Onwards to freedom!

crv1963

Hi


We simply worked out on paper what we will need to have, definitely include the SP, we worked with over estimated bills and underestimated income to build a margin of error in our favour in our calculations.


Once we had that we have worked out the dates of the various pensions coming in then what pots of money we need to bridge any gaps. So we worked out that in reality I can really retire age 60/62 wife age 57/59, but that the work we will need to do can be in a different field/ profession/ part time as long as we have built up a good proportion of our pots.


Interestingly I worked an extra shift yesterday in a different area of the organisation and I really enjoyed it. I worked with a woman who had taken early retirement and she said although she'd taken a hit with the pension reduction, for her doing shifts when she wanted if she wanted was such a release from the work related stress she actually enjoyed working back at her old workplace.

gallygirl

Escapar2020 wrote: »

This is all very interesting! I hear different mentions of spreadsheets, is there something good and simple to download rather than starting from scratch?

There are various models you can use and download the results of - CFire sim is one that comes to mind - but that is based on you knowing what income/savings you will have and your projected spending. It then plugs all the data in and runs it through all the financial cycles we've had over the last 100 years, plus some random ones, and tells you what % success rate you have (i.e. how likely you are to end up broke in the gutter because your money has run out :eek:).
However, it was only when I built my own, very simple, spreadsheet that I really understood what was happening and what could happen to my money.
I set it up with income being fed in at various fixed stages (e.g. I have two 'massive' DB pensions (around 2.2k a year in total :rotfl:) which come payable at 60 and I projected state retirement coming in at 68 - it's currently 67 so I added an extra year. I took their current values and added x% for inflation every year. I took what I thought I would spend in retirement and added y% a year (always made inflation slightly higher than the pensions rise). Then I added rent from properties we let out with z% increase a year (less than inflation). I projected my pension pots worth and how it could grow or shrink. I did all the same based on me no longer being with Mr GG (so rental income halved). I did it with 0% inflation, 10% inflation etc. All models showed I wouldn't run out of money and I could afford to draw on my pension pot to fund extravagant holidays .
Once I really understood the figures I then played with the online calculators and let them do their worst.. I came out with a 98% success rate, so then I jumped ship :T.
Now I need to have the courage to spend some of the money in the pension pot :rotfl:.

Ed - 60% to Barista FI? That's superb - and there's you beating yourself up .

SuperSecretSquirrel

Thanks for posting everyone, it seems my diary has never been busier!

NM, earlier comment regards unproductive cash, I've come to realise it's not really relevant. I can shift between asset classes whenever I feel like it, so what at one moment is unproductive, at the next could be. It doesn't really matter all that much how things are allocated in the accumulation stage, but obviously it matters when moving to the withdrawal stage. Same could be said about home equity (or even the cars), but we won't want to downsize or rent in future, so leaving it off the table. I think I'm happy to leave my "interest accruing assets" calculation unchanged

KC, you are welcome to post as much detail as you like here!

Ed, 60% to Barista FI, that's awesome! Can't believe you were down on yourself a few days ago, you too are "keeeleeeng eeet"

crv1963, tending towards the pessimistic or conservative side makes sense to me - better safe than sorry!

Thanks for all the feedback on how I could include state pension in my calculations. Not had a chance to sit down with pen and paper (or a spreadsheet) yet, so not sure which approach will work best for us, but I have a feeling the gallygirl route of a spreadsheet where I can see exactly what is happening would work well. A breakdown split across all different pots would be really helpful. I sometimes worry that focusing on the headline NW value will leave us with too much held hostage in pensions, not enough available in earlier years. A proper spreadsheet that accounts for which pots can be accessed and when would help avoid that outcome. I need to start getting a grip on this rather than keep putting it off as a "problem for the distant future".

Bit morbid, but I'll need to keep in mind that if the state pension factors in a big way, one of us dying would halve the amount coming in, without halving the expenses. A few variants for different scenarios might be required.

Having thought about it (not very deeply I hasten to add!) I think we're already barista FI. If we both earned minimum wage (£7.83 from April) and worked 20 hours a week each, we'd take home over 16kpa between us. At the moment, that's pretty close to our annual expenditure. Assuming we could arrange our shifts in such away that paid childcare wouldn't be required, add on a little income from investments etc and we're good. No idea on tax credits and the like, probably not relevant if you have savings, but it seems they wouldn't be required anyway. This has really buoyed my feelings. We earn a fair bit more than that, and the difference is being saved for the future. Were not a zillion miles away from pulling this off, are we?

I know our expenses won't remain static, the children will be far more expensive ten to twenty years from now for a start, and houses need maintenance, cars need replacing, etc, but knowing we now have what can be considered a huge safety net of being able to get by on very little income is very heartening :cool:

VDOT47

Sounds like a good position to be in at the moment SSS!


My thinking about retirement is very much more 'broad brush' without spreadsheets etc (although I'm wondering if I should start one lol) - basically, using today's expenses (which I think is how you need to look at it, as no one has a crystal ball on how inflation will affect things) how much would me and OH need to live off, excluding the mortgage (as this would be paid off in a future retirement scenario). I think it would be about £20,000 - £22,000 p.a plus 'treats' such as holidays, so all-in probably £30,000. State pension would account for c10k of that, so we would need c£20k p.a. to live off. Therefore, assuming retirement at maybe 55, that is 'best case' 30 years at £20k = £600,000.


Release maybe £200k from downsizing, take into account pensions which are automatically accruing from auto-enrolment contributions (a final pot of about £100k according to the latest scheme provider estimate) and then it probably leaves the need to have about £300k in savings/investments.


Any more than that is bunce .....

greent

I find all of this terribly confusing. I have an old defined benefit (non contrib) pension from when I worked in a bank (VR back in 2004, when I was only working part time by then) I've looked up the guaranteed transfer value of it and it's 250K (shy a few hundred £) with my current pension (if I was of staff pensionable age) being 7.2k pa. OH also worked in a bank, similar scheme, left 2008. His current pension value would be 22k pa - he's lost his login for me to check tfr value so has asked for a reminder (will be posted) We've also got a couple of other (much smaller) pension schemes each (and should also get full state pension according to the forecasts we've received) and have a BTL (we're looking to repay the mtge in 7y) I *think* we're doing ok - but am planning on a chat with an IFA around April/ May (when OH should be in between contracts) We're 47/48 and MF on our home (val c430-450k) - but we do have 4 children...

As a back-of-fag-packet type calculation, does it sound reasonable? We generally (when not having expensive kitchen refits! ) have quite low spends compared to many of our peers (inc those with less children)

Obv not looking for actual guidance, just does it sound passable or not? - any major action we need to take would have to be soon, given our ages! (hence the IFA later this year)

(sorry for hijacking!)

gallygirl

SuperSecretSquirrel wrote: »

Were not a zillion miles away from pulling this off, are we?

Yup, not a zillion miles at all. Definitely keeeeeleeeng eeeet :rotfl:
.

VDOT47 wrote: »

My thinking about retirement is very much more 'broad brush' without spreadsheets etc (although I'm wondering if I should start one lol) - basically, using today's expenses (which I think is how you need to look at it, as no one has a crystal ball on how inflation will affect things) how much would me and OH need to live off, excluding the mortgage (as this would be paid off in a future retirement scenario). I think it would be about £20,000 - £22,000 p.a plus 'treats' such as holidays, so all-in probably £30,000. State pension would account for c10k of that, so we would need c£20k p.a. to live off. Therefore, assuming retirement at maybe 55, that is 'best case' 30 years at £20k = £600,000.


Release maybe £200k from downsizing, take into account pensions which are automatically accruing from auto-enrolment contributions (a final pot of about £100k according to the latest scheme provider estimate) and then it probably leaves the need to have about £300k in savings/investments.


Any more than that is bunce .....

That's as good a place as any to start :T. Now you need to start fleshing it out, staging guaranteed income against planned retirement and seeing where the gaps are - that helps decide whether your strategy should be pensions or ISA's or similar. Bearing in mind the age limit for drawing on pensions may well rise.....

greent wrote: »

As a back-of-fag-packet type calculation, does it sound reasonable? We generally (when not having expensive kitchen refits! ) have quite low spends compared to many of our peers (inc those with less children)

You appear to also be keeeeleeeng eeet GT . Your house is a major asset - would you consider downsizing when children are older (tip - get all out of the house for the summer and move without telling them ). When are pensions payable, how much do you want/need to live on and when do you want to retire are obvious starting points.

SuperSecretSquirrel

Another £25 PB win in February

Stooze stats as they stand - I've paid a total of £151.34 in money transfer fees, and £6.35 in interest, received £25.27 cashback, and won 11 x £25 prizes. 7 months into a 24 month experiment I'm £142.58 up.

The cost of borrowing versus PB prizes shouldn't really be compared directly. Initially I had more than the stooze pot in PBs. Right now I have less, having withdrawn 12k to repay the mortgage. Further withdrawals from PBs will be needed to pay off the stooze card balances eventually, which is fair enough. Minimum card repayments are not pulled from PB balance. It's not like the values are lightyears apart, but it's not fair to say that the PBs holding is equal to the stooze pot either.

I'll keep tracking things as I have been, but I'll also keep a note of holding size each month to work out overall return from PBs.

SuperSecretSquirrel

Updated my signature:

Mtg [2013 £64k|2014 £51k|2015 £38k|2016 £26k|2017 14k] Zero!
MN [2013-£25k|2014-£2k|2015+£16k|2016+£34k|2017+£52k] +£51,713.71 (MFiT4:+60k)
NW [2013 £126k|2014 £156k|2015 £190k|2016 £228k|2017 £269k] £270,817.92 (2020:300k)
FI [2013 -1.2%|2014 2.8%|2015 6.9%|2016 13%|2017 18%] 29.1% (exc SP)

That will do for now. Eventually another line marked (inc SP) will appear, once I've figured out how to calculate a FI% figure that includes state pension

SuperSecretSquirrel

[SIZE=2][FONT=Courier New]               CURRENTVALUE       +/-MTH       +/-QTR       +/-YOY
House Value:    [COLOR=Blue]£125,000.00[/COLOR]        £0.00        £0.00        £0.00
Pensions:        [COLOR=Blue]£78,520.56[/COLOR]   -£1,107.26    £2,056.79   £12,576.99
S&S:             [COLOR=Blue]£28,057.73[/COLOR]      £663.02    £2,883.19   £12,864.14
Cash:            [COLOR=Blue]£24,995.80[/COLOR]      £506.22  -£15,457.12  -£20,307.77
Car Value:       [COLOR=Blue]£14,085.00[/COLOR]     -£640.00     -£740.00   -£2,515.00
Mortgage:             [COLOR=DarkRed]£0.00[/COLOR]        £0.00   £14,904.43   £21,644.55
Due to HMRC:       [COLOR=DarkRed]-£224.04[/COLOR]      -£53.46      £259.29      £245.82
Student Loan:      [COLOR=DarkRed]-£182.11[/COLOR]       £66.50      £199.10    £1,813.18
[B]Total:          £270,252.94     -£564.98    £4,105.68   £26,321.91[/B][/FONT][/SIZE]

90.1% of the way to 300k net worth (2020 challenge), 0.0% mortgage ltv, £52,829.49 liquid assets, 29.1% financially independent.
__________________________________________________

A little late posting figures this month. I managed to grab the balances on the 1st, but it has taken until now for me to find the time to post here.

On the surface, a poor month. Net worth has fallen month on month for the first time in as long as I can remember! Surely, I must be disappointed, right?

Wrong

Markets were rough in February, pension has taken a hit, S&S ISA has taken a hit. All that has really happened is some of the recent obscene paper gains have been lost. No bother

Other than that, some heavy car depreciation seems to be the only figure of note. Depreciation was suspiciously low last month so this looks like a case of playing catch up. Also, we all know cars are lean mean wealth destroying machines, so a hefty negative figure on that line should never come as a surprise!

In other news, we are both relieved that at the end of this month, the year long spend tracking experiment will be over. I appreciate having the resulting data on hand, but the data capture has been such a chore! If we've learned anything from the process, it's that we're natural non spendy types, and our no budget budgeting style is perfectly fine

Oh, and I've just seen that there was a £50 PB win this month :j

Karmacat

Very balanced attitude there, SSS, about the "losses" and the data tracking. I haven't been data tracking recently - it doesn't give me any extra information I can actually use, I *know* what I need to do to balance the portfolio, thats good enough. Might go back to it in after we sell my mum's house, as the whole balance issue will then need to be looked at again.