I see pensions is already on the roadmap … but some thoughts on this.
In the past, the old style pensions plans did everything for you … no need for the retired person to understand it, a simple monthly payment. Whilst the new style pensions we have can be much better ( eg left over money after death is not lost ) it is also much more complicated. Its entirely possible you can pay too much tax, run out of money, spend too little … and this is all happening as you get older and less able to cope with complexities.
Those of us with these new style pensions are now getting to retirement age … so the sh** is about to hit the fan
There are very few multi-vendor tools available to help. A couple of interest though are -
So there is a huge gap in the market for retirement tools. I would say features should include -
- Pre-retirement planning ( look at spending, see if the pot can sustain that with inflation / growth assumptions ) - expected pot value and income over time
- Tracking actual pot value & returns ( inc download of current fund values )
- Comparing plan with actual - critical to avoid running out of money ( or spending too little )
- Tax considerations - ie UFPLS & PCLS
- Mixture of funding sources - eg pensions + ISA’s
- Simulations of variables ( growth / inflation etc ) - calculate the chance of running out of funds
- Some way to make it easy to spend … eg auto topup current account from pension/ISA, keep as much as possible invested
Pretty sure there are other ideas …
Oh. Also it would be great to (optionally) support couples.
It would be amazing if Emma could do all of this!
I’m not overly familiar with the ins and outs of pensions - what % of the features you’ve mentioned above are useful pre-retirement vs during-retirement?
Well, pre-retirement I would suggest -
- Tag investments ( ISA or pension ) as for retirement
- Show totals of retirement investments
- Pending planning in emma, allow integration to planning tools ( I know evolve my retirement has an API )
- Add planning to emma - work out how much can be spent each month
Then post retirement -
- Track actual investment values with plan
Currently I (try) to do this in a google sheet - I can share some screenshots if that helps.
Makes sense, thanks for explaining.
The first couple of points should be pretty easy to add, but I guess the planning/ working out how much you can spend is where it gets a little trickier.
Pensions are on our long-term roadmap (next 12-18 months) so we have a bit of time to figure out exactly what this will look like!
FYI, here is one of my post retirement plan … so income starts at £3,500 per month and grows with inflation. To fund this money is taken from different pots -
and of course we can see the value of each pot over time as they get used up -
and, hopefully, this doesn’t go to zero before you die This is where I think Emma could get to.
Really interesting - thank you for sharing
So you have three pensions and then the state pension. Have you ever considered using someone like PensionBee to combine them into one?
What’s the reason behind your nutmeg account increasing in value over time in the bottom table?
Yes for pensions. But you can’t combine pension+isa and there are two of us. So will have 4 accounts at the minimum
Funds are still growing … so you can take out less than the fund grow ( ie living on interest ).
I don’t think pension consolidators like Nutmeg are the answer for planning. I’m not saying consolidation is bad, it’s just that it doesn’t really help much with the planning problem: if there are two of you, both lucky enough to have had a DB (final salary) pension early in your career then you could easily have a DB pension, a DC (money purchase) pension, and a state pension. On top of those you probably have an ISA, and perhaps even an investment pot that you weren’t able to put into a pension or ISA because of the limits. Between two of you that could be 10 pots (5 each) of money to consider in your plan.
I think of the asset side as being all about pots. Even if you a have a few pensions each that could be combined by a consolidator like Nutmeg, as mentioned above you could easily still have 10 pots of money to consider. Many of us will also need to plan for at least one debt pot: a mortgage that will have to be paid off at some point.
Each pot has different characteristics with regards to tax, access, valuation (which depends on the underlying assets), charges, inheritance and ideally needs to be modelled during the accumulation phase (pre-drawdown) at retirement, in the decumulation phase, and on death. If you define some of these fundamental characteristics for each pot then they can be modelled in different scenarios.
On the cashflow side, I think of planning as being all about phases. Emma has the data to help with the base case estimates: current income and outgoings. Those can form the basis for forward estimates during accumulation and decumulation phases. Most people should probably plan their cashflow for multiple decumulation phases to reflect the fact that they may plan to keep working for some time after retirement, and/or may want to spend more on holidays etc in early retirement than in later retirement. They may also want to prepare for a higher cost of care in late retirement.
Some may even want to add multiple accumulation phases, e.g. if they plan to go part time prior to retirement or maybe even a pre-retirement decumulation phase to fund a sabbatical.
Good point about budgets and state pensions. Also liked your idea to generalise pre/post retirement into phases.
I expect we could have a emma retirement “space”, each pot in the space tagged with its type (pension, SIPP, ISA, state pension etc ) and expected growth.
As you say, the existing emma budget could be used to create a retirement plan, and the retirement “space” could be monitored against the plan post retirement.
BTW I believe this area is huge … lots of us are now at that age when these new pension complexities are kicking in.
I agree, it’s a big area. Financial advisers charge a pretty penny to model different scenarios for you (which is just maths, not advice) - after you spent hours collating imperfect data. Then when you realise how sensitive the results are to some of that data, you can spend more time perfecting it, and spending more money for them to re-model.
There’s a lot to be saved by doing the modelling yourself (in Excel, or perhaps in Emma?!) and then taking the RESULTS to a financial adviser for true ADVICE (which is not a space I think Emma would want to get into - although it could provide the data and introduce advisers).
Much of what’s needed can be achieved by adding investments (including pensions) to Emma, then augmenting those with pension-related (and IHT-related?) attributes to support retirement modelling. Some of those attributes are generic (state pension, ISA), which Emma can provide (or default), some are individual (DB pension). Those who don’t want to model their retirement wouldn’t need to add those optional attributes until they’re ready to do so.
Also for those who don’t have shared bank accounts and savings, I think you’d also need to think about how to share data between Emma accounts (who are willing to do so), so that you can create a joint retirement plan - I think many people will have unbalanced/suboptimal retirements if planned independently.
I missed this thread , We are 100% on the same page. This is such a big gap in the market and I really worry that so many people don’t realise the size of the income gap they are going to have until it is too late to make a difference.