Is this OK for retirement?

[Soootired23]

I currently have around £34k in my pot, DH thinks he must have around £24k.

We get deducted around £7.5k every year, which would take us to around £250k by the time he retires, by the time I retire, we'd get at least another £30k. That doesn't take into account the investment piece around pensions, mine is in a mid risk "pot".

We'll be mortgage free in the next 5 years with a house worth £400k. The plan is then to buy a more expensive house (salaries allowing) and then downsize again, so we'll end up with at least another £300k in the bank.

To me that seems enough, but I don't know if I'm being unreasonable.

You've not said how old you are and when you want to retire.

We're 40 and 45, and we plan to work until the state pension starts flowing in (if it does) so say another 30 and 25 years respectively.

Hmm I assume you have DC not DB pensions, the pots seem a little small for 20 years of work so far - when did you start contributing? I would talk to your provider and get a forecast.

I'm mid forties and my current DC pot is £120k and I also have a modest DB pension that will pay out £12k a year from 65, Mr Monkey has a better DB pension that will pay out £25k a year from 60. I don't feel this is overly brilliant and am working hard to add more to my DC pot.

Just my personal preference but I would not rely in downsizing to fund retirement, you may find by 68 you are not keen to lose that extra space or can't face moving.

It is small because I've only worked in the UK for the past 12 years, which is why the funds seem "low".

I have a zero pot for my DC because that will/should come from an inheritance if it doesn't, well c'est la vie!

The whole plan relies on moving to London (which is why we'd end up with a more expensive house) but I'd also be earning a London salary, which at the every least would be 50% more of my current one, but I hope by then I'd also climb to the next step in the ladder.

It doesn't seem a lot to me. It depends what quality of life you want in retirement. The Wesleyan website tells you you'd need £14,400 for a very basic retirement, £31,300 for a moderate retirement and £43,100 for a comfortable retirement all for a single person. https://www.wesleyan.co.uk/pensions-and-retirement/how-much-to-retire

Couples need more but it also suggests the type of lifestyle you might get for each of the above. Worth a read.

So you are relying on moving to London, buying a house in London and then selling it when you are 68 to add to your pot? Feels risky in your mid 40s.

Also if you have both only worked in the UK for 12 years, check you will have paid enough NI to get a state pension.

Yes, basically. There's no real reason for it to not happen. Beyond being able to get a decent job that gives me what I want and is fully remote (which seems unlikely).

We'll probably add more to the pots, eventually, but it's hard to predict how much more we can.

We have a net income of around £5.5k with outgoings of just £2k. BUT we need to do some hime improvements, and a new car soonish. And we like to go on holiday too!

Why would you need a fully remote job if you want to live in London?

What is your bidget for buying in London? How big a mortgage would yoi need? Where do you plan to downsize to?

I would suggest running some actual figures.

The would be the only reason to NOT move

Current figures suggest that a pension pot of that size would give an annuity of £12K - £13K (presumably split between you?). So at 67 (if the pension age stays the same) your dh would get about £6K per annum, plus his state pension. Then when you retire your total pension payouts would be around £36/37/38K between you. And you would have to pay a small amount of tax.

Can you live, day-to-day on that amount, covering all bills and routine costs (car, food, insurance, council tax etc). What about personal spend? A haircut, clothes, Christmas and birthdays?

You might also have some capital from downsizing, which would presumably pay for luxuries and unplanned expenses, such as holidays, eating out, major repairs. If you did have £300K of released capital, wise investment might give you about £10K+ per annum without eating into the capital sum.

That's all at today's figures. No-one can predict how that might change.

Fort some couples £36K per annum for all routine expenses, plus £10K per annum for luxuries would seem like a fortune. For other couples it would require major cutbacks. Only you can know how that fits with your expectations and habits.

Rule of thumb is around £250k of capital for a £10k annuity. You need to decide what sort of retirement you want and work back from there to what level of saving you need to be doing now to achieve that

What lifestyle do you have/want? That will determine what income you need from retirement.
It my be worth getting some advice on what to aim for and what you need to do to get there.
You've got time, it might helpful to look at contributions as a percentage of income to judge if it's enough. The rough rule of thumb is you need to contribute half your age when you start paying in - i.e. if you start at 30 total contribution, including employer would be 15% of income.

Nobody here knows if that will be enough or not. Half the response on here will say they will be on the breadline and feeling the pinch with their £2m property empire funding retirement and the other half will be people who rent, are approaching retirement and have about £20k in their pot.

This is so true.

I thought I was doing ok - or at least doing my best in my own circumstances - but recently some of the threads on MN about finances and retirement have made me feel really depressed. Lots of really smug posts from people who will be retiring at 50 with ££££. Not very helpful to anyone.

That would be a massive dip in our current lifestyle , saving all of that would lead to a miserable life IMO.

We basically did everything in reverse, but we're fortunate that I have a highish salary and decent career prospects and also inherited enough to be almost mortgage free.

If everything fails we have the plan B of moving to Mexico.

I know everybody says to not count on the state pension, but that's the key to our plan.

Mainly we just want to be able to go to the pub once a week, have a car, pay the basic bills, and go somewhere warm once a year. Nothing outrageously fancy

For reference, I recently retired at 59 with a pension pot equivalent to £700k. This gives me a pension of around £40k pa. I have paid NI ( self employed) so will receive state pension at 67. I’m still working one day a week and DH is drawing down his private pension until he reaches state pension.
Once we are both over 67 we will have an annual income of around £60-70k.

For this though I have been paying into a pension for 35 yrs at a % averaging 10% of my superannuable income, which at times was over £400 a month. I am still contributing to a small private pension while I’m working for tax purposes.

My advice would be to speak to a good financial adviser in order to get the most for your money.
We still have a DS at uni which is why I’m still working, once he has completed his studies then I will retire fully. We know we can manage on our current income, the earned part is purely to support DS. We also have a healthy amount in savings which we have been using to replace household appliances and generally upgrading the house. The aim is to reduce our energy consumption and we have nearly halved our energy bills. The last project is to board out and further insulate the loft.

Regardless of the country’s economic future we have given ourselves a huge comfort zone. It may have been at the cost of some luxuries we could have enjoyed in the past but I am now happy that we were cautious. Both of us have had major health problems so early retirement has been a blessing. I’m glad we didn’t stick our heads in the sand and hope for the b st.

It’s easy, when you are young, to think you are going to breeze through to retirement age, but shit happens. I didn’t envisage being diagnosed with breast cancer at 57 or that my DH would have a stroke 2 months after I completed treatment. It would have been a total disaster for us if we hadn’t planned to retire in our late 50s so both events meant that we could give up work without financial loss.
I have just lost a friend ( 58) she had a brain haemorrhage out of the blue and died within 24hrs. My younger sister died last year from pancreatic cancer aged 56. It’s easy to feel invincible in your 30s and 40s but having lost both parents before they were retirement age we chose to aim for early retirement, just in case.

I actually don't feel invincible (quite the opposite) I've had so many close calls, cancer scares, and chronic diseases that I don't even know if I'll reach that age, thus why I'm trying to enjoy the here and now

A pension pot of almost £60k is nothing. Not enough to live on at all.

I still have 30 years to save!

If you've not been in the UK for a chunk of time, have you checked what state pension you are likely to get? It might be worth looking into buying back years, especially if you have any partial years which might be able to be bought relatively cheaply. The window for back dating this is due to reduce in the next few weeks so I would look quickly.

I get it's a balance but I guess you have to ask what lifestyle compromises now would allow you to make less compromises in retirement. I get it's a challenge that most won't be able to manage, especially if they started later in life. My pension allows me to run predictions on what difference various contributions would make to my pot on retirement and likely annual pension. I've recently been made redundant so I've been looking at what difference continuing to make a small contribution to my pension would do in the long term. I'm looking at paying in around £100 a month about 20% of what was being paid in when I was working (mine and my employers contribution combined). It would make quite a difference to the amount I'd get at the end but it's not going to make a huge difference to our lifestyle now.

If HRMC does its job correcty I still have like a a 5 year cushion (so I think I need to work for another 20 years which is fine, I plan to anyway).

But also there's the chance that we might migrate somewhere else (either the US or Mexico) in 5 years, so until then it's hard to know what the future will bring.

The plan to move to London and then downsize, has been part of the master plan for a while.

Even at 3% (and with no compound interest) we'd get £1500 a month, and we currently live on £2k with 4 DC, so yes, we'll have to scale back but it looks like it could/should be ok, while not strangling us at the present.
If the state pension still exists by then we're absolutely golden.

My partner and I are a few years younger than you and we're aiming for 1m each (not including LISAs) plus a rental property.

I don't rely on the government to pay out anything though, so we are trying to put money aside in different ways too. Certainly wouldn't expect the state pension will exist when we retire.