Will I be able to retire in 12 years?

[Wuffle]

Newguy,

It is worth noting that the neuro-typical are almost incapable of saying that at approximately aged 60 a British citizen stands a good chance of coming into some property wealth. It is hard to put on a spreadsheet, much like portfolio risk, but it is real. Both my parents did. Dad has now gone, it has rolled over to mom. She is now in care and the amount is reducing. I am including it in my calculations on an annual basis.
It is NOT our business but consider it.

W (not neuro-typical).

[Boots]

Please can I ask does my table look right?

It looks about right to me. Personally I would work out the growth on the opening balance, then add the contribution. Strictly speaking, I think you could work out growth on half of the contributions as well, but life is too short.

I really wouldn't try to assess if my prediction was correct based on a single year, there are far too many variables. I keep a little graph and just look for the trend over 5 to 10 years.

[AsleepInYorkshire]

Hi guys

I don't think AiY table was quite right and to be honest I am not sure if mine is right either but using AiY as a basis here is what i have come up with.

Firstly, I am really not sure if it is a great idea adding the growth rate on the contributions. I think it maybe sensible to only do the growth rate on the opening balance. Does anybody have a view?

Now according to my table the growth rate should be around £19K this year. Well given that my assets only went up by about £17K last year that does seem like a bit of a stretch. However, looking at my pension contributions in the last year I didn't contribute as much as I am planning to do this year. Hopefully this will be the turning point.

Please can I ask does my table look right?

Thanks
Newguy

Yup. Sorry I added 2.1K incorrectly.

Newguy									
Year Age	No	Op Bal	Contr	Total	Draw	Growth	Total	Tax Free Cash									
									
1980				25.20		4.00%	6.00%		25.00%
2022	42	1	295.7	25.2	320.9	0	19.3	340.2	0.0
2023	43	2	340.2	25.2	365.4	0	21.9	387.3	0.0
2024	44	3	387.3	25.2	412.5	0	24.7	437.2	0.0
2025	45	4	437.2	25.2	462.4	0	27.7	490.2	0.0
2026	46	5	490.2	25.2	515.4	0	30.9	546.3	0.0
2027	47	6	546.3	25.2	571.5	0	34.3	605.8	0.0
2028	48	7	605.8	25.2	631.0	0	37.9	668.8	0.0
2029	49	8	668.8	25.2	694.0	0	41.6	735.7	0.0
2030	50	9	735.7	25.2	760.9	0	45.7	806.5	0.0
2031	51	10	806.5	25.2	831.7	0	49.9	881.6	0.0
2032	52	11	881.6	25.2	906.8	0	54.4	961.2	0.0
2033	53	12	961.2	25.2	986.4	0	59.2	1,045.6	0.0
2034	54	13	1,045.6	25.2	1,070.8	0	64.3	1,135.1	0.0
2035	55	14	1,135.1	25.2	1,160.3	0	69.6	1,229.9	0.0
2036	56	15	1,229.9	25.2	1,255.1	0	75.3	1,330.4	0.0
2037	57	16	1,330.4	25.2	1,355.6	(54.2)	78.1	1,379.5	344.9
2038	58	17	1,034.6	0.0	1,034.6	(41.4)	59.6	1,052.8	0.0
2039	59	18	1,052.8	0.0	1,052.8	(42.1)	60.6	1,071.3	0.0
2040	60	19	1,071.3	0.0	1,071.3	(42.9)	61.7	1,090.2	0.0
2041	61	20	1,090.2	0.0	1,090.2	(43.6)	62.8	1,109.4	0.0
2042	62	21	1,109.4	0.0	1,109.4	(44.4)	63.9	1,128.9	0.0
2043	63	22	1,128.9	0.0	1,128.9	(45.2)	65.0	1,148.8	0.0
2044	64	23	1,148.8	0.0	1,148.8	(46.0)	66.2	1,169.0	0.0
2045	65	24	1,169.0	0.0	1,169.0	(46.8)	67.3	1,189.6	0.0
2046	66	25	1,189.6	0.0	1,189.6	(47.6)	68.5	1,210.5	0.0
2047	67	26	1,210.5	0.0	1,210.5	(48.4)	69.7	1,231.8	0.0
2048	68	27	1,231.8	0.0	1,231.8	(49.3)	71.0	1,253.5	0.0
2049	69	28	1,253.5	0.0	1,253.5	(50.1)	72.2	1,275.6	0.0
				403.2	1,253.5	(601.8)	1,523.4	1,275.6

Noting that this is a small part of my spreadsheet and I can model variables at the press of a button (that is assuming I put the right figures in first ). If I change the retirement date it will rework the rest of the sheet.

Other areas model the impact of inflation, draw down, tax allowances and future expenses.

It's constantly evolving and is a work-in-progress.

I can fill in my anticipated expenses now and project them forward. The spreadsheet works for up to two people as my good lady has both a private pension and a DB pension.

AIY(D)
Sorry forgot to mention the growth rate for each year works on the money going in up front not monthly. I am self employed so I tend not to buy monthly. I think the constant to use for monthly input would be 0.541.

[JohnB]

The OP should develop a spreadsheet that runs forward their investments, with a range of assumptions on growth rates, market setbacks, and taxes. That will give a range of outcomes, retirement date could move by 2-3 years. I moved on from a spreadsheet to a webpage, http://www.johnbray.org.uk/retire/retire.html, its complicated because life is.

[newguy]

Newguy,

It is worth noting that the neuro-typical are almost incapable of saying that at approximately aged 60 a British citizen stands a good chance of coming into some property wealth. It is hard to put on a spreadsheet, much like portfolio risk, but it is real. Both my parents did. Dad has now gone, it has rolled over to mom. She is now in care and the amount is reducing. I am including it in my calculations on an annual basis.
It is NOT our business but consider it.

W (not neuro-typical).

Thanks Wuffle. In my case I've got three other brothers and my parents are not well. I am not expecting there to be any inheritance left.

Newguy

[newguy]

Thank you everybody you have given me a lot to think about.
Newguy

[monabri]

"TAX" was mentioned but I can't see where it is being applied.

( and hopefully income will be supplemented with state pension).

[newguy]

"TAX" was mentioned but I can't see where it is being applied.

( and hopefully income will be supplemented with state pension).

Hi. In my case it’s done through work at payroll and I think the scheme is called a salary exchange. I don’t need to take any action.

[monabri]

"TAX" was mentioned but I can't see where it is being applied.

( and hopefully income will be supplemented with state pension).

Hi. In my case it’s done through work at payroll and I think the scheme is called a salary exchange. I don’t need to take any action.

I was referring to year 2034 when you start to drawdown your pension. You'd be able to drawdown 25% tax free but the drawdown sum totals to ~£780k

Bear in mind you will be getting state pension as well (eventually) and you are in to paying high rate tax.

[Hariseldon58]

For the OP he has made a great start, he’s going to add about £25k a year for 12 years.

Personally I consider adding to the ISA alongside/instead of the SIPP at some point, tax relief is great but there is a lack of flexibility, you may want t access money at some point. It mitigates the risk of further changes in the rules and need to be aware of the lifetime allowance….

With a large ISA pot I have a lot of potential tax free income, its swings and roundabouts for a basic rate taxpayer. I have enough SIPP to use the basic rate allowance fully and thus pay no income tax. A thought.

The OP is doing what’s required, just needs to keep doing it ! Year in and year out, minimise expenses and churning the portfolio.

With respect to the actual investments, the pension contains three broad market trackers, in truth is that those three, in an appropriate mix, is all that is needed. The rest are adding complexity and costs in the hope to do better, in truth not necessary and not likely to make a significant improvement.

WHy not keep the picking your own trusts/funds to the much smaller ISA, if after five years you can demonstrate that you have done better and are confident that will continue then may be extend it to the SIPP.

At some point as you get closer to retirement adding some safe bonds for a reserve makes sense.

[vand]

Also, one of the financial levers you can pull is to go with an interest-only mortgage, which will dramatically lower your monthly payment, and allow you to invest more of your income. The drawback, of course, is that you are not paying down the principal, just paying interest, so you'll need to account for that in your pot size.

Nonetheless, if you think investments are going to grow at the rates you have pencilled (6% real?) in then it will undouted speed up your time to reach your goals and something to consider.

Your current mortgage rate seems very high compared to the current best deals available at the LTVs you are currently at, so there is opportunity there to free up more cash regardless if you want to go interest only or standard repayment.

[newguy]

For the OP he has made a great start, he’s going to add about £25k a year for 12 years.

Personally I consider adding to the ISA alongside/instead of the SIPP at some point, tax relief is great but there is a lack of flexibility, you may want t access money at some point. It mitigates the risk of further changes in the rules and need to be aware of the lifetime allowance….

With a large ISA pot I have a lot of potential tax free income, its swings and roundabouts for a basic rate taxpayer. I have enough SIPP to use the basic rate allowance fully and thus pay no income tax. A thought.

The OP is doing what’s required, just needs to keep doing it ! Year in and year out, minimise expenses and churning the portfolio.

With respect to the actual investments, the pension contains three broad market trackers, in truth is that those three, in an appropriate mix, is all that is needed. The rest are adding complexity and costs in the hope to do better, in truth not necessary and not likely to make a significant improvement.

WHy not keep the picking your own trusts/funds to the much smaller ISA, if after five years you can demonstrate that you have done better and are confident that will continue then may be extend it to the SIPP.

At some point as you get closer to retirement adding some safe bonds for a reserve makes sense.

Thanks Hariseldon58

I think my plan is to try and use the tax relief that is available. If/When the chancellor reduces the tax relief available then paying into the ISA is a better option.

The keep doing it bit will be difficult but trying to get as much money into my pension funds at present makes a lot of sense and is very much required.

I am still very much unsure of my own stock picking skills. I see the pension as being the professional plan whereas my isa i see as a small gamble. In time hopefully i will see the returns increasing in the ISA and i will be happier with my own stock picking.

The two fidelity special situations fund make up about 30% of total funds currently.

Newguy

[newguy]

Also, one of the financial levers you can pull is to go with an interest-only mortgage, which will dramatically lower your monthly payment, and allow you to invest more of your income. The drawback, of course, is that you are not paying down the principal, just paying interest, so you'll need to account for that in your pot size.

Nonetheless, if you think investments are going to grow at the rates you have pencilled (6% real?) in then it will undouted speed up your time to reach your goals and something to consider.

Your current mortgage rate seems very high compared to the current best deals available at the LTVs you are currently at, so there is opportunity there to free up more cash regardless if you want to go interest only or standard repayment.

Hi Vand. I will look into the mortgage thing in March as the charges substantially reduce in June.

Going interest only seems very risky as especially as I am not entirely sure whether I will be able to get growth of 6%.

If i did go down this route, where would the money go. Would it be better to pay into the pension plan to get the tax relief and then draw down at somepoint to pay off the capital sum.

If you are going interest only it might be sensible to get an even longer term. Well when i retire I suppose my investments would become less risky so returns may not be as high.

[Hariseldon58]

For the OP he has made a great start, he’s going to add about £25k a year for 12 years.

Personally I consider adding to the ISA alongside/instead of the SIPP at some point, tax relief is great but there is a lack of flexibility, you may want t access money at some point. It mitigates the risk of further changes in the rules and need to be aware of the lifetime allowance….

With a large ISA pot I have a lot of potential tax free income, its swings and roundabouts for a basic rate taxpayer. I have enough SIPP to use the basic rate allowance fully and thus pay no income tax. A thought.

The OP is doing what’s required, just needs to keep doing it ! Year in and year out, minimise expenses and churning the portfolio.

With respect to the actual investments, the pension contains three broad market trackers, in truth is that those three, in an appropriate mix, is all that is needed. The rest are adding complexity and costs in the hope to do better, in truth not necessary and not likely to make a significant improvement.

WHy not keep the picking your own trusts/funds to the much smaller ISA, if after five years you can demonstrate that you have done better and are confident that will continue then may be extend it to the SIPP.

At some point as you get closer to retirement adding some safe bonds for a reserve makes sense.

Thanks Hariseldon58

I think my plan is to try and use the tax relief that is available. If/When the chancellor reduces the tax relief available then paying into the ISA is a better option.

The keep doing it bit will be difficult but trying to get as much money into my pension funds at present makes a lot of sense and is very much required.

I am still very much unsure of my own stock picking skills. I see the pension as being the professional plan whereas my isa i see as a small gamble. In time hopefully i will see the returns increasing in the ISA and i will be happier with my own stock picking.

The two fidelity special situations fund make up about 30% of total funds currently.

Newguy

With regard to stock picking skills, you will likely discover that your faith in your ability will diminish with experience !!!!
It does for most people, including me…