Your Retirement
Your future story
Income, savings, budgets and,
what people said about their retirement
Table of Contents
Making that once in a lifetime decision
You can plan your retirement all you like, but for some, the hardest part is fixing a date and sticking to it, if you have a choice of course. Stopping or reducing your work needs a kind of self-assurance.
Budget & expenditure download
How much will you spend when you retire?
Download your free budget planner, do it once, take your time and it will surprise you.
Where your retirement income comes from
Income generally comes from two sources.
Secure and guaranteed
Lifetime state and occupational pensions and Annuities.
Savings and investments, which are flexible and controllable.
Pensions, ISAs, Shares, Bonds, bank accounts etc.
secure income
savings & investments
This money should be split between
Top-up income and Set-aside money
Managing savings and investment
Keep your savings in two pots
Separate the money you use for regular retirement income, from the money you will need for extras and the unexpected. If you bundle it together it’s easy to lose track.
Top-up money is to fill the income gap between secure income and what you need to cover regular spending.
Set-aside money is for one-off extras and emergencies.
Top-up money
This is your long term income money and it should be invested so that it at least maintains it’s value against inflation. This is one example of a managed portfolio similar to many pension schemes in a medium risk portfolio.
Income planner’s calculators show the amount needed and it should be enough to last. Most likely made up of pension funds, ‘stocks and shares ISAs’ etc. Your choice of investment is mainly depending on your risk preference.
Set-aside money for emergencies and extras
However tight your budget is, set aside 20% to 25% of your cash, personal pensions, savings and investments.
Set-aside money is cash when you need it
To be kept on one side and not to be confused with top-up money. Use it for special holidays, property repairs, replacement white goods, car, gifts etc, medical emergencies.
What you invest and where is for you to decide.
If you can’t seperate it physically, then keep a strict record and update at least annually.
Simplify your assets
Untangle your cash and investments
When you first list all your assets, list everything including bank accounts and bonds as well as pensions and ISAs and shares. People often have unnecessarily complicated investments, too many bank accounts and credit cards, so combine assets to simplify them, you will thank yourself when you are older.
These are liquid assets, in this case anything that you can use for Top-up income and Set-aside money. The calculators list these different assets and it’s important not to hold anything back from you list.
Fixed assets like your home or 2nd car can be part of this in later years, for example if were you to one day downsize to a smaller home. These would be additional liquid assets to use for income to add for later and you can do this in the calculator.
Make sure your spouse or partner is financially aware and not just when you retire, make it easy for them to understand, especially if you’re the one who knows more about it. If and when one of you is left on your own, untangling complicated assets at this time can be especially hard.
Some things people have said about their own retirement story
I planned my retirement for years, but it still came as a big surprise!
No Monday mornings or Friday afternoons, I couldn’t get my head round the first year, I was even a bit anxious. Suddenly there was no demand on my time, and that hadn’t happened since my school holidays. It was more than I could have wished for, time became my own.
I just needed something new and meaningful to do, so I decided to relax, keep an open mind and see what came next. Then clear as day I thought of new ideas and challenges. Things I always liked doing, but never had the time before. It’s a whole new beginning and well worth waiting for.
We are very happily retired, it’s a simple life. Monday it’s the gym and swimming if we feel like it, we do everything together. On Tuesday we do the shopping. Every Wednesday it’s nice to go out for a drive and explore all the little villages and towns.
We have our favourites, perhaps with a bit of lunch as well. Friday is our day off, getting ready for the weekend and deciding what to do in our garden.
I love every minute of it and it took me no more than five minutes to adjust to my new lifestyle.
Do you have a final salary pension?
Very few employees, pay enough into their pensions to give them anything like the income available for members of DB final salary schemes. However, if you have a one, your retirement topping-up savings will be less.
Non-guaranteed Defined Contribution (DC) schemes depend on your contributions and the result is rarely guaranteed. Most public sector workers, such as local government, teachers, NHS, police officers and firefighters are offered Defined Benefit (DB) Schemes described below. Some private sector larger employers still have them, but they are not as secure and exist in limited numbers.
Final salary schemes or Defined Benefit (DB) schemes give a guaranteed benefit. If you have a final salary pension from a previous employer or at some time worked as say a teacher, the NHS, or been a member of any other public sector scheme, you have a valuable benefit at a subsidised cost. I have met many members of these schemes who are unaware of their high value. If you work in the private sector you will almost never match these benefits elsewhere.
Public sector schemes are Un-funded, unlike your private pension there is no pot of money to fund furture pensioners. Pensions for public sector workers are paid directly from government taxation. As more people live longer in retirement, those in the private sector, who’s taxes pay public sector pensions, will have to pay ever-increasing taxes to fund these schemes.
In the private sector, the provision of this level of guarantee has proved too expensive and non-guaranteed workplace or personal pensions, i.e. Defined Contribution (DC) schemes are provided.
The answer is that they are not affordable, but will they last and in what form?
