HELP PLEASE - rE CHANGE OF CIRCUMSTANCES

guilo67

Dear all,


Newbie here looking for help, constructive criticism and perhaps reassurance.


Issue - as of Apr 2016 I will be made redundant.


I have known it would be coming but none the same it was still a shock. Not wanting to crow but I think I will be OK. On the news I was part euphoric part reticent and full of trepidation.


I have now got my head together and done some basic calculations. The overall retirement spreadsheet is WIP. I would welcome feedback and any help / hints anyone has.


Think this post will be a bit like a work report so sorry about that, old habits and all that, here goes.


Background


Im 54 now and am due to be made redundant Apr 16.
I currently earn 80K plus have company car.
I have FS pension which kicks in at age 65, early redemption 4%PA. This will be worth 22K PA. Pension frozen but will rise with CPI.
Mortgage free.
No kids - dog only.
OH teacher and still working.


Strategy & Tactics


Retire at 56 and live off pot. Keep pension intact (if possible)
Live well and enjoy but be sensible
Downsize eventually but not yet and so not in any calc,s.
Maximise my pot and maximise tax wrappers.
Educate myself in financial planning then visit IFA.
Pump 3k per month into AVC then remove AVC tax free Apr 16.
Please note AVC does not count in FSP.
At Apr 16 live off pot ASAP so keeping pension intact.


Assets now and at Apr 2016


House worth 350k, 2016 = 360k
AVC worth 24k, worth 2016 = 81k
ISA worth 60K, worth 2016 = 78K
Tax free lump sum worth 2016 = 30k
Rainy day fund = 8k (constant)
Total pot to last 9yrs = 197k


Liabilities Apr 16 - Apr 25


Live on equiv 22k PA = 208k
Buy car, keep for 9 yrs = 12k
Unknown pot = 10k
Toyal spent over 9yrs = 240k


Gap / contingency


Gap = 43k or two years.
Down size?
Take pension 2 years early lose 8%?
Total assets do not take account of compounding?
Don't spend as much PA, cut back to circa 17k
Liabilities Apr 16 to Apr 25


As I stated previously I am sure there will be obvious things I have overlooked or just been plain naïve / stupid.


Please feedback, all comments gratefully received especially those more knowledgeable about some of the specialist areas. If there any better strategies / tactics please share.


Many many thanks and apologies again if its a bit grey. best regards...................

guilo67

Originally posted this on the incorrect board

TELLIT01

The only observation I would make, assuming you mean 2016 and not 2015, is that April 2016 is a long way off and many things can change in that time. The company could change its mind about making you redundant for a start. Alternatively, if they are discussing redundancies 18 months hence they could be gone before that.

guilo67

Appreciate the reply.
I am pretty sure all aspects will hold exactly to the dates. The April date will definitely not be sooner. They might ask me to go slightly later. However I am positive that this is the date I will go. I have this in writing and to be fair they have been pretty good to me and I have been pretty good to them so its in everyones interest not to rock the boat.


Health being hit by a bus etc pretty sure its going to be as per the dates.

guilo67

Thanks a lot Keith fully appreciate the reply.


April 2016 is the correct date.


The dates will all hold. They might ask me to stay on as consultant for a couple of months but I will not do that. I am ready to go and they know that.


All dates etc are in writing. They have been good to me and I have been good to them so its in no ones interest to rock the boat.


Im treating it like a friendly divorce.


Thanks again appreciate it

guilo67

Hi folks, this is a bit slow, am pretty sure I'm no expert. Any advice gratefully received. Including dis similar points of view...thanks

kerri_gt

I'm no expert but the first question I think of is, what are your outgoings now vs what you think you can live off. Remember things such as utilities will likely be higher if you are at home more than you are at the moment, what do you plan to do in you retirement (there's only so much daytime tv one can watch) - will you be planning more travel, going out, hobbies that cost etc? Even more driving to places will add petrol / car costs - they might seem small amounts but soon add up.

Do you truly know what you spend now - if not it would be a good time to start actually noting spends, most of us think we spend x and actually spend y - you seem to be in a lucky / positive position where you are financially comfortable at the moment, but may spend more than you think.

getmore4less

£12k on a car, what mileage will you be doing, I had a 35m(round trip) commute that was a reduction of 7k a year and I have not filled those miles with personal miles.

If this is a second car will you need one, if so do you need a run around or a workhorse, will depend what the plans are.

If going low miles a 3yo high mile ex lease company car(could you buy your current one?)

Redundancy you mention the £30k any more can you get that paid in 2016-17 tax year that's another 10k tax free.

You also have not counted any investment income from your working pot.

22k * 9 is £198
if we say over inflation returns.

£185 over 9 years. spend £2000 per month drawdown.(more than £22k to cover the £10k unknown)
rate left/shortfall max drawdown to zero.
0.0% -£31000 £1713
0.5% -£27300 £1752
1.0% -£23500 £1792
1.5% -£19400 £1832
2.0% -£15000 £1873

spend £8k on a car so 4more in the pot

2.0% -£10k £1914

How much of the £22kpa is discretionary spending?
It should be possible to make the money last.

guilo67

Great questions posed, thanks.

I currently reckon that I can live off 18k quite comfortably. I have therefore budgeted 4k discretionary spend.

Plan in retirement is get fitter and do the things I enjoyed, walking, climbing,canoeing, golf and cycle as well as do house garden etc. am sure I will get my list of chores. In preparation for this I have bought new clubs, boots, bike, canoe etc etc. last year I spent about 3k getting what I wanted.

my plan was to spend up to 12k on a nearly new reliable sensible car to be a comfortable workhorse. The horse would last me 9yrs and be capable of doing circa 100k. Going by the advise so far and feedback I am thinking of Octavia, Yeti or Mondeo.

Some good questions;

could I buy my current company car. YES. I currently have a 3 series BMW. Nice car but a !!!!!! in the snow. I would like to go back and enjoy a couple of outdoor years so don't think BMW is suitable.

could I defer some payment and put into 2016/2017. DONT KNOW. Great question which I will work on. If I could could I throw the whole lot into my AVC and pay no tax?

Have not considered investment income. yes and no. I sort of assumed that income would counter inflation. Not very mathematical I know. I enjoy stocks and shares and have dabbled for about 20 years, usually in FTSE 350 companies. Last year with compounding the total value increased 9%. About even this year if you discount compounding. My plan was to move half from single shares to a global tracker and keep my interest and brain ticking on the remainder.

Hope this helps, thanks again very much for the feedback, other peoples perspectives are great and very insightful. cheers

getmore4less

Are you going trailer or roof for carting things about.


Might influence the car choice(agree don't bother with the BMW)


As said on the other thread, winter set of tyres/wheels will be the way to go.


If planning a house overhaul think about budget, if just a decorating you can start collecting things like paints etc. when stuff in on clearance sales, we picked up some this year at £16 would have been £32 when you need 6 tins that's close to £100.


Do you need storage/shed/workshop/greenhouse, again a couple of years to be on the lookout for a bargain.


If £18k will cover the normal going you can adjust the discretionary based on performance, caution of just beating inflation is probably wise.


£1500pm drawdown would leave £23k after 9 years based on just pacing inflation.


One other thing is if the OH carries on working how you manage that situation, we had a few years like that and there can be issues, especially the first summer holidays when you are both at home probably for the first time.


If you can get all the projects done during term time then you can have a "quality" time during the holidays.

guilo67

Thanks again,

Great point re the other half. It's compounded by the fact that for the last 20 years I have lived out of a suitcase traveling so this wiLl be a change and will require a bit of adjustment by both parties.

Quite happy to do the chores, cooking etc as well as doing my own thing but imagine the first 12m will be stressful for all concerned.

The car will have roof bars. I also plan to get a trailer as I plan to have a multi stove installed. Chopping wood can be one of my chores lol.

Good point re buying stuff in advance. I have a fairly large cellar so storage will not be a problem. I do fancy a greenhouse but maybe not quite yet. I can see us down sizing in maybe 10 years so maybe then.

Thanks