Associate
ok, how they do it in my case is i get 2 payments per month 1 off £917 which is £11004 per annum and the second is off £305 per month which is £3660 per annum, this keeps me under the £12.5k tax bracket, does that make sense
How much do you need for comfortable existence in retirement.
- Thread starter newbiejim
- Start date
Soldato
Isn't the amount usually mentioned 2/3 of your pre retirement income? Obviously islf you're on a very good wage and ploughing 40% of your gross income into your pension at 50+,then you'll probably need a lot less than 2/3.
For me, I'd be pretty happy with my current salary, minus mortgage / pension / student loan costs.
For me, I'd be pretty happy with my current salary, minus mortgage / pension / student loan costs.
I`m 61 in December, acutely aware of the egg timer running down. Awareness of being this age has just pretty recently been at the forefront of my consciousness. Consequently my thoughts are on retiring so I can have some years of being relatively fit and indulge the free time. Unfortunately I cant quite determine the balance of free time vs financial security (longer I work I get more pension, but less free time).
In short, how much per month would give a comfortable/non breadline existence (assuming no indulgent foreign holidays, pretty much just a regular existence, no mortgage to pay & circa £400 a month static outgoings.
My current thinking is £1500 a month, which is achievable for me. Is this reasonable?
This is definitely a how long is a piece of string question.
Do you currently budget? Not necessarily as in sticking to a budget, but knowing exactly how much your monthly bills + food + outings + leisure + any other expenses are for the last few years?
You should be able to build a rough idea of how much per year the following costs:
- Council tax
- Electric/Gas
- Water
- Broadband + phone/mobile contract
- TV License + On-demand/streaming services
- Car expenses (tax/mot/repairs/fuel/insurance)
- Other insurances
- Mortgage/rent (if applicable)
- Food & Drink costs (Keep a separate tracker for takeaways / eating out)
- Home maintenance / repair costs
Majority of the above are going to be classed as essentials. You'll also want to account for varying increases - electric/gas, fuel, car insurance etc.
Not really. The personal allowance is applied to your total income, not per income stream. If I had four jobs paying £12.5k each I'd have to pay tax based on a total income of £50k.
Presumably there's something we're not aware of.
Associate
well sorry...dont know how to explain it then, I could give you the number of my financial advisor if you want and you can ask him
...and if he explains it to you then let me know cos its all above my head lol
Associate
just found this, this seems how they do it
How much of my pension is tax free?
The good news is that some of your pension is tax free. If you have a defined contribution pension (the most common kind), you can take 25 per cent of your pension free of income tax. Usually this is done by taking a quarter of the pot in a single lump sum, but it is also possible to take a series of smaller lump sums with 25 per cent of each one being tax-free. The rest of your pension income will be taxed in the normal way.
Most defined benefit pensions also offer the option of taking a tax-free lump sum as well as a guaranteed (taxable) income. Ask your scheme for details of this.
Soldato
- Joined
- 30 Sep 2005
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- 16,546
Remember state pension though. Private pension is to have a nice retirement. You should be able to get by with state, think it's £9k a year?
Associate
so if you look at my payments it looks like the £305 one is 25% of the pension which is tax free and the other payment is below the tax limit any way so no tax on that either. Maybe that is what they do, I may be totally wrong but if anyone can explain then go a head but tbh dont really care how they do it so long as I dont end up with big tax bill in a few years time
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Soldato
1k maybe obviously above would be better i dont need toys to be entertained just fuel to drive to the coast and tors, morrgage free, cheap water rates £17 pm cheap ct , phone £6 month, old but reliable car, paying off morrgage and improving property has always been my priority not trinkets
Thanks for that.
You've forgot to mention your legal-highs drug addiction and alcohol consumption
Associate
I will be honest with you surveyor, dont fully understand the ins and outs of it but thats why I got professional help, they look after all my pension funds for a yearly fee which I dont mind paying as I dont have any money worries, they take care of everything. If you want to know the company they are Beaumont Wealth and have several places around the Uk, Mine is based in Shropshire
Soldato
I can assure you that £1500 is not enough even with the state pension. -I retired 21 yrs ago on half pay pension- sounds a lot but I was a drone worker all my life so my paypacket wasn't a lot although it kept wife and myself self sufficient - I remember one year the local dustmen earned more than we did. Over the last 21 years we have seen our pensions drop compared to cost of living.
We have no mortgage or debts and a 11 yr old car. We have some saving but that's rainy day stuff and not having holidays. Every house I have bought I made sure we were in band B/C of council tax - water rates at lowest I could find but now I am having to put £460 a month into the budget account just to keep dry and warm -any other bills are extra like food.
You can not have enough stashed away for your pension and I am talking now of those of us who are on pensions well below the average wage.
Stick as much away as you can, you can't survive on state pension - The only people who can do that is the pro unemployed.
If you have a wife who doesn't pay tax then you can have her tax relief transfered to you - helps a little bit. We do not live in luxury but can afford the odd goodie.
We have no mortgage or debts and a 11 yr old car. We have some saving but that's rainy day stuff and not having holidays. Every house I have bought I made sure we were in band B/C of council tax - water rates at lowest I could find but now I am having to put £460 a month into the budget account just to keep dry and warm -any other bills are extra like food.
You can not have enough stashed away for your pension and I am talking now of those of us who are on pensions well below the average wage.
Stick as much away as you can, you can't survive on state pension - The only people who can do that is the pro unemployed.
If you have a wife who doesn't pay tax then you can have her tax relief transfered to you - helps a little bit. We do not live in luxury but can afford the odd goodie.
Soldato
I think the savings should be in the pension really.
Caporegime
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- 21 Jun 2006
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- 38,372
Realistically speaking what outgoings are people expecting to be less in retirement and what are going to be more?
Less - mortgage free
More - everything else
So I'd want a similar level of income as to my working income. Unless you are planning on using all that free time sat in front of a screen on a couch.
Simply don't retire but go from working 5 days a week down to 2 days per week. That means your work income is dropping by 60% but a lot of that is made up by your taxes being less, so it's not a real 60% loss. Then you top that up with your pensions and passive income streams / savings. Remember you have 5 days off per week to enjoy life. That is plenty.
There are some folk though who get to retirement age and clearly aren't fit to work. Had an old Betty in an old office who was 4 years past retirement and she had fallen over at least 2 times in the office and was absolutely hopeless at everything. But if she did retire chances are she would never leave the house. So that probably won't be a real solution for everyone but they can always get a part time job somewhere like Asda if need be.
Less - mortgage free
More - everything else
So I'd want a similar level of income as to my working income. Unless you are planning on using all that free time sat in front of a screen on a couch.
Simply don't retire but go from working 5 days a week down to 2 days per week. That means your work income is dropping by 60% but a lot of that is made up by your taxes being less, so it's not a real 60% loss. Then you top that up with your pensions and passive income streams / savings. Remember you have 5 days off per week to enjoy life. That is plenty.
There are some folk though who get to retirement age and clearly aren't fit to work. Had an old Betty in an old office who was 4 years past retirement and she had fallen over at least 2 times in the office and was absolutely hopeless at everything. But if she did retire chances are she would never leave the house. So that probably won't be a real solution for everyone but they can always get a part time job somewhere like Asda if need be.
I'm not far away from this kind of position, if I worked till retirement age I would get about £16k private pension which is index linked, But the huge decision is whether to value own free time above additional financial security/comfort.
Caporegime
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- 21 Jun 2006
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Yet you also get those that retire and have nothing and their mortgage was interest only so are now stuffed.
Like you say balancing act which is why the 50, 30, 20 rule should be drilled into everyone.
50% of wage - essentials
30% of wage - luxury spending
20% of wage - long term savings and investments
Do that from working age and you have nothing to fear. Plus you have plenty of money to enjoy your whole life.
People spend far too much on luxuries these days.
For my generation it doesn't matter (I'm 30)
We are more than likely never going to be able to retire unless we get rich somehow. I only get around £1300 a month right now after taxes, regular bills eat into a stupidly big chunk of that.
We are more than likely never going to be able to retire unless we get rich somehow. I only get around £1300 a month right now after taxes, regular bills eat into a stupidly big chunk of that.
Everything except home repairs & eating out I have at around £400 a month. Definitely would need to have a lot for home repairs.