Can we retire please? How much money do you really need need?

Do it if you are in the mind , we sold up when I was 59 , but, although we can afford to spend more we are still careful what we spend ( I don't mean we are tight) , we probably go out to dinner , and, Motorhome more do a bit more, have a go if it don't work out until Pension age, at least you have had a go, we have never ever regretted it , and we have never had a day where we have been bored with retirement, only thing you might miss is the chatting to work colleagues, but that is more than compensated by meeting others.

Remember you are a long time dead !!
 
nicholsong said:
You can only draw a total of 25% of the pension fund tax-free but that could be split over several years. The rest can nowadays be drawn as lump sums once over age 50/55(?), or as income but both are taxed when drawn out.

Fragle you have not said how much you expect to have in pension payments(employment, State and private) and how much capital you would have on top which could act as both an emergency fund and as a source of additional income.

To me £15k sounds very frugal, but it depends on things like Council Tax rate, motor insurance rate in your postcode etc. Where my house is in London if the two of us lived there the Council Tax would now be close to £3,000. Heating and electricity would probably eat up another £2,000 even if we were away for 4-5 months.

We do not spend all our income but probably spend about £25-30k a year, but that is living quite well, but Poland is cheaper than UK.

Geoff
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My £12000 covers all including motorhome ins/service /rd tax its obviously cheaper up north :xThumb: our council tax is half yours for a 4 bed semi in nice area
 
My last day of work was 7th December last year.
It had dawned on me that if I did not stop working pronto I would end up paying a lot more tax on my pension income when I reach retirement age in a few years.

I wanted to minimise paying tax so with mortgage already paid I have a personal pension to live off now and have taken 25% as my contingency fund, my final salary and state schemes will kick in, in a few years

we have sufficient savings not to actually need an income at present so all the present pension income is really just an exercise in shifting money tax free over the next few years from a taxable pot to a non taxable pot. I suspect I will still get clobbered for some tax when I get to 66 but it will be a heck of a lot less.

As for being retired I have never been so busy ever, and I am a lot fitter and healthier as a result! It’s good fun building vans!
 
Duckato said:
My last day of work was 7th December last year.
It had dawned on me that if I did not stop working pronto I would end up paying a lot more tax on my pension income when I reach retirement age in a few years.

I wanted to minimise paying tax so with mortgage already paid I have a personal pension to live off now and have taken 25% as my contingency fund, my final salary and state schemes will kick in, in a few years

we have sufficient savings not to actually need an income at present so all the present pension income is really just an exercise in shifting money tax free over the next few years from a taxable pot to a non taxable pot. I suspect I will still get clobbered for some tax when I get to 66 but it will be a heck of a lot less.

As for being retired I have never been so busy ever, and I am a lot fitter and healthier as a result! It’s good fun building vans!
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Well you can roll capital at £20k a year(currently) into a tax-free ISA, and let it roll-up tax-free but of course not into a pension, as you have no earned income.

That is roughly what I am doing.

Geoff

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Silver-Fox

About the 25% tax free, rules do change so it would be worth checking what the situation is now.

What we did is took the 25% and invested that in a different pot which pays out free of tax. Part of our income comes from that and the rest from the 75% pot. I transferred as much of my tax allowance as I could to Martin so this year he may end up with £10 tax to pay.
 
Now we no longer work for our bread we are busier than even and need to keep a diary.

What I love is the freedom to do what I want when I want and actually achieve some of the things I always wanted to.

Next year we already have bookings for January, February, March, April, May, June and August .......... I'm not sure how we had time to go to work!
 
nicholsong said:
Well you can roll capital at £20k a year(currently) into a tax-free ISA, and let it roll-up tax-free but of course not into a pension, as you have no earned income.

That is roughly what I am doing.

Geoff
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Isn't there an amount of£3600 you can contribute to a pension even if you have no paid work? Maybe they've changed it.
 
Neilfg said:
n and (to be polite) not fully clued up on it, get advice. Personally I would speak to the various organisations first Pension Advice Service, Pension Wise (Citizens Advice) in the first instance.
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These give very basic and simple guidance and will guide you as I have to take professional advice from an authorised and regulated financial adviser, as they are not authorised to give client specific advice, just guidance.
If as said by Neilfg, you're really not clued up at all then nothing lost from trying these as you must at least start somewhere!
 
My pensions guy said I have enough money to retire next week!

Then he said you will have to start working again the week after???

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The Wino said:
Isn't there an amount of£3600 you can contribute to a pension even if you have no paid work? Maybe they've changed it.
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It is 2880.00 paid into the pension and the government added tax relief brings it up to a contribution of 3600.00, even if no income. Not entirely sure the circumstances when you would want to do it :unsure:
 
Neilfg said:
It is 2880.00 paid into the pension and the government added tax relief brings it up to a contribution of 3600.00, even if no income. Not entirely sure the circumstances when you would want to do it :unsure:
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Depends on how cash you have if you both do it you could protect 7200 a year from IHT and still access it layer if needed. The making up by the government is also valuable if you draw it later and are below the level to pay tax.
 
Fragle said:
Help. We are looking for some real world advice on if we are near or have already reached the point of retirement.
I have 8 years to pension age the better half has 2 years and both of us have had enough of being beholden to work. The better half has a few issues we feel its time to enjoy life.

Being very lucky to have paid the mortgage and the motorhome and the bills are just everyday stuff from having a property. We don't really want to full time so having done the maths I think we can do it:clap2:

Ive broken everything down that we can think of insurances, services to car and motorhome, gas electric etc multiplied and divided and computer says yes it can be done. Just.
Happy days.
But the question is? Is there an amount, a real world figure people have found they require. A couple we saw a few weeks back said friends of them had set a target of £15000 per year to live off and only spent £13000. This seems to match our figures. So is this figure realistic? Do you already live on a smaller budget?
New decade new life:xThumb: Any advice is helpful
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if you want me to provide you with a full cash flow forecast no problem this will give you a better picture of whether your money will last as long you want it to. I am soon to be retired Independent Financial Planner. I have done this exercise for many people who wanted to break the shackles. Send me a private message.
 
The Wino said:
Isn't there an amount of£3600 you can contribute to a pension even if you have no paid work? Maybe they've changed it.
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You are quite right Oh Learned one. I did know about it but it had slipped my memory. But I think one cannot claim tax relief on those contributions, can you?

If no tax relief then I would prioritise ISAs, being more flexible, and probably very few in retirement have funds to do £20k into ISA and £3,600 into a pension.

Geoff

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Lenny HB said:
Sounds a bit low to me I would say a minimum of £20k and if you want a few holidays a bit more.
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I think 20k is quite a lot to expect to have -I am sure a lot of people manage on a lot less....maybe depends on your lifestyle :)
 
nicholsong said:
...of course not into a pension, as you have no earned income.
Geoff
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Mrs mikebeaches and I both have no 'earned' income as pensioners. BUT we both make a net contribution of £2,880 per annum to our SIPPs (self invested personal pensions). And the tax man kindly adds £720 each year, making a gross contribution of £3,600 pa.

Not a huge sum, but it all adds up over the years and coupled with decent investment performance, usefully boosts the value of the pots.
 
Jenmelmar said:
I think 20k is quite a lot to expect to have -I am sure a lot of people manage on a lot less....maybe depends on your lifestyle :)
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I can't knock it and if you have that amount great. to be honest I don't think I could face another year full time work.
The quote of "More time less money less time more money" is very true
 
mikebeaches said:
Mrs mikebeaches and I both have no 'earned' income as pensioners. BUT we both make a net contribution of £2,880 per annum to our SIPPs (self invested personal pensions). And the tax man kindly adds £720 each year, making a gross contribution of £3,600 pa.

Not a huge sum, but it all adds up over the years and coupled with decent investment performance, usefully boosts the value of the pots.
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For those who have not used up their annual allowance over the last 4 years there is the possibility that you can pay a lot more than the £3600 gross for one year.

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Jenmelmar said:
I think 20k is quite a lot to expect to have -I am sure a lot of people manage on a lot less....maybe depends on your lifestyle :)
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I managed on a lot less than that while I was still working part-time in the run-up to getting a State Pension.

It got me used to a frugal way of life. Living on a small pension income meant no change of lifestyle except the removal of work itself. I have no desire to go back. Work sucks.

Events scuppered my detailed financial plan to retire at 55. Fully costed spreadsheets turned out to be utterly wasted!
 
nicholsong said:
...But I think one cannot claim tax relief on those contributions, can you?

If no tax relief then I would prioritise ISAs, being more flexible, and probably very few in retirement have funds to do £20k into ISA and £3,600 into a pension.

Geoff
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As mentioned, 'tax relief' is applied - even for non tax payers - in the form of a contribution from the Government.

And I agree, whilst ISAs are very useful and flexible, another advantage of pension savings is that - under current legislation - they sit OUTSIDE the inheritance tax net! ;)
 
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Otter Spotter said:
For those who have not used up their annual allowance over the last 4 years there is the possibility that you can pay a lot more than the £3600 gross for one year.
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Really? Even for those with no earnings?

You have to be careful that HMRC do not consider amounts above £3600 as ‘recycling’.

Ian
 
Otter Spotter said:
For those who have not used up their annual allowance over the last 4 years there is the possibility that you can pay a lot more than the £3600 gross for one year.
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I must admit, I wasn't aware of that. But since I haven't had any 'earnings' for nearly ten years, not sure if it would apply?

And would the 'lot more' you refer to still benefit from tax relief?
 
Retired 6 years ago at 60 with 2 private index linked pensions yielding around £1600 a month after tax. Own home, no mortgage and around £120k in a savings pot. The biggest unavoidable bills are energy and council tax, everything else you can juggle.

So... lucky sod you might think and well set up for the rest of life except that 2 years later my wife of 43 years passed away, having been too I’ll to enjoy our retirement.

Luckily I have found new love, the pot afforded a lovely motorhome with plenty left for contingencies and the state pension that kicked in a year ago provides a useful boost every 4 weeks so no real money worries and life is good again. As others have said, you don’t know what lies ahead so just go for it.... you will find a way (but for the same reasons keep a contingency pot).

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In the year you ‘finish work’ you can still do carry forward of unused relief using the last 3 years un-used relief.
Recycling is only relevant if you are already drawing ‘pension’ income, but if you haven’t started drawing, then not an issue.
 
Fragle said:
Excellent advice everyone.
Ive worked out our expenses at £12000 for the year. (all current bills) that also includes £100 per week for food. ( drink a little no smoking)

£6000 per year for extras until pension kicks in at the full rate as we both have full contributions.
The motorhome is new (third van) and we have no intension of changing again. car is ok and no need to replace.
As we have no need to get people in to do any work. I do it all fortunately.
We are looking at the £6000 really as back up and holiday costs. Being someone who would generally use free aires whenever possible I think this may well be enough :xThumb:
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Dont get caught out, just because you have enough years in doesnt mean that you will get the full pension.
I was reading a post on the caravan forum that somebody retired early from the police force and thought that because he had the years in that he would get the full pension.
But when he reached old age pension age he was told that he wasnt going to get the full amount as he hadnt paid any stamp for the last couple of years. They told him he could pay a lump sum in and get the full amount or have a reduced monthly pension.

Peter.
 
Well I’m 70 retired on only the state pension, I doa few bits an bobs for cash. That keeps us going. We’ve had 10 weeks away in the van, mainly Holiday Rallies(cos they are cheap) had a fortnight in Menorca and just had a tinsel an turkey holiday ( don’t ask). We spent this year about 13500.but with no savings or margin of error. It can be done if you are careful. :xThumb::xThumb::xThumb:
 
I avoided paying 40% tax rate by paying any extra into additional pension. That way my income when I was at work was reduced, so I learnt to live on less, and my pension now retired is much increased. In fact I take home more now retired than when at work. And happy that the taxman has helped me so much!!
 
WASPES said:
Dont get caught out, just because you have enough years in doesnt mean that you will get the full pension.
I was reading a post on the caravan forum that somebody retired early from the police force and thought that because he had the years in that he would get the full pension.
But when he reached old age pension age he was told that he wasnt going to get the full amount as he hadnt paid any stamp for the last couple of years. They told him he could pay a lump sum in and get the full amount or have a reduced monthly pension.

Peter.
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Thanks. Already checked with pensions. For me as of April this year I'm all covered even if I don't work again according to them. Every cloud and all that :xThumb:

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