Anyone else not have a pension?

[woohoo]

I'm 43, back in 2010 I started wondering about retirement, and this is my suggestion for you all

. before you "just start" doing some kind of pension savings, the first thing you need to do, is,...

you need to know what size pot you need to retire on

how to calculate what size pot you need to retire on ?

crudely speaking, and this is what I did in 2010, just take a sheet of paper, or an excel, and consider, at today's values, what will it cost you per month in any given year to live the kind of life you want to live when you retire, so I did it like this... per month

Gas Heating bill

Electricity bill

Food bill

Clothes and footwear

Winter holiday

Summer holiday

Weekends away

Fun/Going Out

Petrol/Diesel

Running a car (mot consumables brakes servicing etc)

Owning a car, discounting the cost of a car over 5 years (you need to estimate what kind of wheels you want to be running around in)

Council Tax

etc etc


So on an Excel or sheet of A4, list all of these items on the left,

make a column for months and estimate what each costs per month

then make a column for year and at the bottom write the total of all of these for the year

then, and this is the useful bit, analytics, make a column % of yearly total and for each item
list in it's row in the percentage of yearly total column what this item's percentage of the yearly
total is

you'll then be able to see, from the yearly total, what the % of each item is, and then you can see
the essentials like heating and food, which don't have much room for manouvre, and the less essentials
like the car, and you can play with the numbers, what if I had a cheap car compared to an expensive one etc

once you have played with the numbers and come with a lifestyle standard of living you will be happy to have in your
retirement, then you will know from this sheet of A4, how much $$$ you need per year to live on, let's say for sake of argument in today's money it's 20k gbp per year

Once you know how much you need per live on per year, then you can estimate based upon your ancestor's life expectancy, to what age generally people in your family live to, in my family it's into the 90's

so, you know what you need to live on, you know to what age you need to fund that, and now the magic part, when do you want to retire ?

Let's say you want to retire at 55 (where retirement means choosing how you use your time) then you back calculate from 90 to 55, this means for 35 years you need to support yourself at 20k gbp per year, which means...

and this is the magic part, how much do you need to retire ?

you need, 20k gbp * 35 years = 700,000GBP

and now you see your retirement goal, you need a pot of 700,000GBP or you need to build an income mechanism which will bring you 20k gbp per year

of course you need to keep up with inflation

these are the basics that we should all be doing or have done.

I've done it, I know the numbers.


On a personal note, at 43, having grown up in the UK with friend's fathers seeing their company pensions stolen, having lived through the .com crash, and the financial crash, especially the latter, where we can see that the greatest superstars in the square mile "didn't see it coming", and where during the crash, people saw their investments halve and funds were locked down and people couldn't remove their money...

then speaking only for myself, I would rather lose my money myself than somebody do it for me

In my opinion, history has proven over the generations, in the long run, property, land, houses, apartments is the best underlying foundation of a pension plan and basically, whatever your total wealth, put the highest percentage into the safest investments and the lowest percentage into the riskiest investments

Good luck

Milan.

Well I will be laughing at you and your fancy preparation when I get my robot body in 20 years time. No need for heating, light, house, car and who needs holidays when you just have to charge up from the nearest Tesla Robot Pump.

[SueEllen]

I'm 43, back in 2010 I started wondering about retirement, and this is my suggestion for you all

. before you "just start" doing some kind of pension savings, the first thing you need to do, is,...

you need to know what size pot you need to retire on

how to calculate what size pot you need to retire on ?

crudely speaking, and this is what I did in 2010, just take a sheet of paper, or an excel, and consider, at today's values, what will it cost you per month in any given year to live the kind of life you want to live when you retire, so I did it like this... per month

Gas Heating bill

Electricity bill

Food bill

Clothes and footwear

Winter holiday

Summer holiday

Weekends away

Fun/Going Out

Petrol/Diesel

Running a car (mot consumables brakes servicing etc)

Owning a car, discounting the cost of a car over 5 years (you need to estimate what kind of wheels you want to be running around in)

Council Tax

etc etc


So on an Excel or sheet of A4, list all of these items on the left,

make a column for months and estimate what each costs per month

then make a column for year and at the bottom write the total of all of these for the year

then, and this is the useful bit, analytics, make a column % of yearly total and for each item
list in it's row in the percentage of yearly total column what this item's percentage of the yearly
total is

you'll then be able to see, from the yearly total, what the % of each item is, and then you can see
the essentials like heating and food, which don't have much room for manouvre, and the less essentials
like the car, and you can play with the numbers, what if I had a cheap car compared to an expensive one etc

once you have played with the numbers and come with a lifestyle standard of living you will be happy to have in your
retirement, then you will know from this sheet of A4, how much $$$ you need per year to live on, let's say for sake of argument in today's money it's 20k gbp per year

Once you know how much you need per live on per year, then you can estimate based upon your ancestor's life expectancy, to what age generally people in your family live to, in my family it's into the 90's

so, you know what you need to live on, you know to what age you need to fund that, and now the magic part, when do you want to retire ?

Let's say you want to retire at 55 (where retirement means choosing how you use your time) then you back calculate from 90 to 55, this means for 35 years you need to support yourself at 20k gbp per year, which means...

and this is the magic part, how much do you need to retire ?

you need, 20k gbp * 35 years = 700,000GBP

and now you see your retirement goal, you need a pot of 700,000GBP or you need to build an income mechanism which will bring you 20k gbp per year

of course you need to keep up with inflation

these are the basics that we should all be doing or have done.

I've done it, I know the numbers.


On a personal note, at 43, having grown up in the UK with friend's fathers seeing their company pensions stolen, having lived through the .com crash, and the financial crash, especially the latter, where we can see that the greatest superstars in the square mile "didn't see it coming", and where during the crash, people saw their investments halve and funds were locked down and people couldn't remove their money...

then speaking only for myself, I would rather lose my money myself than somebody do it for me

In my opinion, history has proven over the generations, in the long run, property, land, houses, apartments is the best underlying foundation of a pension plan and basically, whatever your total wealth, put the highest percentage into the safest investments and the lowest percentage into the riskiest investments

Good luck

Milan.

Luckily for me my ancestors all died relatively early and I have a chronic condition so I don't need to save piles and piles of cash.

[woohoo]

Luckily for me my ancestors all died relatively early and I have a chronic condition so I don't need to save piles and piles of cash.

Some people get all the luck - try to hold out for that robot body I was talking about.

[SueEllen]

Some people get all the luck - try to hold out for that robot body I was talking about.

It's not really lucky when all your aunts and uncles start dying off when you are a kid.

[woohoo]

It's not really lucky when all your aunts and uncles start dying off when you are a kid.

Now I feel bad, apologies.

[SueEllen]

Now I feel bad, apologies.

I was going to add more to make you feel worse but that would be starting a pity party.

Anyway apology accepted.

[pjclarke]

Just turned 55, work has been optional, from a financial standpoint anyway, for some time.

Both me and Mrs PJ are old enough to have defined benefit aka final salary pensions, which we were autoenrolled into, me from my first 2 permie roles, she from 20 years in the NHS. They supply more than half our target minimum retirement joint income of > 30k pa. She already claims hers, I will start doing so when it makes sense tax-wise. I'm assuming State Pension will still be around at or near its current value of c£8K pa when I reach qualifying age, which leaves gaps of 8 and 10 years which we can bridge by taking income/drawing down our company pension defined contribution pot of c£300k. Our SIPP and ISAs currently yield 5.2% in dividends on average, so assuming that continues we can achieve the target income without drawing down the capital, just leaving inflation to worry about. In practice we'll prob drawdown some of it for holidays, seeing offspring through Uni etc.

We've paid into a pension of some sort throughout our working lives, I see it as a nobrainer, as a permie you generally get some sort of matched contribution from your employer, as a freelance you can offset the contributions against corp tax. I started stock market investing almost as a hobby and developed a style of HYP LTBH that suits my temperament and has beaten the market every year since I started doing it with proper money. We recently answered one of those ads for Fisher Investments and a nice man came round and explained their 'wealth management' service, but they wanted 1.5% per year plus a 2.25 % 'initial deposit' fee every time you put money in. So I'm going to carry on DIY investing for a while, though I will move more towards low cost trackers as my interest wanes.

For now, buy National Grid!

[SueEllen]

We've paid into a pension of some sort throughout our working lives, I see it as a nobrainer, as a permie you generally get some sort of matched contribution from your employer,

That isn't generally true unfortunately which is why the government rolled out auto-enrolment. Even blue chips were deliberately cutting their matching percentages for new joiners, after they closed down their "final salary" schemes. There as SMEs often didn't have a scheme, and those who did had ones where the employer put nothing into it.

The reason I know is I was caught up in it and having had family and friends' who have had various jobs in the pension industry, it was drilled into me to always join an employers scheme.

as a freelance you can offset the contributions against corp tax. I started stock market investing almost as a hobby and developed a style of HYP LTBH that suits my temperament and has beaten the market every year since I started doing it with proper money. We recently answered one of those ads for Fisher Investments and a nice man came round and explained their 'wealth management' service, but they wanted 1.5% per year plus a 2.25 % 'initial deposit' fee every time you put money in. So I'm going to carry on DIY investing for a while, though I will move more towards low cost trackers as my interest wanes.

For now, buy National Grid!

Thanks already have.

[SeededLoaf]

I've only just started paying into a pension in my mid 30s. It does make complete sense in terms of tax benefits but difficult to let go of that cash for years.. But we all know time flies and you'll be an old fart before you know it

One hopes the private pension age doesn't get increased nor the 25% lump sum scrapped.

Get it in!

[alreadypacked]

Or the pension funds don't get a hair cut.