Real world pension lifestyle

[NWpostie]

As said in the title as I'm a few years off from retiring, im making plans now to jump ship, I also want to have a comfortable lifestyle.

So the things I would like to know is.....

How much are you getting a month, obviously this will vary between individuals and after how many years of service ?

Did you take a lump sum plus pension or forgo the lump sum for a larger pension ?

Did you have an additional AVC such as bonus plan or flexiplan ?

Did you take it when it was due or took it early ?

Were you able to have the lifestyle you were hoping for or did you struggle ?

Did you claim pension credit or other benefits to make up for any deficiencies in your pension or get any grants to help you ?

How did you handle all the free time or did you struggle mentally ?

I hope this will help others who may this information useful for life after work.

Thanks

[Schiff]

Not specifically Royal Mail related, but I think that this (lengthy) thread on the Money Saving Expert forum is useful in helping you to think about how much YOU need for a comfortable retirement, which will be different to the amount that other people need.
https://forums.moneysavingexpert.com/di ... the-number

This Which? article is also useful as it looks at the spending of several thousand retiree households and the types of lifestyle that their income gives them.
https://www.which.co.uk/money/pensions- ... u0z9k0lw3p

[RobertT]

NWpostie, I suspect most visitors to this forum are still employed and so can't really answer your questions.
So as nobody else has put their own views forward, and as someone who is planning on retiring in the next year or two, I thought I'd put my two penneth in.

How much are you getting a month, obviously this will vary between individuals and after how many years of service ?

From 55 in less than 2 years time, I plan to retire and access my personal pension. I intend to take the 25% tax free cash upfront to use as a dip in fund and then drawdown a rate equivalent to the Personal Tax Allowance(currently £12,570) each year until 60. If I were to use all the lump sum as income for those 5 years, it would mean an effective tax free income of £18,500 per year.

From 60 I expect to get a section C NRA60 pension of around £7,800(inc. supplement) per year and at 65 an NRA65 pension of around £3,200(inc. Supplement). With the remainder of the personal pension being drawn down until 67 to keep my income to the rough level of the PTA. Plus lump sums from AVC's and the DBCBS.

I'm not too concerned about paying a bit of tax, but as the pension amounts involved put me on the cusp of the PTA, I don't want to pay tax if I don't have to.

The state pension of currently £9,300 will kick in from 67, but I'll obviously lose the supplement(total of about £1,600) at the same time.

*NRA60/65 figures are based on 2020 statements, so should increase with inflation over time.

Did you take a lump sum plus pension or forgo the lump sum for a larger pension ?

I have no plans to commute any pension as I have AVC's and the DBCBS to provide the lump sum/s.

Did you have an additional AVC such as bonus plan or flexiplan ?

Yes. I plan to transfer my Bonusplan over to my personal pension to help fund retirement from 55. I'll do that either after I've left RM or after the RMPP closes, whichever is sooner.
My Flexiplan, which is over 25% pot value and so taxable, and DBCBS will fund the lump sums at 60 & 65, providing more 'dip in money' on top of my basic income.

Did you take it when it was due or took it early ?

I have no intention of taking any RM pension early.

Were you able to have the lifestyle you were hoping for or did you struggle ?

Obviously hypothetical in my case, but the plan is that I'll have more money to live on in retirement than I give myself now. So I hope to have a decent lifestyle.

Did you claim pension credit or other benefits to make up for any deficiencies in your pension or get any grants to help you ?

I'm not too clued up on state benefits and don't think I'll be entitled to any.

How did you handle all the free time or did you struggle mentally ?

For me, the financial side of things is pretty much in place and as long as I'm reasonably sensible I shouldn't have too many money worries. But filling 8 hours a day that you would currently spend at work might be an issue over the longer term and has the potential to cause mental issues for some.

Hobbies, days out, holidays, different surroundings, etc are all planned and I haven't ruled out getting a little part time job to replace the social interaction and banter I currently get at RM.

The key to be able to do what I want isn't all about money, but it will definitely help.

I hope this will help others who may this information useful for life after work.
Thanks

I might not have given you exactly what you wanted, but I hope I've helped in some way.

[NorthernBoy]

Rob

Your retirement plans looks well thought out, thanks for sharing this. I am looking at a similar plan although I plan to finish at about 56/57, if I can make the numbers work

My only suggestion is have you thought about taking your NRA 65 at 60? This would give you a higher guaranteed inflation proof income at 60.

I say this because the reduction would take about 15 years to make up and I would argue you are better having more cash in your pocket the younger you are. Personally I am taking my nra 65 at 60 as I view nra65 as really part of my original pension from RM which should not really have been separated from nra 60 in the first place.

[RobertT]

My plans have been thought out and formulated over quite a few years. The basics haven't changed much over time but the specifics of exactly where my money is and when I plan to take it have evolved to some degree.

I haven't ruled anything in or out, but I would prefer to have a higher inflation proofed income well into my retirement and for the rest of my life, so intend to take my RM pensions at NRA. The lump sums and the ISA's I have are to maximise the cash in my pocket when I'm younger, although I still intend to keep a cash buffer tucked away for those rainy day emergencies and luxuries.

[tractorboy2]

Rob

Your retirement plans looks well thought out, thanks for sharing this. I am looking at a similar plan although I plan to finish at about 56/57, if I can make the numbers work

My only suggestion is have you thought about taking your NRA 65 at 60? This would give you a higher guaranteed inflation proof income at 60.

I say this because the reduction would take about 15 years to make up and I would argue you are better having more cash in your pocket the younger you are. Personally I am taking my nra 65 at 60 as I view nra65 as really part of my original pension from RM which should not really have been separated from nra 60 in the first place.

I worked out that if I took my NRA65 at 60 , I wouldn't start losing out till I was 80. This is because the 15 years doesn't start till you are 65.

[NorthernBoy]

Rob

Your retirement plans looks well thought out, thanks for sharing this. I am looking at a similar plan although I plan to finish at about 56/57, if I can make the numbers work

My only suggestion is have you thought about taking your NRA 65 at 60? This would give you a higher guaranteed inflation proof income at 60.

I say this because the reduction would take about 15 years to make up and I would argue you are better having more cash in your pocket the younger you are. Personally I am taking my nra 65 at 60 as I view nra65 as really part of my original pension from RM which should not really have been separated from nra 60 in the first place.

I worked out that if I took my NRA65 at 60 , I wouldn't start losing out till I was 80. This is because the 15 years doesn't start till you are 65.

For me the Nra 65 is a small % of my overall pension as such I am prepared to take a 25% reduction for taking it at 60. For my nra 60 I am taking it at 60 as the reduction in £ terms for is significant at 55.

Also as stated above I view nra 65 as really part of the original 60 pension that Rm just happened to move out to 65 to save money, so that’s another reason why I am taking it early.

No right or wrong on when to take your pension, do what’s best for you. Work out what you need to live on per month in retirement and then work out a plan that meets that monthly number.

[baldrick]

As said in the title as I'm a few years off from retiring, im making plans now to jump ship, I also want to have a comfortable lifestyle.

So the things I would like to know is.....

How much are you getting a month, obviously this will vary between individuals and after how many years of service ?
About £1190 after deductions from RMMP (32 years actual service + 8 'bought' years) + £624 State Pension.

Did you take a lump sum plus pension or forgo the lump sum for a larger pension ?
I converted nearly all my lump sum into pension.
But I took VR at 62 so I got 104 weeks redundancy payment which is my 'emergencies' fund.

Did you have an additional AVC such as bonus plan or flexiplan ?
No, but I paid into the added years option from 40 years of age until 60. It bought me the extra 8 years for the full 40 year pension.

Did you take it when it was due or took it early ?
When due, at 60.

Were you able to have the lifestyle you were hoping for or did you struggle ?
I have a fairly simple lifestyle so it is enough for me.
My mortgage was paid off just before I reached 60. My only big expense is a winter holiday.

Did you claim pension credit or other benefits to make up for any deficiencies in your pension or get any grants to help you ?
I'm not entitled to anything except the £200 Winter Fuel Payment, free London travelpass, and free prescriptions after 60 - the Government is proposing raising this to 67.

How did you handle all the free time or did you struggle mentally ?
I found it a bit difficult to get used to at first, it took about 12 months to decompress and I'm quite happy not doing anything much now.

[Hawkey99]

What to do when retired?

This I would argue is almost if not more important than the actual money you receive.

Filling your day can be sometime hard if you don't plan things properly but there are literally hundreds of things you can do that are good for you and your health.

Walking great for mind and body.
Swimming Same
Gym same
Volunteering. You can do this with no skills and do as much or as little as you like. Putting something back into society.
Reading and joining a library.
Social events with people also retired.
Growing your own fruit and veg, getting an allotment.
Travel. Local walks and history. Camping free or cheap.
Cooking real meals not from freezer.
Go to the Cinema
Get a dog...Very highly recommended.
Start new hobby.
Jigsaws and quizzes.
Visit local pub (not to often)
Spend extra time with family.


Just a tip of the Iceberg list......Have a great life.....

[NWpostie]

Lots of very interesting answers and it does give me some ideas as I hope it does for others, I hope this thread will continue for a long time as pension rules do change all the time including the proposed CDC pension plan, this thread can keep us up to date with current practice and experience.

Thank you Baldrick for taking the time to give a detailed response

I'm about the same stage as you Robert T, same length of service and similar savings plan.

[NWpostie]

It's been 4 years since I put this thread up, I'm now 57 and approaching the time when I need to start planning to retire.

My AVCs is looking healthy Flexiplan and bonusplan both in growth option, bank saving accruing nicely and doing overtime to build up my savings.

I just need to knuckle down and focus on getting to NRA60 in good shape to have a positive lifestyle,, hopefully the payout is enough to thrive on rather than surviving.

Come the time I claim, I'll keep you updated

[RobertT]

It's interesting to read my reply to your questions from 4 years ago. It's now just over 2 years since I left RM and my experience has (more or less) matched my plans!

I knew I was in a decent position financially when I left, but I'm in a better place now than I thought I would be, as my savings and investments have performed better than expected. The personal pension being the stand out one, as that has only gone down by half as much as I've drawn down from it.
If that continues, it will probably mean giving a slice to the taxman at some point, but 80% of something is better than 100% of nothing!

The practice of being retired can be hard for some to adjust to, and I've heard of people transitioning straight away, to others going back to work because it's not for them.
I was somewhere in the middle and it took me a good 4-5 months to settle down into a new routine, and to some degree it's still a learning process, just as life is in general.

I've had a few holidays, done some DIY and filled my time fairly well doing the hobbies that interest me – and there's still plenty of things I'd planned and haven't got round to yet!

There are days you think 'what now', but talking to some of my ex colleagues about how RM has changed, I'm in no doubt that I made the right choice in going when I did.

[NWpostie]

@RobertT

Circumstances have changed in 4 years, we now have Kretinsky as the new owner, terms and conditions are only guaranteed for 5 years, that can easily end sooner going by previous foreign takeovers.

Financially thing are much better my AVCs have increased vastly since I last posted this thread, I'm also closer to my target of saving up at least one years salary equivalent for emergencies, I will continue to save up to NRA60, once I claim it I will see how much I have before deciding my next step.

[mrcurve]

I would suggest that anyone still at Royal Mail after the 60 Pension kicks in, consider saving the extra income, and maybe a bit more on top, having an extra pot of money to supplement your income when it drops down to just the pension level would help to tide you over until the 65, 67 pensions kick in.
Its probably going to be a challenge to drop down from a wage and pension to just the pension, if you can reduce your income by saving extra it will give you some inkling of living on a pension only.

Also check out your local u3a, its not expensive and you don’t have to be retired either.

https://www.u3a.org.uk/

[freespeech]

NWpostie, I suspect most visitors to this forum are still employed and so can't really answer your questions.
So as nobody else has put their own views forward, and as someone who is planning on retiring in the next year or two, I thought I'd put my two penneth in.

The state pension of currently £9,300 will kick in from 67, but I'll obviously lose the supplement(total of about £1,600) at the same time.

I'm currently 59 and my state pension forecast at NRA67 is £12,014.12 per year. Why is yours so low?