Enjoying Retirement

[LeoSayer]

Jon39 said:

Considering Inheritance Tax - there is set amount allowable for gifting, but I think that can be increased, if the amount can be gifted as expenditure from normal income.

Are you able to comment on that point?
Would it be correct that if only half retirement income was needed to live normally, then half could be given to grandchildren without tax implications ?

That is my understanding provided it is a regular payment. Link with details below.

https://www.tilney.co.uk/news/how-do-i-make-regula...

[Shnozz]

Welshbeef said:

Shnozz said:

GT3Manthey said:

Shnozz said:

Remember that PH isn't representative of society as a whole. There are many out there living off state pension alone and certainly over here in Spain, many pensioners living extremely well off that pension alone. Add in a private pension and you can live like a King (of a less wealthy nation).

Cheaper to live in Spain than in the UK do you think ?

Oh without a doubt. However, I do see a few living in the UK off a state pension that do ok - albeit have to count every penny. The point I was making is that you can elect to live somewhere else, whether cheaper parts of the UK or elsewhere, where your money goes further.

To live somewhere outside of the UK you need a visa/citizenship.

And?

[GT3Manthey]

Shnozz said:

Oh without a doubt. However, I do see a few living in the UK off a state pension that do ok - albeit have to count every penny. The point I was making is that you can elect to live somewhere else, whether cheaper parts of the UK or elsewhere, where your money goes further.

The plan is to live further away & not be travelling to London.

I’ve done the journey to the office for nigh on 40 years now and can’t tell you how sick of it I have become.


I suppose most ask themselves if they can afford to retire and sit crunching numbers for a good while. It’s the major factor in pulling the pin I guess.

We’ve asked ourselves what we want in retirement. We’re not bothered about travelling enormously , more interested in seeing more of the UK .
Time together & spent with family is very much the key for us and local leisure activities such as golf, gym and walking .

When I ask my friends if 5k a month is enough they almost get angry with me !

Only real ongoing kids payment will be with daughter at uni but I’ve thought about using the entire loan facility for this both fees and accommodation.


My want to retire is so great I’m sure we can make adjustments to make it work

[plenty]

omniflow said:

The reason why I posted that is because if you're no longer working, you're probably not hammering 7 bells out of your monthly mobile phone contract and so can switch to a cheaper deal without any downside. It's not a case of tightening the belt, it's more a case of eliminating unnecessary expenditure.

I find I spend less money when I'm working hard (because I've got less free time to spend it).

[gotoPzero]

Bernie_78 said:

usn90 said:

Some of these projected funds scare the life out of me, especially when I look over at my pot and projected sums.

I’ve recently “moved up” to just below average wage, have the workplace pension with employer contributions, long term partner with nothing at all in her pot as she doesn’t earn enough to qualify for a workplace pension.

As long as my partner qualifies for the state pension, combined we will be ok I think, but I don’t think I’ll be able to work my role up till state pension age, nor would I want to, I’d like to retire at 60, so 28 years to go, but I just don’t see my current projection giving me the funds required.

Pistonheads is not at all representative of the nation as a whole - but I'd suggest using that fear to drive some action. I did (and I am 10years older than you for context) and found a local firm that actually offers a free consultation for the company I work for, how did I find out? by asking people who retired early at the same company I'm in. You're not late, or early, but I wish I'd started at 32 so you're "ahead" of me if that helps.

Yep you are lucky in that you are a) young and b) have figured out that you need to save more.

You also have a good idea of what age you want to stop work which is also a bonus.

So now its a case of do some simple maths and start saving.

Compounding is your friend and don't look at the big number because it will put you off. Look at the big number as what you will have - not what you need to save.

Also starting now means you have to save less over a longer time. Remember life is not a straight line either but putting in money early takes the peaks off the tops and helps the dips not be quite as low IYWSIM.

[plenty]

GT3Manthey said:

I’ve done the journey to the office for nigh on 40 years now and can’t tell you how sick of it I have become.

I went self-employed a couple of years ago and never looked back. I work from wherever I want, plan my days so that my meetings are later in the day - I'm not an early bird and now I can pretty much get up whenever I want (I typically don't start working in earnest until 10 am).

No corporate or office politics, no manager or people to manage. I work with people I like on work I enjoy doing that I'm good at. I'm making pretty close to what I made in my corporate days.

I appreciate I'm pretty damn fortunate and not every line of work can offer the same opportunity.

[Jon39]

LeoSayer said:

Jon39 said:

Considering Inheritance Tax - there is set amount allowable for gifting, but I think that can be increased, if the amount can be gifted as expenditure from normal income.

Are you able to comment on that point?
Would it be correct that if only half retirement income was needed to live normally, then half could be given to grandchildren without tax implications ?

That is my understanding provided it is a regular payment. Link with details below.

https://www.tilney.co.uk/news/how-do-i-make-regula...

Thank you Leo.

I need to check on the word 'regular'.
I have begun building an equity portfolio for grandchildren, with holdings in designated accounts.
Not regular gifts as in every week or month, but more of annually regular, if/when share prices look attractive to add to their holdings.

[gotoPzero]

GT3Manthey said:

When I ask my friends if 5k a month is enough they almost get angry with me !

I suspect its because its a very healthy retirement income and for most people they would never have this level of income in retirement.

Also, you would think that someone who has that type of wealth would have a better understanding of their personal finances to the point where you would not need to ask (not a dig btw) and as such they would just carry on and not have to ask.

However, IME, most people dont actually have a great understanding of pensions and investments and can become a bit detached from the true cost of living too. Its something that we dont really openly discuss a great deal. For the reasons above.

As for your situation, I think you are going to be fine. I think finances are the least of your concerns. I think the mental shift from working in the city to not working might actually be your biggest hurdle.

If I were you I would be making the most of every day and enjoying myself as much as possible. GL!

[GT3Manthey]

plenty said:

I went self-employed a couple of years ago and never looked back. I work from wherever I want, plan my days so that my meetings are later in the day - I'm not an early bird and now I can pretty much get up whenever I want (I typically don't start working in earnest until 10 am).

No corporate or office politics, no manager or people to manage. I work with people I like on work I enjoy doing that I'm good at. I'm making pretty close to what I made in my corporate days.

I appreciate I'm pretty damn fortunate and not every line of work can offer the same opportunity.

I can’t work remotely in the business I’m in or work varying hours sadly but I’d love to change to something that enable this.

May I ask what you do work wise ?

[plenty]

GT3Manthey said:

I can’t work remotely in the business I’m in or work varying hours sadly but I’d love to change to something that enable this.

May I ask what you do work wise ?

Consumer/customer insights (market research) for tech and financial services. Of course not all fields lend themselves as easily to being self-employed, but I know lots of people across many occupations who have successfully made the jump to being consultants.

Employers are also waking up to the need to offer more flexibility - in tech and FS it's not unusual to find senior roles that are remote based with perhaps the need to visit HQ once a month at most.

[LeoSayer]

Jon39 said:

Thank you Leo.

I need to check on the word 'regular'.
I have begun building an equity portfolio for grandchildren, with holdings in designated accounts.
Not regular gifts as in every week or month, but more of annually regular, if/when share prices look attractive to add to their holdings.

I'm not an expert, but I'd imagine to make it obvious this arrangement qualifies, the payment should be monthly or quarterly to an account where your grandchildren (or a trust for their benefit) is the beneficial owner.

Does a designated account achieve that? Is the designated account included in your estate?

IM should be able to give some pointers on their sticky threads.

Edited to add...sorry to be blunt but this does beg the question of whether you actively managing your grandchildren's assets is the right thing to do. Seeing as we are discussing inheritance, what happens if you die or become unwell?

Edited by LeoSayer on Thursday 20th January 10:41

[okgo]

It is scary to read this as I think I said on the last thread the OP started on a similar sort of topic. I've just seen that the LTA is around 1m and would only buy you an annuity of about 3k net a month? So those that are talking about far greater sums (adding on the 1k from state I suppose) - is this all coming from private investments separate to that?

Re your friends getting irate, I'd imagine the best bet is asking people who lived like you do today, rather than others. No use you asking someone worth 25 million what they're spending for the same reasons you'd imagine.

I could probably start a new thread but it would be interesting to know if anyone has a rough benchmark of where one 'should' be at age milestones, there doesn't seem to be loads out there on that?

Edited by okgo on Thursday 20th January 10:39

[Shnozz]

okgo said:

It is scary to read this as I think I said on the last thread the OP started on a similar sort of topic. I've just seen that the LTA is around 1m and would only buy you an annuity of about 3k net a month? So those that are talking about far greater sums (adding on the 1k from state I suppose) - is this all coming from private investments separate to that?

I assume these days people do drawdown and rarely buys annuities. Depleting pot is always a bit scary though. Mind you, so are annuity rates whereby £1m only buys you £3k PCM.

I am sure my Dad got about 7% on his annuity when he retired. Lucky bd!

[Wacky Racer]

"Life is what happens to you when you are busy making other plans"

John Lennon.

(He was assassinated six months later)

[UnclePat]

gotoPzero said:

Yep you are lucky in that you are a) young and b) have figured out that you need to save more.

You also have a good idea of what age you want to stop work which is also a bonus.

So now its a case of do some simple maths and start saving.

Compounding is your friend and don't look at the big number because it will put you off. Look at the big number as what you will have - not what you need to save.

Quite correct.

That's why I posted my earlier comment - these threads can be unnecessarily demoralising for some.

Fair play to anyone budgeting to spend almost £100k between two in retirement, but barring something unusual (e.g. inheritance) and net of the big additional expenditures of mortgage, savings etc. that probably equates to a joint household income (gross of Tax) whilst they were still working of £250k or maybe more - clearly that is not the norm for most.

You only have to watch the news to see the pain caused by utility costs at present.

Recognising the realities of saving for the future whilst young is a huge thing - I've always been prudent, but at 32 I certainly didn't provide much thought to it.

Even starting from a pot of zero at 32, saving £250 per month (not too painful if your Employer contributes and you avail of salary sacrifice) with interest of 5% per annum, increasing contributions annually by 1% to partially account for inflation/pay rises, compounds to a pot of circa £200,000 at age 60, or £275,000 at age 65. That's a decent chunk without too much saving pain. Yes, it'll need Drawdown rather than Annuity to get the most from it, and the State Pension will still be needed (hopefully it will still remain), but it's a good base to work from. Everything else is planning & preference, which at 32 leaves plenty of time to mull it over.

I wouldn't get too hung-up about it either - accrue a solid & untouchable 'rainy day' fund, maximise Employer pension contributions if you can, pay in a compromise balance yourself between what you can afford and what you need, lock down household bills & unnecessary spending generally, try and stick a little bit away each month in savings for luxuries / bumps in the road then forget about it and spend the rest on enjoying yourself whilst young and hope to be around to draw a pension later. Not everyone has the interest or means to invest much beyond that.

Edited by UnclePat on Thursday 20th January 10:50

Edited by UnclePat on Thursday 20th January 10:52

[Shnozz]

plenty said:

omniflow said:

The reason why I posted that is because if you're no longer working, you're probably not hammering 7 bells out of your monthly mobile phone contract and so can switch to a cheaper deal without any downside. It's not a case of tightening the belt, it's more a case of eliminating unnecessary expenditure.

I find I spend less money when I'm working hard (because I've got less free time to spend it).

I remember chatting to my Dad when he retired and he said he had a change of mindset one of caution (or fear, depending on how you view it) when he stopped work. It was quite the psychological thing for him when he realised he wouldn't have any income from employment ever again and was then seeing out his life using that pot of money he had accrued. I am sure you would reduce spending in exercising caution rather than living day tod ay spending in the knowledge that the next month a pay cheque comes in.

[plenty]

Shnozz said:

plenty said:

I find I spend less money when I'm working hard (because I've got less free time to spend it).

I remember chatting to my Dad when he retired and he said he had a change of mindset one of caution (or fear, depending on how you view it) when he stopped work. It was quite the psychological thing for him when he realised he wouldn't have any income from employment ever again and was then seeing out his life using that pot of money he had accrued. I am sure you would reduce spending in exercising caution rather than living day tod ay spending in the knowledge that the next month a pay cheque comes in.

That's a very good point.

I'm cautious by nature and can see me becoming more so once incomings reduce. The hard part for me will be persuading the better half (who is fully dependent on my income and has become accustomed to a certain standard of living) to also pare back her outgoings...

[anonymous-user]

UnclePat said:

Quite correct.

That's why I posted my earlier comment - these threads can be unnecessarily demoralising for some.

Fair play to anyone budgeting to spend almost £100k between two in retirement, but barring something unusual (e.g. inheritance) and net of the big additional expenditures of mortgage, savings etc. that probably equates to a joint household income (gross of Tax) whilst they were still working of £250k or maybe more - clearly that is not the norm for most.

You only have to watch the news to see the pain caused by utility costs at present.

Recognising the realities of saving for the future whilst young is a huge thing - I've always been prudent, but at 32 I certainly didn't provide much thought to it.

Even starting from a pot of zero at 32, saving £250 per month (not too painful if your Employer contributes and you avail of salary sacrifice) with interest of 5% per annum, increasing contributions annually by 1% to partially account for inflation/pay rises, compounds to a pot of circa £200,000 at age 60, or £275,000 at age 65. That's a decent chunk without too much saving pain. Yes, it'll need Drawdown rather than Annuity to get the most from it, and the State Pension will still be needed (hopefully it will still remain), but it's a good base to work from. Everything else is planning & preference, which at 32 leaves plenty of time to mull it over.

I wouldn't get too hung-up about it either - accrue a solid & untouchable 'rainy day' fund, maximise Employer pension contributions if you can, pay in a compromise balance yourself between what you can afford and what you need, lock down household bills & unnecessary spending generally, try and stick a little bit away each month in savings for luxuries / bumps in the road then forget about it and spend the rest on enjoying yourself whilst young and hope to be around to draw a pension later. Not everyone has the interest or means to invest much beyond that.
]

Yeah, excellent post. There’s a wide range of earnings and wealth on the forum so any reactions that inform one’s own decision making have to be taken in context.

[GT3Manthey]

anonymous said:

[redacted]

Very similar numbers to me and allow £1500 a month on top to eat out & have spare cash to build up

[anonymous-user]

okgo said:

It is scary to read this as I think I said on the last thread the OP started on a similar sort of topic. I've just seen that the LTA is around 1m and would only buy you an annuity of about 3k net a month? So those that are talking about far greater sums (adding on the 1k from state I suppose) - is this all coming from private investments separate to

I can only speak for my own approach but I get money in this order.

1. Drawdown from a pension pot using an UFPLS, drawing enough to use up my 20% band (because I will be a 40% payer when I reach pension age).

2. Dividends and interest, both small enough to be covered by their own allowances or the starter rate.

3. Capital gains up the the 12k allowance but only if there are any stocks I really want to sell.

4. If needed straightforward cash withdrawals from deposit accounts.

So, all based on tax efficiency really.