How does this financial situation look long term…

[Moneyquery]

Delurking for this query

I’m 63 and we rent our home. Not worried about tenancy length. I want to retire at 67 latest but maybe 65.
Salary - approx 96k
Partner salary. 33k
Savings: 50k in each of our ISAs and we add 1200 per month between us
200k in sipp currently cash at 4% interest adding 1400 per month in contributions gross I take the extra 20% as take home pay via my tax code as increased personal allowance All stakeholders pension gets transferred to sipp as it leaks money.
30k in easy access savings for cars/kids/emergencies.

I know I’m not skint and I’m certainly not complaining but I worry about the future and if I’ll have enough money to live comfortably. I’d love to buy a house but I think that ship’s sailed. When I look at RIO or interest only I’m not eligible. If I’m lucky and healthy I could have c 350k at retirement. Or am I f@cked?
I’m not interested in providing for my nineties, past lifestyle will no doubt catch up with me at some point.

[borcy]

Do you have a company pension, does your partner?

What lifestyle do you want post retirement?

Do you have any other debts?

[gazapc]

Moneyquery said:

Delurking for this query

I’m 63 and we rent our home. Not worried about tenancy length. I want to retire at 67 latest but maybe 65.
Salary - approx 96k
Partner salary. 33k
Savings: 50k in each of our ISAs and we add 1200 per month between us
200k in sipp currently cash at 4% interest adding 1400 per month in contributions gross I take the extra 20% as take home pay via my tax code as increased personal allowance All stakeholders pension gets transferred to sipp as it leaks money.
30k in easy access savings for cars/kids/emergencies.

I know I’m not skint and I’m certainly not complaining but I worry about the future and if I’ll have enough money to live comfortably. I’d love to buy a house but I think that ship’s sailed. When I look at RIO or interest only I’m not eligible. If I’m lucky and healthy I could have c 350k at retirement. Or am I f@cked?
I’m not interested in providing for my nineties, past lifestyle will no doubt catch up with me at some point.

Well just looking at a basic level that you currently have income of ~£130k, but less than 3 x that in savings/pension, unless you/your partner have other company pensions not mentioned above, you will have a significant step down in income once retired.

Moneyquery said:

I’m not interested in providing for my nineties, past lifestyle will no doubt catch up with me at some point.

Fair enough, but does that also apply to your partner?

[Countdown]

Apologies if this is stating the bleeding obvious but you need to work out how much money you'll need in retirement and then work back from that to see if you're screwed (or not).

[Greshamst]

How much is your rent?

To be honest, given your earnings I would expect you to either own your home mortgage free, or have higher savings. I think you are likely to experience a step down in lifestyle.

[Moneyquery]

borcy said:

Do you have a company pension, does your partner?

What lifestyle do you want post retirement?

Do you have any other debts?

The company pension gets transferred to sipp. If performance improves I’ll look at investing it but for now I prefer the interest. We’re not extravagant but I’d like to travel a couple of times a year for five years or so, mainly Europe.

Debt free

[Moneyquery]

gazapc said:

Fair enough, but does that also apply to your partner?

Indeed It’s one of the things that keeps me awake at night

[Moneyquery]

Greshamst said:

How much is your rent?

To be honest, given your earnings I would expect you to either own your home mortgage free, or have higher savings. I think you are likely to experience a step down in lifestyle.

This level of income has come quite late in life, last 6/7 years.

[Moneyquery]

Countdown said:

Apologies if this is stating the bleeding obvious but you need to work out how much money you'll need in retirement and then work back from that to see if you're screwed (or not).

No need to apologise you’re quite right, sometimes I feel optimistic, sometimes I see my savings dwindling with rent and council tax till it’s all gone.

[greengreenwood7]

did i read that right? you've got 200k in the sipp that's sitting in cash?? ( no investments at all?)

If so, not sure why? unless money is earning a fair bit more than 4% it's going backwards..... whether from inflation/debasement.

as has been said, starting point is what you will need to live on, allowing for rises in rent etc.
as far as house purchase, the other option is equity release, but i think you'd need to be putting down 70% ish ( changes with age), but if you find some change down the sofa, that's an option?

Not to sound condascending, or rude, but you probs ought to immerse yourself into how to safely/sensibly grow your existing pot. From memory 10% growth year compounded approx doubles the principal in 7'ish years. But the past year has been bonkers in certain sectors.

Perhaps with some time invested (your time not 'passing time), you can increase the returns on what you have....and what you'll be adding to your 'pot'.

[mike9009]

I would be adding far more to your pension now. Maybe reduce the ISA too to get the tax savings of the pension contributions. I see little point in taking the 20% saving from the SIPP too as this will be taxed heavily. Unless your current lifestyle demands it.....????? Adding more to your SIPP will have a two fold benefit....

1. It will mean more money during retirement
2. It will get you used to a substantially reduced income when you retire.

If you model a 20 year retirement, you should be able to work out what you will have per annum (roughly). From there you can work out where you want to be and how much you need to put in your pension for the last few working years.


I earn a fair bit less than you and put a similar amount into my pension. Plus I have two kids (10 and 14) to support and I am 'only' 50.

[mike9009]

This site is quite easy to give a guide and try different scenarios for drawdown of capital.

https://www.thecalculatorsite.com/finance/calculat...

I reckon with 350k with 4% growth you should last 20 years on just over £21k per annum. Plus you should get state pension on top.

Means you will need to be quite frugal compared to your current income/ lifestyle.....

[jonathan_roberts]

Your outlook is bleak.

[JackJarvis]

I'd buy a cheap property and prepare for a very frugal life in retirement.

[ATG]

Time to grasp the nettle. Far from a disastrous position. I expect you may decide to work a little longer than you're currently hoping to do to give yourself longer to save, longer for your investments to grow (and as others have said, you likely want to rebalance your investments to have the chance of getting some growth) and the longer you work, the less time your savings have to support you. I'd probably be sticking as much of your income as possible into a pension to maximise the tax breaks.

Edited by ATG on Friday 22 March 17:17

[Armitage.Shanks]

Do you want to keep renting in retirement or buy a house? Depending where you want to live against what you're paying in rent it's still possible to buy a house in a fairly decent area in the Uk for less than £100k.

I wouldn't be renting in retirement especialy being in the hands of a landlord that has control.

[Nemophilist]

if not a house how about a canal boat?

[Shnozz]

I don’t think it’s as disastrous as some make out. There are many folks out there who have spent their lives renting, have no SIPP and aren’t earning £100k PA.

You don’t reply to the question of how much your rent is, but presuming it’s relatively modest and you aren’t living a £100k a year lifestyle with no foundations, I’d be maxing your pension contributions now to both fill the coffers as best you can as well as getting used to life on a much reduced salary, as well as minimising tax. At 65 you’ll have your state pension. Add to that a modest private pension, which with drawdown you can front load slightly to reflect decline in spending the older you get.

It’s a slightly odd situation but, given you say these earnings have only been in the last 6-7 years, be thankful they have increased as it’s given you a chance to salvage a retirement in any form.

[Caddyshack]

I would guess that most of the income your pensions will provide will be soaked up paying rent?

[Shnozz]

Armitage.Shanks said:

Do you want to keep renting in retirement or buy a house? Depending where you want to live against what you're paying in rent it's still possible to buy a house in a fairly decent area in the Uk for less than £100k.

I wouldn't be renting in retirement especialy being in the hands of a landlord that has control.

If you could save enough to meet the post brexit financial requirements I’d be looking for a nice little place in Europe. Much of it gets more for your money, lower cost of living, smaller heating bills and my Spanish council tax for an example is less than 2 months of my U.K. equivalent.