Prosperous soul in the making

doingitanyway

PurpleFairy26 said:

there will always be a house suitable somewhere, particularly if you can we two hours from where your work is now. If you drew a circle round that on the map two hours away that would show how much scope there is. 

I've stolen this idea for my own future plans. Thank you

doingitanyway

Re the pension. It sounds as if you are doing good research and will make the best decision for you and your family.
Great work with your garden so glad you can enjoy it. We all work so hard paying for our homes it is nice to have the opportunity to enjoy them!

mark55man

I agree SH is doing good research, but the trouble with pensions is that the conclusions you need to draw are harder than most decisions.  And those that seem fine at age 50 aren't always the ones that your 70 year old self would necessarily be quite so pleased about.

Someone put it very well when they said (about defined benefit buy out sums, but more generally true) is the reason why the companies are so willing to pay out so much money to buy people out of them, is that they are in fact actually worth more.  the peace of mind in not having to navigate the next 30 years of investment twists and turns is worth more than you may think.  sometimes you have to think about what you are giving up as much as what you are gaining.

savingholmes

Thanks for the concern and interest guys

I think for context it is worth explaining the pension buyout figure I've been given is 45 times (now) what I am due to be paid at 65 (£7.8Kp.a.) - 15 years from now. I think when ES looked into hers she was only offered 20x which I wouldn't take. 15 years would be a lot of time for pension funds to grow and compound. If I wanted to take that pension at 60 - the annual amount I would get would drop by around £1.8K a year which adds up if I live longer. At 55 the reduction would be even bigger. By using a flexible drawdown strategy I can minimise tax and leave the bulk of the money continually invested. The 45 x rate is a lot of room for market fluctuation. If it grew even 5% a year compounded - it would go up from £355K - £10K fees (345K) to £443K by 2025. If it went up the 7% or 10% that were seen over a recent 10 year period with compounding it could be worth far more. That pension would be enough to see us through from 55 to 67 - with either DH chipping in money from his pension at 60 or one or both of us working part time and we ought to be able to repay the mortgage in that period too. We just want to give ourselves more options and choose how, when and where to work with a cushion of the pension behind us. 

If I left my current employer tomorrow - I've already accrued around £8.8K in my guaranteed current work pension. If I stay there until at least 55 - (another defined benefit pension) - I am due to qualify for approx £13K from age 67 from my current employer plus £9.1K state pension (SP). If I chose to work until age 67 (unlikely) I would get £23K plus the £9.1K SP. DH is also due to get £9.1K state pension. That means that in the unlikely event that I had exhausted the pension I am trying to move in the 12 year period between 55 and 67 - that we would still have a minimum of £30K a year to live on at 67 - and should have remaining £ from DH's defined contribution pension too. Our current estimates suggest that we could easily have an income of £40-50K p.a at 67 with at least 60-75% of that guaranteed. Even the FCA does admit for some people it is absolutely the right thing to transfer. While I could draw my current work pension from age 55 - they would permanently reduce my pension by around 46% which is why I don't really see that as a viable option.

If the advisors really believe I'm not a good candidate they will turn me down anyway as at least one already has when I was offered a lower amount.  The pension I am seeking to transfer offers 50% spouse benefit and my current pension less than that. If I were to pre-decease my husband he would really struggle financially. This way my fund in inheritable in full by him or whoever I nominate. If I died before age 75 he could take the lot tax free - after that it is taxable.

We are hoping to stop working full time at 55 rather than quit working completely. Once we are debt free and depending on the mortgage situation - we could live on one wage or 2 part time ones even without the pension. I see it as my money that I should be free to do what I want with rather than all these roadblocks that have been put in the way - and expensive roadblocks at that. 

savingholmes

In other news - one of my cucumber plants has 3 flowers on it - all of its leaves are like paper with yellow spots though. All of my bean plants have pretty red and white flowers on them. I lost another pound so back to 12lb weightloss which is good. DD has felt ill all week - snuffly nose after meeting up with her friend for a walk. We hope it is just hayfever and walking in the rain but who knows. None of us have caught it which seems positive. It's pouring down with rain here which is disappointing.

We read the meters this weekend - we are now £83 in credit on gas and electric which is good. I am expecting our water bill to be way worse. I looked at our neighbour's house online - they are seriously house proud and their house looks stunning! I was then fighting feelings of inadequacy. It should be pretty much the mirror image of ours with one or two tweaks but it compared really well with an interior designed brand new home. Oh well... I found some Utube - M Forleo who was seriously motivating so that lifted me a little.

PurpleFairy26

Interesting your thoughts on pension. I have a meeting with a FA this week about my DB pension so interesting. 

As for your neighbours house. May look nice but houses like that are rarely practical for living in! 

mark55man

I missed that multiple.  My way of thinking is if the multiple is 40 you only need to return 2.5% above inflation to at least match the income stream from the pension.  and you always have the option of a later life annuity of the risk or hassle gets too much (in that sense a period of ill health is your friend).

I fear your only trouble may be the increasing reluctance of anyone to do this for you. My experience was more like ES a low initial offer which I rejected but over time it has risen and is now high 20s (which is still not high enough).  You should assume 3-4% return is realistic anything else is a bonus

good luck with it SH - it is a battle to work out whats best and then make it happen

enthusiasticsaver

You are correct SH in that my offer was a lot lower (less than 20 years) and if in fact I had been offered 45 times (I have never heard of anyone getting that high an offer) then I would fight for it too as there is obviously more wriggle room in market fluctuations. Did you say  the advisor you are considering is asking for an upfront fee before advising you though.  Don't most of them take the fee from the transfer amount?  What is to stop the advisor charging and then advising against?  

MovingForwards

Your neighbours house is the type of place I would be too scared to put a cup down as it would get whipped away, if I sat for too long I would worry the duster would come out 😂 my ex-MIL was / is like that, never felt comfortable.

Isn't it great seeing them flower and know you did that!

If it wasn't for you, I wouldn't have looked into setting up an additional pension, over and above my work DB one. You inspire confidence that they (SIPPS) are for regular people and not just the high income earners. I do hope you find an IFA willing to sign the papers off.

Blackcats

I can't contribute any input into the pension discussion, however, I do know that lots of people are re-evaluating their futures and making plans for a different normal.  I know your pension plans have been on your mind for a while now and looking at houses is also a way of thinking of a future life.  I wouldn't feel inferior about your neighbour's house - it's always nice to have a nose around in an on line peek but definitely not worth feeling inferior about.  I'm sure your house is a lovely happy home.