What are you going to live on when you retire?

ColdWarWorrier

Old-Salt
I was forced into retirement six months ago (see ‘Enforced Retirement’ thread in Old and Bold for details).

Fortunately, I was mortgage and debt free at the time and moved from the South East of England to the Scottish Borders. The plan was to try to live off my Army and occupational pensions supplemented by the cash reserves from my lump sums and profit from selling a very expensive house in Sussex and buying a much cheaper one in the Borders, until the State pension kicks in in six years’ time.

As it has turned out, I can survive comfortably on just the monthly pension income and not having to touch any of the cash reserves. It helps that Madam continues to work full-time and takes care of the regular monthly bills (council tax, utilities and phones, etc). Not having to service a mortgage or credit card bills has freed up a lot of cash each month.

I am ostensibly a stay-at-home househusband, but the reality, under lockdown, is I spend my time playing guitar and binge-watching TV programmes.

For me, retirement is good. Once lockdown lifts more outside activities are planned.
 
I know who he is. He is every homeless veteran with the bit piece of cardboard with EX-ARMY in huge letters on it wanting a handout, been homeless longer than they served. There's one in Liverpool with a wingeing sign ("so much for GREAT Britain" I believe it says) who is collecting his pension plan in shop doorways each day.
I know a lass who works alongside the RBL representing a number of matters relating to veterans in Liverpool - she has chatted to me about the lad in Liverpool (I can’t remember his name, but we are probably talking about the same one). He gets a nice regular wedge from service charities and was offered a place to live.

My retirement plan is my mil pension after a full 24 - I am currently a civil servant so a decent pension there.
I live in a fairly cheap (but very nice) apartment and providing that my Dad pops his clogs in the nearish future then selling the family terraced house will finance another apartment that I can rent out.

If he does kark it in the next year or two, I can even bank the money from the rental and buy another one for my retirement day - which would give me a comparable income to what I am on now. It may be grim oop North, but living is cheap and means I can splash out on decent plonk.

(BTW - I don’t want him to die, but at the moment I am seeing him sliding slowly, but with increasing rapidity in that direction. It is shit, but it has me looking at plans, even for what the hell do I do with his cats).
 

Ravers

LE
Kit Reviewer
Book Reviewer
Interesting thread.

I’m the same age as the OP and I think there are some definite heads in the sand where our generation is concerned, regarding our future.

Most of my mates and peers don’t even know how pensions work. It’s not something we were taught at school and when you get a job, the pension stuff is just another form you have to fill out.

I think the entire system is geared up to assume you’ll buy a house at some point and have the mortgage paid off by the time you retire.

In theory it should be possible to survive on the state pension and whatever savings you can scrape together if you do this.

You’d have to downsize your life considerably, but this is all stuff that should naturally happen as you get older anyway. Kids will move out and become self sufficient, when you and the missus stop working you won’t need two cars anymore, your commuting costs will disappear.

You need to factor in these savings when considering what your future looks like.

However it’s a thin line to tread and for many it’s not possible to slim down their expenditure. In which case it’s time to look at other options.

I’m currently looking at how things are gonna pan out for my mother and it’s pretty grim truth be told. She’s in her mid 50s and living in a rented house. Come retirement age there is no way she is going to be able to afford her rent on her pension. She has a pension, but having fired out 3 kids and not worked for a fair portion of her adult life, it’s not going to be enough. Women in my family also tend to live forever with great and great great grandmothers living well into their 90s on all sides.

In my opinion the best and least risky bet is to get a job with a very good pension, invest in your own property and diversify your portfolio with a few wildcards like antiques, jewellery and art. If you’re self employed try to grow your own business as much as possible with the aim of selling it one day.

Other than that what else can you do?

Apart from marry the daughter of an Earl.
 
Other than that what else can you do?

Apart from marry the daughter of an Earl.

Qualify for a role in the military where pensionability is obscene. I know of an old Sqn oppo - not a direct peer as he was about 10yrs older than me - who retired recently as an OF-5 (Army full Colonel equivalent). His pension, yup pension, alone at age 57ish is just over £55k pa. He may share your Mum's genetics as he has numerous relations as centenarians so he'll be bleeding you as the taxpayer dry for the next 40yrs.

My financial plan is to retire at around 50-51 with my mil pension, income from my meagre investments and BTL property totalling the same after tax as a ground branch OF4 (ie an Inf Lt Col) takes home . That'll do me.
 
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I have no expertise in financial planning but as I understand things paying off your mortgage as soon as possible is the most effective thing you can do in terms of saving money long term (assuming you don't have short term high interest debt like a credit card).

From my rough maths overpaying 10% per year on £100,000 with an interest rate around 2.5% will save around 24 grand compared to just making minimum payments. Standby for someone who does this for a job to correct me.
Yeah, I keep meaning to start doing that too.

I just need to sit down with the Frau for a finances chat.
 
Firstly, get a good independent "whole of market" IFA. If you live in the NW I can give you a name. A good IFA will do a proper job of risk profiling and recommend appropriate funds for you, which you can choose if you wish.

I've had a SIPP since 1990 and have been putting the maximum into it for several years. I'm now at the point where I've reduced my contributions as I have ~£750k in the pot. I've also been paying into a SIPP for SWMBO (my company secretary). As I'm planning to retire in just over 2 years we should have sufficient between us to live comfortably. SWMBO has some other pensions from NHS / Local Authority but I don't expect them to amount to much.

You can put up to £40k per year into a SIPP and if you have a company secretary who is a relation you can put the same into hers / his [other non-gender specific personal designations are available] pot. The contributions are averaged over 3 years and hence you can use up the allowance for 2 previous years if you have a good business year. I've done this when I've had a particularly good year.

If your business can run without you, then you can sell the business when you plan to retire and there are specialists who can help you to do this (for a price!) If you sell the company then there may be a "golden handcuffs" clause which will tie you in to working for another year. Alternatively, there may be a clause which prevents you poaching customers or from starting up a similar business for a period.

Hope this helps.
On the point about selling a business, the key is to plan early and build a business that has value in how it works as well as what it sells. One that someone else can come in and develop. Start planning early to build saleable business; one that you work on, not in. Way too many people spend time “building a business” when all they are really doing is building a wage without the protections of employment.

The other side of this is that it means there are lots of businesses for sale as boomers want to cash out. In fact, far more businesses than there are buyers. It’s quite easy to buy a going concern for not much, probably with owner finance, then go in and systemise it before flipping it for a profit. Far easier than starting up.
 
Well in my case, my paltry British old age pension, my paltry Canadian old age pension, plus the product of bunging my tax free vehicle allowance in a fairly high interest RRSP every year, along with my 50/50 employer matched RRSP.


Oh, and my wife's large inheritance, and the proceeds from her dead Dad's mshoosive farm when we stop renting it out, and sell it.
 
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RedDinger

War Hero
I am retiring at the end of May so have been doing a lot of financial planning recently.

I started by working out how much I need for essentials each month (bills, shopping, insurances etc) and how much to maintain a happy life (golf fees, holidays, emergency money etc). This obviously differs for everyone.
But Which claim to know the answers here if you just want a ballpark idea: Retirement Spending

Then I looked at income over next 25 years (I'm 60, so if I make 85 I'll only need money for nappies).

Apart from a small army pension (£2800) I'll need to fund myself for 6 years until my Govt Pension kicks in (£9000) plus another final salary one of £3000. After 10 years my wife will get her Govt Pension.

After plugging all this into a spreadsheet I made which does lots of calculations , I can live at pretty much the same standard with a Drawdown pension pot of £300K even if it makes no interest.

I've got more than this in my pot as I've had 20% of my salary going in for 27 years (10% from me, 10% from the company).

In summary, pay off your mortgage as soon as you can, and put as much as you can afford into your pension.
 
Interesting thread.

I’m the same age as the OP and I think there are some definite heads in the sand where our generation is concerned, regarding our future.

Most of my mates and peers don’t even know how pensions work. It’s not something we were taught at school and when you get a job, the pension stuff is just another form you have to fill out.

I think the entire system is geared up to assume you’ll buy a house at some point and have the mortgage paid off by the time you retire.

In theory it should be possible to survive on the state pension and whatever savings you can scrape together if you do this.

You’d have to downsize your life considerably, but this is all stuff that should naturally happen as you get older anyway. Kids will move out and become self sufficient, when you and the missus stop working you won’t need two cars anymore, your commuting costs will disappear.

You need to factor in these savings when considering what your future looks like.

However it’s a thin line to tread and for many it’s not possible to slim down their expenditure. In which case it’s time to look at other options.

I’m currently looking at how things are gonna pan out for my mother and it’s pretty grim truth be told. She’s in her mid 50s and living in a rented house. Come retirement age there is no way she is going to be able to afford her rent on her pension. She has a pension, but having fired out 3 kids and not worked for a fair portion of her adult life, it’s not going to be enough. Women in my family also tend to live forever with great and great great grandmothers living well into their 90s on all sides.

In my opinion the best and least risky bet is to get a job with a very good pension, invest in your own property and diversify your portfolio with a few wildcards like antiques, jewellery and art. If you’re self employed try to grow your own business as much as possible with the aim of selling it one day.

Other than that what else can you do?

Apart from marry the daughter of an Earl.

This.
 
I have a fairly simple plan. Now just short of 56. Retire from the police at 60. 9 years plod pension, 26 years AFPS 75 so I won't be starving. I have a free standing AVC so might take 25% of that at 60. State pension kicks in at 67 for me. At that point I will start drawing down the rest of the pot up to the threshold for upper rate tax. No mortgage and the house is worth enough that Mrs D will be ok on my legacy pensions. I will do something from 60 - not sure what but I'll want a part time job.
 
I have two fit and healthy neighbours in their 70s, both pretty handy (one is an ex-maintenance and snagging manager for a housebuilder) who do DIY jobs for FREE on ma hooose because they are soooooooo bored.
They won't take payment, and ask what the next available task is when they finish one.

It is highly unlikely that I will live to a pensionable age so who cares? I don't give it too much thought. Mortgage will be paid off by life insurance, big house to downsize from leaving Mrs Stain and Mini Stain not living the high life, but not cutting out coupons either.

As some others have said, if I did make it I'd still want a part time job. If your life consists entirely of freetime, it loses its meaning, so much that you do DIY free for your new neighbour.
 
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RedDinger

War Hero
CivvyPete said:
...Even with 'risk profiling' pension pots can go tits up. Having paid to have my modest funds professionally managed about 10 years ago, and opted for a low risk approach, I asked for an update recently, with about six months to go to retirement, only to discover over a third of my funds had been put into some highly leveraged fund that went to zero value about 5 years ago
If you've paid for someone to manage your funds downstream, and they've tanked like this, you may well have a claim against the adviser.

Did you pay any kind of trail fee? Have you had any review meetings / correspondence?
I agree. It sounds dodgy.

I've had a low risk pot professionally managed for 5 years. I get full access on a website, monthly statements and an annual review with my FA. Even with the COVID effect, its returned around 3% PA
 
I have twenty years in a local government pension scheme. I’ve been drawing it for several years now because I left the job because of ill health. I’m now 65 and in October on my 66th birthday, I’ll start drawing my OAP.

The big difference for me though is my occupational pension from my local government service. The money from that puts me streets ahead of everybody I know who for whatever reason isn’t working.

When I start to collect my OAP, although I’m not currently sure what I’ll collect, my income will obviously be even better than it currently is.

The thing is, when I first joined local government back in my early twenties, a pension was the last thing on my mind. The fact that I was there for twenty years and ended up in a senior management job on a decent salary was almost an accident.

I just continuously enjoyed what I was doing for most of the time and although I wouldn’t have turned my nose up at a job elsewhere if something I liked came along, that didn’t happen so I stopped where I was and kept paying into the local government pension scheme.

I look back now and think, thank Christ I ended up doing what I did. Income wise because of my pension, it’s like I never left work.

My message to anybody is unless you are onto a sure fire thing that will make you a millionaire, get a pension scheme going ASAP because like me and everybody else, you will get older and your choice will be, you can either do nothing and survive and scrape by on benefits or if you sort out a decent pension scheme, you can live as if you are still at work.

You just don’t have to get up and go anywhere to earn it. You’ve already done that bit.
 

goodoldboy

MIA
Book Reviewer
Not really one to think of when your first joining the Army but certainly one to think of when you've gone past the best years of your life, are settled with a kid, have a mortgage etc

Some of the people I know who have been in the forces have been determined to stick it out for the full 22.

A former PSI I knew? Was ex-Infantry, did his full 22 and even 12 years after leaving the forces now works as a gym instructor.

Now that my business is generating a consistent turnover and I can afford to pay myself a decent enough salary in the next few months obviously the next step towards financial security is what am I going to live on when I get to the age of 55 (20 years from now?), some may say it's well late to start voluntarily putting money into your pot because as far as I can see the state pension is about 200 quid a week and after thinking how me and the wife blow over a ton a week on food shopping has got me scratching my head a bit and putting my grown up socks on,

So I have a buy to let morgage house which is rented out the old dear put in my name I've had since a little chod (which will never EVER leave me), but F all paid in due to the fact after I was medically discharged from the Army, I'm not medically fit for jobs including Police and alot of the roles I would love to do which are related to my business degree? Driving is a must, and I'm prohibited.

Business is growing gradually and I'm forecasting to turnover 6 figures in the next year so thus to be VAT registered and things generally going steady.

So I turn to my accountant now and start thinking a year from now when I will start paying myself a larger salary from the business instead ( I don't do dividends at the mo, I am basically rotating funds and reinvesting in the business), how much should I be throwing into a pension pot with a good provider a month which won';

a) Won't exceed the threshold right now, isn't too much
b) Will give a decent return steadily when I've got grey hairs

Other ways to make an income? Some people play the stock markets, buy and sell bitcoin, foreign exchange, some will want to keep working until 70, but being in my situation at the moment it's currently being a good motivator to get life sorted out now so I can also treat my son a bit when he's in his teens.

Obviously I don't have a clue what about much but other allowances I currently get are disability benefits (PIPS) and I pay a basic enough wage to myself, would love to pay more, but the main incentives I'm looking at as the business grows is perhaps larger dividends in a few years as I can carry the allowance from previous years and also putting the wife on as a shareholder to increase the tax free dividend allowance.
Get yourself a decent (recommended by word of mouth) independent financial adviser. One who has no direct ties to a particular company. His fees will be recouped easily with the money you make. Only 35? You're right to get on with it but it's never too late.
 

Arse Gravy

War Hero
I have 3 ½ years until I'm 55 and my AFPS 75 increases, I've already asked for a pension prediction and the monthly income from that is more than enough for my next move.

Once the drains on my resources have left home, they've already been issued a warning order, we'll be selling up and moving to a more sedate lifestyle on a narrowboat. We've done the sums for it and it is easily achievable after the pension increase.

Since contracting in hot and dusty places I've been saving and over paying on my mortgage so any money that we still have after the house sale will pay for the boat with the remainder becoming beer funds.

If we don't adapt well to the lifestyle Laughing Gas will get the heave ho and I'll go it alone (she obviously doesn't know that part).
 
Interesting thread.

I’m the same age as the OP and I think there are some definite heads in the sand where our generation is concerned, regarding our future.

Most of my mates and peers don’t even know how pensions work. It’s not something we were taught at school and when you get a job, the pension stuff is just another form you have to fill out.

I think the entire system is geared up to assume you’ll buy a house at some point and have the mortgage paid off by the time you retire.

In theory it should be possible to survive on the state pension and whatever savings you can scrape together if you do this.

You’d have to downsize your life considerably, but this is all stuff that should naturally happen as you get older anyway. Kids will move out and become self sufficient, when you and the missus stop working you won’t need two cars anymore, your commuting costs will disappear.

You need to factor in these savings when considering what your future looks like.

However it’s a thin line to tread and for many it’s not possible to slim down their expenditure. In which case it’s time to look at other options.

I’m currently looking at how things are gonna pan out for my mother and it’s pretty grim truth be told. She’s in her mid 50s and living in a rented house. Come retirement age there is no way she is going to be able to afford her rent on her pension. She has a pension, but having fired out 3 kids and not worked for a fair portion of her adult life, it’s not going to be enough. Women in my family also tend to live forever with great and great great grandmothers living well into their 90s on all sides.

In my opinion the best and least risky bet is to get a job with a very good pension, invest in your own property and diversify your portfolio with a few wildcards like antiques, jewellery and art. If you’re self employed try to grow your own business as much as possible with the aim of selling it one day.

Other than that what else can you do?

Apart from marry the daughter of an Earl.
Or the daughter of a very wealthy farmer with a mahoosive farm (probably similar to you, sans title).
 
Do you both do the finances, or is you or her that breaks out the dreaded budget book?
Both. She earns slightly more than me, but I get a better bonus that puts me ahead - so we split pretty much everything 50:50 - but due to her being one of them thar American types (as well as British) I tend to do most of the suggestions / getting stuff in my name as I know the system better, and she's cautious about hitting the thresholds that would cause the US to tax her into the 13th Century.

Edit: We're both pretty sensible with money...but I'm more sensible and don't buy shite.
 
Hope they raise mandatory retirement age for aircrew to 70 then keel over within six months of downing tools from kidneys exploding due to overuse while tapping a new keg of ale.
 
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