10-20k at 25. We both reckoned that (for us) the £20k at a far earlier age would have been far more beneficial. We adopted this with the girls and gave them both what was pretty much their 10% deposit on a house each. This was money they couldn't 'squander'. They're now 28 and 31, married with young families. They and their husbands work, they don't have 'money to burn' but for us, giving them a leg up was a sensible thing to do and a far better use of say £50k than that £50k sat in an ISA or safe BS acct.
In my world, I don't see my lad being super rich, I know his goals and plans and know his salary realistically, so I know he can't do it alone. Whilst we've not discussed figures, I'll give him anything and everything I can, even if it means me going without
nearly £350k in the bank which should more than cover £20k per annum at 60.
Happy to hear of any flaws in my workings to slow down at 60
IIUC you're suggesting you can build a pension pot of £350k by 60 and then go part time drawing out 20k pa, to supplement your part time work, and then at 67 retire completely and the money you were earning PT is now covered by state pension.
You said show the flaws, so here goes. IANAPA, but have been through this recently.
Basic calculation, the 4% rule, says that for a pension to last for 30 years, you can draw out 4% pa increasing with inflation. That would give you 14k as the amount you can draw out in Y1, 14k + inflation year after, etc. To draw out 20k pa you need 500k.
A more sophisticated calc (I modded the spreadsheet i developed for answering STM previously) which enables me to adjust for assumed rate of return on your pension and also inflation..... if you work on 6% return and 2.5% inflation then your 350k will last you 27 years.
If you want to model a better RoR or different Inflation I can. For example if I change inflation to 3% you run out in 25 years time.
Next issue - that assumes all 350k invested - but if you intend to pull some out every year for 25+ years there will be a downturn in that time and you don't want to pull money out (sell shares) in a market low. So, you want 1-2 years held in 'cash' for when that happens - you then use that instead but you won't be getting a return on that in the same way.
And while 25 or 27 years from 60 sounds like 'enough' - the ONS calculator for you as a 50 yo male has your average life expectancy currently at 84, with a 25% chance of living to 93 and a 10% chance of living to 97. So a non-negligible chance of you outliving your funding.
Reading all together, and absolutely understanding there are plenty on here and elsewhere that have retired at that age with similar or lower pots and SO FAR made it work by cutting cloth differently (not many 80+ posters though yet, they may yet run out....sorry to be a pessimist but might happen), but it's you that said you and the wife need 4166* per month, and on that basis I reckon 350k is not enough. I reckon you need more like 400k +/- if it is to last you into you late 80's early 90's and to enable you to hold 20-40k of that as a buffer.
(* also to check - in your calc 4166 is as gross.....you won't get that, you'll get whatever that is after tax. If you want £4k /mo actual you need to be 'earning' more like 5k)
TLDR - you have a plan and it isn't light years off but I suggest doing some reading and if necessary getting a proper calc done, that 'could save £1000 but prob more like £500' makes a big difference if you can do £1000 now rather than even in 3 years time.
But surely as you get older you need less. Both as the state pension kicks in and as your needs decrease due to health, fitness.
For example if I retire at 60, I'm going to Finale for 3 months. But when I'm 70 I'd be happy with a fortnight in Lanzarote.
There's also things like houses to consider and capital from downsizing. I bet a chunk of STWers will have a £500k+ house and 0 mortgage by the time they retire. So you can easily free up £200k of that with a nice 2 bed bungalow.
Whilst I may need £40k a year at 60, I bet if I'm 85 I need the best part of bugger all.
If I'm pissing the bed in a posh place or a crap place, I'm still pissing the bed, so who really cares by then 😃
The calc includes state pension coming in at 67, thats factored. Earnings before then, pension after, topped up by 20k a year is the model.
Yes, house and stuff can cover some of the uncertainties particularly if you arent encumbered by kids and inheritances, etc.
Equally though. My Dad's 87 and still very active physically and economically. You may be right, and being cautious will bite you, but if my Dad had worked on your illustration he'd be in a miserable state by now (he wouldn't, me and my sister wouldn't let him be but you get the point)
Financial planners will probably tell you to assume post-retirement spending is higher than your likely average in the early years as you try and enjoy your freedom with trips and toys etc, then a lower middle period as you slow down a bit and then a final ramp up as care costs hit. Re care home costs...the average period in a care home works out at c2 years, but it’s one of those numbers where absolutely no one is average.
Basic calculation, the 4% rule, says that for a pension to last for 30 years
I think ? this assumes leaving a fair amount of pot left when you pass away ? If you are happy to work on basis of a pot diminishes to next to nothing by, say 85, then I think a drawdown of 6% or so is realistic, but I may be wrong !
Yes and no - it doesn't necessarily assume a fair amount is left after 30 years but does suggest that you should be confident it'll last the 30 years or longer, which is kind of the same thing.....
Fair enough, but I think taking a linear approach is conservative. As others have said, you’ll spend/need a lot more living life in your 60’s and 70’s than after that, in most cases. A model which takes extra drawdown in the first 10 or so years seems more applicable IMO.
My dad is well into his eighties and is spending quite a lot on nursing home fees. I don't know that you can assume spending will fall over time.
I was working on the basis that nursing home costs will be picked up by the state once personal funding runs out
They might, but I suspect the quality of care won't be as high...it won't be bad (hopefully), but it won't be as frequent or as good.
I didn't write the 4% model, I just used it as an 'industry standard' very basic model that has generally worked well enough as an estimation in the past, it is heavily caveated by the fact it is such an averaging. I did suggest getting a proper calc done.
So sure, today's 'modern pensioner' that is expected to have an active phase of initial retirement, and to live longer than the pensioners of the past is going to stretch that model. If you take more out initially then it will last less time (obviously) - but worth saying because you lose the money faster and also have less invested creating returns that you rely on in future, so it loses twice over in that estimation.
I'm going to say it out loud and some may take exception. I'm envious of those that have retired early on 'lower' pensions and are now living the life. But I hope they have really worked it through and are managing carefully (or have bought annuities sensibly) because if you find you went too early there's not a lot of chance to pull it back....you can stay in part time work at 60 far more easily than getting to 70 or 75, realising the pot's running out, and trying to get a part time job after 15 years out of work. I'm naturally conservative with a small c so this is me speaking entirely but I want a safety margin, and then a bit more beneath that myself before I can mentally retire and not worry. I'm 56, my pot is already bigger than many have mentioned above and who have already retired or gone into PT and my plan is to work FT for another 5 or so and then PT. I've smiled and clapped those above that have taken the leap and it's working out now; privately I'm not sure ....but it's their choice, and I'm trying to not sound like I'm pissing on chips, so I've bitten my tongue till now.
As for the 'expect state to pick up care bills later on' / 'if I'm pissing a cheap bed or expensive one, who cares?'
Fair expectation now but we're talking 30-odd years ahead now. Have you seen the direction of travel, I'm not convinced that's a safe assumption for then....and who cares - well, I assume my family would and I don't want them to have their old mum left to rot in the very basic level of state care that might still be available then if I can avoid it. For sure it's OK to say that if you've gone doolally then you want you kids to abandon you and not worry, I couldn't do that to my mum or dad and I don't think my kids will do it to me, and they certainly wouldn't for their mum, no matter what we instructed.
Your outlook on life seems very negative. I prefer (as do some others here) to see the positives instead. If something bad happens later, sure, it won't be great. But I'm not going to dwell on it until that time.
I could drop dead tomorrow (or even on the Pleny in 45min) and my wife becomes a millionaire, where's all the point me having all that money if it just buys me a nice funeral
You say negative, I said conservative. Yes, I accept the point even if 'negative' is quite an emotive way of putting it. Maybe I am, I saw the quality of end of life care my Mum got under the state (complex medical, not just care) and it was shit; the coroner's pre-inquest into her death opens today. I have little faith in 20+ years time that the state will be able to provide very much.
Live for today, there might not be a tomorrow - accept completely your right to the opinion and if you're wired to accept that then great. I'm not. I try to enjoy today, but with a cautious eye on tomorrow.
The problem is if you include private care you could be looking at £1000 per week. That will blow up most peoples pensions if it's included in any projections.
TheOtherJohn does indeed have a very cautious outlook, you'll see that in spades on his various threads. But I think his input here is excellent. Any discussion needs two sides and I think he's put his viewpoint across very well.
I never said his input wasn't useful, I just said he's very negative ☺️
I never said you said it wasn't useful ,😆
etc
OtherJohn’s glass might tend to be half empty when others might judge it half full, but his words are not without merit.
The problem is if you include private care you could be looking at £1000 per week. That will blow up most peoples pensions if it's included in any projections.
Yes, if this is part of people's retirement strategy absolutely nobody will bother saving for retirement. Property will hopefully cover care costs for most of us.
Another angle to planning, has anybody looked into old schemes they might have been part of in their youth but never really noticed? I had a couple of jobs either side of joining the Navy that I can't remember if I was part of schemes or not. I've had probably the last 23 years at 2 companies and I'm on top of the those.
Anybody gone searching for older schemes? How did you find them?
Agree it’s good to see a variety of perspectives. When I posted up the other week to see how folks were getting on with early retirement at about 60 and pots more around the 500k than the £1M target often quoted that was exactly what I was looking for.
This thread remains extremely useful as I navigate the early months of my own early retirement with a pot around the number I asked about, so grateful for all the thoughts.
Worth checking this video out if you are thinking of an early exit but caught by the NMPA change to 57.
After watching it last night I found out my Aviva pension has the PPA clause which means I can draw from 55 👌
Not sure if I'll be in a position to do that but it's great to know it's an option. I was assuming I'd be fully caught by the NMPA change but it turns out I'm probably not
Thanks for highlighting - annoyingly I fall into that middle gap - Born May 1972 and planning to retire at 55!
I had presumed that as I was below 57 at the implementation date I would be ok (guess I might still be from the video) but I'm also going to contact pension providers to see if a PPA.
To make it even more annoying I know my employer is currently thinking of changing providers!
To make it even more annoying I know my employer is currently thinking of changing providers!
Yeah I saw that in one of the comments underneath the video. I guess it would only matter if the employer is somehow moving all previous funds to a new provider rather than just starting paying new funds into a different provider.
It's your pension after all, so I'm not really sure how they would have jurisdiction over moving the old pot which could affect your rights....but I'm guessing here really.
Back to care and care homes...much is made of this aspect of getting old but it really is worth bearing in mind that out of the 11 million over 65s....441k are in care homes. (It has decreased over time...I recall a solicitor telling my mother and I...when asked about putting her 'average uk house value' house in 'trust, that 5% go into care...so in 2006 my mother had a 95% chance of avoiding it....she actually spent 5 yrs in one)
^^^ on that point, when going through numbers and scenarios with my IFA, he suggested that the majority of very elderly folks that go into care last less than a year..
all very depressing nonetheless.
Thanks for highlighting - annoyingly I fall into that middle gap - Born May 1972 and planning to retire at 55!
I had presumed that as I was below 57 at the implementation date I would be ok (guess I might still be from the video) but I'm also going to contact pension providers to see if a PPA.
To make it even more annoying I know my employer is currently thinking of changing providers!
When my employer did that, our existing pension stayed as-is, and I started contributing to the new one.
At that point we had the option of either porting the existing pot to the new one or just leaving it 'dormant' (dunno what the right word is) as a seperate pot
Yeah I'm minded to ignore the flip out of potential care home costs and hope (and/or ensure) I go out with a bang rather than a whimper
^^^ on that point, when going through numbers and scenarios with my IFA, he suggested that the majority of very elderly folks that go into care last less than a year..
all very depressing nonetheless.
It does seem unfair, as in it really hits modest estates hard... estates of low value dont get hit, rightly, and estates worth millions can absorb or maybe even avoid some of the cost with financial planning..
but for those in between, a long spell in a care home can quickly decimate the estate.
When my employer did that, our existing pension stayed as-is, and I started contributing to the new one.
At that point we had the option of either porting the existing pot to the new one or just leaving it 'dormant' (dunno what the right word is) as a seperate pot
We just had our UK work pension scheme move provider. First, new contributions were into the new provider’s ‘lifestyle’ fund and then the whole pot from the previous provider’s was moved. The whole plan and each stage were concisely communicated.
New provider has a wider range of fund options including several ‘lifestyle’ choices defined by expected retirement year.
a much better platform, slightly lower platform fees, more fund/investment choice, seemingly similar otherwise.
on that point, when going through numbers and scenarios with my IFA, he suggested that the majority of very elderly folks that go into care last less than a year.
Mrs DB’s mother went into a care home with the proceeds of her house sale funding her care - she’s still there 5 years later and the £500k nearly gone.
on that point, when going through numbers and scenarios with my IFA, he suggested that the majority of very elderly folks that go into care last less than a year.
Mrs DB’s mother went into a care home with the proceeds of her house sale funding her care - she’s still there 5 years later and the £500k nearly gone.
Yep, mrs_oab's granny went onto care home and £350-400k was spent, even my gran in Scotland (where funding covers personal care) needed all sorts for 6 years in the dementia unit. I guess it's a cost of life and none of us should assume the state will pay....
My father (84) is of the view that somehow his children will pay for a care home..... It's going to be a shock to him shortly. 😞
Regarding lifestyle funds, just be mindful that the flipside of the fund share proportion moving towards safe “cash” as you near retirement, also means growth is likely to stagnate.
Care home costs are high, state funded care homes are paid at a lower rate than costs therefore are subject to corner cutting
Regarding lifestyle funds, just be mindful that the flipside of the fund share proportion moving towards safe “cash” as you near retirement, also means growth is likely to stagnate.
Said earlier on but with people having potential 20-30 year retirements, you don't need to move funds to 'safe' investments when you retire, you want it to continue to grow, as the market will do over that period.
What you do need is for a couple of years to be held in safe investments / 'cash' so if there is a market crash (and in 20-30 years there will be, at least one) you don't have to sell shares at rockbottom prices and can use the cash in the meantime.
Frankly there is no way to adequately prepare for potential care costs.
My uncle died last month - he was in a £1900 per week dementia home in Glasgow. There's no amount of saving that would realistically fund that for any length of time.
I don't have the exact stats to hand, but it is roughly 1 in 4 of us will require residential care, and with an average "stay" of 6 months. It's the territory that ought to be straightforward to price, and build a suitable insurance product for (and indeed the govt expected insurance companies to do so), but noone has brought anything to market. I expect the uncertainties around future costs are too great for a commercial player. So it is down to an unhealthy combination of self-funding, home equity, state funding and optimistic hope, for each of us.
Even partial care is hugely expensive. £20ph for a direct relationship with a carer. £35-£40 ph through a care agency.
£1,000 per week for a live in carer (plus "call out" costs).
Insurance for care home fees exists but no-one buys it, because they are in denial, or just don't want to pay for it. Until it's too late.
Logan's Run approach starting to look quite appealing now.
Not sure if this is the right place for this, or if I should start a new thread, but one of my old pension schemes is currently 'on the road to buyout' and has a surplus left over. The administrators want to return this to the company I worked for, whereas I can't see why any surplus shouldn't go back into the pot. I suspect I'm missing something here, but googling it has been as useful as googling things has become of late...
Not sure if this is the right place for this, or if I should start a new thread, but one of my old pension schemes is currently 'on the road to buyout' and has a surplus left over. The administrators want to return this to the company I worked for, whereas I can't see why any surplus shouldn't go back into the pot. I suspect I'm missing something here, but googling it has been as useful as googling things has become of late...
I take it its a Defined Benefit scheme not a Money Purchase? If so, buyout costs have reduced significantly over the past few years due to high gilt yields. The trustees of the scheme only need to purchase equivalent benefits so any surplus would be returned to the employer as thgis is their reserve for the pension liability and the buyout psses on that responsibility to the insurance provider.
There is no "pot" for you in a DB scheme. There is a promise to pay you an amount of income in retirement, based on salary and tenure.
If they are going down the buyout route, then typically an insurance company takes over the obligation to pay you in the future, and the company makes up any shortfall (or gets any surplus).
There is no difference to you and your future pension income, other than a transfer of credit risk from trustees (/sponsoring company) to the insurance company. In all cases, these are underwritten by the Pension Protection Fund.
Good question, which I'll need to find the answer to. It's unhelpfully called the 'Retirement Savings Fund 5:15' and the letter I've received says it's just under a billion , which made me (rightfully?) think it was an actual, existing, pot...
If that's the nominal value of your pot, or your bit of the pot, you are officially quids in! (It probably won't be, unfortunately for you)
🤣 🤣 🤣
I'm planning in care costs for last couple of years of life, basically £1k a week at current value. If I need more than that will be reliant on family/house etc. If don't need I'm sure my kids or tax man will be happy to have it.
Regarding lifestyle funds, just be mindful that the flipside of the fund share proportion moving towards safe “cash” as you near retirement, also means growth is likely to stagnate.
These lifestyle funds were brought in when most people chose an annuity but YOU may prefer to keep a higher percentage in growth assets as you near/enter retirement if you are going down the drawdown route as @theotherjohnv points out.
I like the way you included 'probably' just in case.
If misteralz has a billion pound pension pot that they're broadly unaware of I'll copy the collected works of stw out longhand
Expecting that misteralz is a DB scheme and the WHOLE pot is £1,000,000,000. If that's not the case misteralz perhaps you could spread your enormous wealth around STW rather than horde it like the Sméagol billionaires to be found elsewhere 🙂
A couple of links that turned up yesterday when I saw an invite to some pension awareness ( https://pensionawarenessday.com/ ) things. I expect they've been shared before.
https://www.retirementlivingstandards.org.uk/
https://www.gov.uk/check-state-pension
The 'retirement living standards' one was interesting. Values like these are cited by Which? and various pension providers in their blogs and stuff. This may be the source, from Loughborough University research?
Figure 4 in https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/bulletins/householddisposableincomeandinequality/financialyearending2024 provides some perspective for the disposable income.
For those still working, this ONS calculator might offer some despair https://www.ons.gov.uk/economy/inflationandpriceindices/articles/areyourwageskeepingupwithinflation/2017-06-20
I kinda thought that the billion would be shared among the hundreds or thousands of folk in the scheme, yes. If I had that much money to share then I'd at least buy stw a working server or whatever.
I like the way you included 'probably' just in case.
Seemed sensible to do so, you know what it's like, there's always some smartarse who likes to challenge apparently defacto statements 🙄
I've just checked the value of the DB scheme I'm in, and it was £835m at the end of 2023, as per the annual statement dated Aug 24. Presumably itll be a little bit more when this year's statement comes out. I'm happy with the ~£22k that it's paying me
2 weeks since there was a new post in this thread!
it used to be so active. Perhaps you have all retired now?
Not an entirely frivolous thread resurrection. I met with my IFA today. Seems, as expected, my combined DC pension pots will be insufficient to support me in the kind of indulgent lifestyle I’d like. Well, not after age 81 or thereabouts. This was a very simple model with uniform income (increasing at 2%/year - a magically low rate of inflation!) and adding in full state pension at 67.
Seems that I’ll have to cut my cloth according to my future means. NP, that’s the way and was expected.
discussion with my SO showed they have a high aversion to risk and they suggested that I just buy an index-linked annuity. Can’t say that sounds like a bad idea given our 30+ year history of, advisor-supported, investment products has shown modest gains with occasional shocks (for example, 2008, 2022).
I did wonder about taking, say, 15% of my pot and shifting it to ‘low risk’ options then drawing down on that when needed to provide a flexible buffer while the remainder be used to buy an annuity. There are trade offs to be considered.
Before I break out R to do some modelling, can folks recommend any sites that might support some initial scenario testing with a bit more than either simple drawdown or somple annuity estimations? Wanting to look at the trade offs of pot growth/drawdown combined with different annuity values.
I’ll be looking back through the thread for other inspiration too but if folks have experience, notions, ideas, or opinions on risk averse approaches it’ll be interesting to hear them.
Not sure if this is the sort of thing you want?
https://james-shack.co.uk/retirement-tools
he has a YouTube about them too. https://m.youtube.com/watch?v=Ssi1U6aMCdU
I have used a few online planners, this one is good IMO