The Edcawber Principle

Science_mum

Sorry for the typos. I had very little sleep because of DS and DD last night and haven’t consumed enough coffee yet.

edinburgher

£6 paid off a CC.

Steeling myself for a *very* dry day of admin, admin and a little admin to fill in the gaps!

edinburgher

I survived the admin day and half about an hour or two left to go today before moving on to something more intellectually stimulating.

Mrs E has put her pension contribution up, meaning that she now has a total of 18% of her salary going into it. This is a nice amount and with no assumed wage rises over the next 24 years (very unlikely) or ad hoc contributions from either of us (also unlikely), should lead to our combined DC pots sitting in the range of £270k-£400k. I assumed 3% and 5% real return, which I don't think is terribly unrealistic considering we have a fairly balanced global portfolio.

Getting to the point, this means we're already on track for retirement at 60 (younger for Mrs E) on 80%+ of our current wages with no other changes.

The challenge from this point will be improving this

VDOT47

Sounds good Edinburgher. I think my aim is also to have a pension pot of about £400k by 60 (or ideally earlier), as well as being mortgage free by that time. I may not choose to retire at that age (and doubt MrsVDOT will, as she runs her own business and loves doing it), but it least it would give me the flexibility to think about retiring, scaling down, trying something different etc.

Suffolk_lass

Personally I would be looking for a bit more than £400k in your DC pot (or at least in your total income-earning investments) if that is where you anticipate your income coming from. I think you have a DB pot of (g)old that is busy index-linking and possibly a DB in your current employment. If that is the case I will relax (on your behalf). If not, maybe you know where your debt-busting money will next be deployed...

edinburgher

SL, my DB pot(s) will be worth £24k a year by then assuming no further promotions or pay increases. The £270-400k only needs to last 8 years

At that point we may both get state pensions as well, but could cope even if they no longer exist by then.

It's quite possible we might spend less by that point, so 60 would appear to be a worst-case scenario for now. I don't see us paying off our mortgage until a) rates shoot up or b) we're forced to for any reason

edinburgher

VDOT47 wrote: »

Sounds good Edinburgher. I think my aim is also to have a pension pot of about £400k by 60 (or ideally earlier), as well as being mortgage free by that time. I may not choose to retire at that age (and doubt MrsVDOT will, as she runs her own business and loves doing it), but it least it would give me the flexibility to think about retiring, scaling down, trying something different etc.

I'm a MFW fraud VDOT, other than getting to the lowest mortgage rates, I have no real interest in paying it off :rotfl:

Your plan sounds good, self employment can be wonderfully flexible when you're successful in your chosen business

Suffolk_lass

edinburgher wrote: »

I don't see us paying off our mortgage until a) rates shoot up or b) we're forced to for any reason

Why not? When you look at the amount of money you are paying in interest (rather than the rate of interest), isn't that an unnecessary drain on your income?

Our mortgage is at 1.24% and on less than £40k we are paying over £30 a month in interest. That is lots of lovely coffee... I am guessing yours is a bit more than that (on both elements). Do you know what you currently pay in interest? I suppose I just hate paying it and I always have better things to do with it.

Pensions - phew! I was sure you had other parts of your pension planning in place. You will be better off than us when you stop (Oh the benefits of hindsight, if only I had got the hang of this earlier!).

edinburgher

My mortgage is paid from after tax pounds. Payments into Mrs E's pension (salary sacrifice) are paid before tax, reduce her NI bill and prevent her having to make student loan repayments. Our mortgage interest rate would need to be brutal to make us prefer OPs.

Suffolk_lass

OK. I get that. Our mortgage was 13% at one time. I suppose we are coming from different places and at different stages of our lives. Of course there were no tuition fees for my generation and I got a grant to live on. I deeply regret that student loans exist. Personally, I would write off all student debt. Our Son dropped out because of them. He wasn't willing to accumulate the debt for a course that seemed to be replicating his Btec. Now inflation and a disincentive to earn more in his case, means his is sitting there, just growing. Your wife's investment in her pension is a constructive approach.