Investment & Investing

Is that because you have been lucky or is that what someone could reasonably expect?

I think according to the MSE article I have been lucky.

It’s all been a bit quiet over there.

Sshhh! It's a secret.

Good for you!
Was wondering if I had missed something.

I know there are multiple pension calculators out there that can calulate approx what you will accumulate as pension if contributed £XXXX monthly/annually etc

What I am struggling at is to figure out how much money I would need when I retire; still a n00b around this stuff but:

1. What is 'retirement'? When I decide to stop working freelance or PAYE and the next day I can access the funds given that I am above state retirement age?
   
2. Our current outgoings are going to go down as we grow older (at least thats the optimistic scenario), I can foresee childcare costs going down with quite a bit of detail in my head but what about rest? Will my mortgage finish in its term or before?
   
3. What sort of expenses go up as you grow older? Healthcare?
   
   

Basically I am happy to save for retirement but would be nice to 'understand' the goal.

how much money I would need when I retire

There was a report on this the other day. It was something like £17k per annum for a single person, £30k for a couple.

In today's money.

What sort of expenses go up as you grow older? Healthcare?

You won't be working that much, so you'll have to find something to do instead, and this will cost you money, probably.

£17k per annum

fucking hell, even if I ride 105?!

Our current outgoings are going to go down as we grow older

ok lol

£17k gets you Claris

you'll have to find something to do instead, and this will cost you money

posting is free

they wont?

I was thinking every remortgage brings down the monthly mortgage outgoings with LTV changing (our next one is 2023 and we will most likely go from 80% LTV to 60%)

Not having any more children and not going to pursue private education for the kid either so once nursery phase is over I'd imagine its slightly less for next few years and keeps going down?! Dunno I have no idea.

I'd class 'retirement' as when you stop working, and start withdrawing from your savings / investments / pension rather than contributing.

I think the rules on personal pensions are that you can start withdrawing 10 years before state pension age.

If you want to retire earlier than this you'll also need ISA investments to bridge the gap.

https://networthify.com/calculator/earlyretirement is a good calculator. I'm budgeting £35k / year in today's money to have a comfortable mortgage-free retirement. That comes out to £2.5k / month after tax, which is tons.

Assuming no illness, bad investments, societal collapse etc

interesting thank you

That calc doesn't take into account state pension. But it may be best not to count on getting that.

It's also a bit confusing since it asks for income after tax, which is irrelevant since the only thing affecting the time to retirement are your savings per year vs. your estimated expenses.

Also don't know how that would be affected by salary sacrifice pension contribution and employer benefits.

You can ballpark things by looking at the annuity rates: https://www.hl.co.uk/retirement/annuities/best-buy-rates

£100k in your pension pot would buy you a static £3887/year income for life if you bought it now and were age 55.

So if you wanted £35k/year for life (non-inflation adjusted) and want to retire at 55 you'll need something in the order of £900k in your pension pot by then at today's prices. You'll still be 12 years away (at least) from a state pension at this point.

Obviously you'll need more than that as you'll want something that is going to track inflation in some way, otherwise £35k/year might be near nothing 20 years after retiring. Although some people retiring early will be using the state pension to top things up once they get to the right age.

State pension age is currently 67. No idea what it will be by the time I get near then, but I expect it to be pushed out to at least 70.

It's also made much more complicated by partners and joint pensions/etc.

A financial adviser is probably the place to start.

I Googled "is anyone still buying annuities?" as I thought they were such a bad deal. But I guess they're very low risk, so could form part of a retirement strategy.

https://www.ft.com/content/feac7950-0d75-47b2-a45f-b4a70ae1cda1

One thing I found interesting is the idea of buying successive annuities in tranches as you get older and returns get higher.

Might be cheaper to check current rates at dignitas.

After you get below about 60% I don't think the LTV impacts that much on the rate.

Darklol

I'll be honest in that I'm kind of ignorant when it comes to pensions, have been in LGPS since 2015 and everyone says it's a brilliant scheme so just plod along with it

Annuities seem like a terrible deal. You should be able to pretty safely withdraw £4k a year and still match inflation if you had £100k of S&S. Then when you die you've got a massive lump of S&S to pass on instead of the annuity which is presumably worthless.

£17k per annum for a single person, £30k for a couple.

Until you need care services.

Then it's more like £17 for 2 months.

Yeah let’s not think about that :(