which I assume is a lot larger than the average worker can hope for, entitles you to an annuity of around £20k a year. That doesn't seem all that much.
Does this worry you, or are you hoping to have such an inexpensive lifestyle by that point that it will be largely irrelevant?
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I'm hoping to die early.
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I'm hoping that a couple of ventures outside the day job come together and give me some cash to invest separately to top up the pension.
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If you accept that you shouldn't have a higher standard of living in retirement than in work, you need to look at your current netnet and then take away mortgage costs, investment and savings contributions, commuting costs, other work costs and see what's left. If you earn a vaguely high salary, you pay a shedload of tax. In retirement, you should hardly pay any. Also if you have chidren then them leaving home is like a massive pay rise in itself.
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if annuities are as expensive as they are now, I will not be getting annuities. There are better ways of using £500k.
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That seems about right. I'm aiming for a 750k pot and even that seems ambitious unless I boss the AVCs.
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Monthly expenses of £3.5k mortgage, £1k pension (probably less if just aiming for £500k), £2.5k school fees, £400 season ticket all of which will stop in retirement.
Even ignoring the state pension that £20k has gotta be £2k per month in my pocket?
So thats the same actual useable money in retirement as I have earning £9.4k now or about £205k a year?
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what PP said
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what PP said
but that's not exactly related to pensions is it now Clergs?
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are you lot thinking more about your combined pension pots with your other half?
I haven't looked into what happens to my pension if I die first
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Tbf a 3.5k mortgage is quite small. Monthly that's what - less than 200 quid
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I haven't looked into what happens to my pension if I die first
If you're properly planning for things its worth looking at as it can vary massively. Pretty sure I keep my wife's pot, get a lump sum and then a spouse's pension too. Some times though I think the entitlement in the fund is used to pay the lump sum and / or spouse's pension.
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If I die while employed here, my wife gets nearly £2.5m. Get in!
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Puts the whinging state workers pension arrangements in perspective. I for one feel pleased that penury awaits me but not them.
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I don't understand pensions, not that I've tried to understand them, so just don't have one.
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My retirement plan is die young but also put 15% of salary into pension - just in case.
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You really need to max pension and ISA if you can and preferably 2 ISAs.
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Who works these numbers out? I mean who the fook would accept 4% as an acceptable annual income return on an investment? Should be looking for at least 10%.
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heh @ 10% return
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Like Bam, I have tried time and again to understand this subject but, despite being quite a clever bunny, I just can’t.
I just do what st. james’s Place tell me
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anyone maxing their pension for anything other then tax reasons is a huge hmong.
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Love ??? suggestion. Given that when I qualified I was on £40 something grand gross it would have been a struggle to tuck away £16k a year. In fact even now I'm not putting that much into my pension.
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Lol, the only 10% you'll get from SJP is in charges, not returns.
Pensions are really simple - it's just a tax wrapper for investments that you can't get at until you are wrinkly. Pensions don't do badly or well, the underlying investments do.
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What laz said. 20k back from 500k is crap. And the tax free bit is pretty limited.
fook em
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10% is what I achieve turning over my watch portfolio. I assume it applies to other asset classes.
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Yes all true AWU, if you pretend that most of your investment growth is not eaten by charges and they fooked in the ass when you cash it in with a shitty annuity at the end.
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Best put more money into watches then.
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But it's better to use that money now to make real money and have fun.
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Well yes you do need to keep an eye on charges but there's no longer any obligation to buy an annuity with the pot. I certainly won't be.
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Can you buy a house with your pension or does it have to be a financial product?
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And is it capped at like 40k a year before it's taxed?
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yes it all gets taxed when you take it out.
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So what's the fooking point?
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pensions are not “really simple FGS. I have no idea:
- what the tax benefits of paying into a pension are
- how much I’m allowed to pay in, total or per year
- when I can start drawing
- what tax I have to pay on income or capital withdrawals or even how the difference between the two is defined
I know that one year I accidentally paid in slightly more than I was supposed to, to one of my schemes. So far as I can see there have never been any adverse consequences to this.
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"So what's the fooking point?"
Unless your employer gives you free munny to put in, or you can save LOADS of tax now. There is none.
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Cookie, you're either:
1. a genius with no empathy for mere mortals like us who struggle to understand the complexities of a notoriously difficult discipline; or
2. a simpleton who is missing the salient points
I shall let others form their own opinions.
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People like Buzz who spend a lot of time on your personal investment portfolio.
How the fukk do u find the time
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I think he’s a simpleton with no empathy for mere mortals like us and misses the salient points.
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I count the cash in my wallet. Then go on to my pocket. Add the two sums together. Currently standing at £5.43. Only takes two mins.
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"no requirement to purchase an annuity anymore"
that is news to me, good news too.
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Surely it is better to just build a private income.
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Wot AWU said. Pick funds with low charges and watch the difference between high and low charges compound over time.
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What ITFT said. Invest in creating something that generates a living income without needing you to work, and accept you’ll pay tax on the income, just as you do on your income now. If a pension is the best way of doing that then fine, but - when I’ve made the effort to engage with the subject - I’ve generally tended to the wibble view that a pension probably isn’t the best way, over and above the level required to max out your employer’s matches contribution.
eg
The two investment properties my wife and I own already generate an income of three and a half grand a month, most of which currently goes towards paying down repayment mortgages at the mo, but most of which will eventually be pure income. Yeah we’ll pay tax on it but worrevah, we pay tax on our salaries. The income from those two fairly modest properties is likely to massive exceed anything a pension ever pays out.
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I'd be amazed if a highly paid City lawyer could not learn everything they needed to know about pensions in half an hour of browsing Hargreaves Lansdown or moneysavingexpert.
Pensions are really an equities vehicle so if you don't like or get shares or funds of shares, then it's probably not for you. BTL has been good historically but that's mainly down to leverage so it's not a straight comparison at all. On a fully funded basis most BTL currently makes no sense at all - low yield, high tax at every stage of the investment cycle, high ongoing costs, concentration risk etc. But people like something they can touch and I can get with that. I do wonder how many actually work out the real costs and therefore real return however.
My various pension pots are at about £500k now on a good day and I think I have put in £22k of my own money. I don't think that's too bad.
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TL:DR, however this is why all public sector workers on DB arrangements should wind their fooking necks in.
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For moment I thought Laz's BTL empire was only earning £3,500 a year although conceivable if it's up north.
AWU there are also so many landlords who don't seem to realise that the additional rent you get from changing tenants every year is probably less than the cost of agent's fees, voids between tenants and the cost of redecorating between the tenants. You're often better off leaving the same tenant in situ for several years.
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Annuities are for gimps
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Of course what you have to remember this is laz and therefore has to be taken advisedly.
One very strongly suspects that one of these ‘investment properties’ is his old house up north London way that he is renting out until he returns to do another stint in a London law firm at or around the time his first child starts primary school.
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I'll be doing something throughly different by that time m88, although I certainly expect that, like law, it will pay money..
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