Prosperous soul in the making

savingholmes

enthusiasticsaver said:

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?  

Yes - they can advise against and I would have paid £495 to go nowhere. I've already paid £122 to get an updated estimate. However the FCA wants them to charge a fee - to try and reduce costs for those who do go ahead - as otherwise those who proceed are subsidising those who don't and no fee encourages more people to take a punt. I think it is a risk worth taking but will try one other provider Monday am and if that goes nowhere try and go ahead with this one. The other provider also charges an upfront fee but I can't find on the web how much - but then their % of the pot is much lower so depending on the fee it could work out cheaper - if they will even touch someone of my age.

savingholmes

mark88man said:

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

Yes - back in January I was turned down by about 8 providers just for being under 55. Their reasoning being if you were 3 month away from your 55th birthday - you had less risk of the market crashing before you could withdraw your tax free lump sum (upto 25%). I will get a report with cashflow options etc and in theory comparing market returns, annuity rates and life insurance versus leaving it as it or flexible drawdown.

MovingForwards said:

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.

Glad you are getting your pension sorted. It will be worth it in the end. I am kicking myself now as at one point in my 20s I was only contributing 50% of what I could and my pension would otherwise have been even higher. I have to just be grateful for what is though. I've never grown cucumbers before or anything other than beans and fruit so yes very exciting.

Blackcats said:

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. 

Thanks Blackcats. They are nice but a little OCD and they have been effectively furloughed for months so had plenty of time to sort their house - plus their kids have moved out. It all helps. 

Well DS and I have had another conversation about him paying board from his next payday. Depending on whether I feel he earns enough to pay it - considering £440. Logic being approx £200 for food as our bill has gone up dramatically since he's been home (coincided with lockdown) plus £240 towards mortgage, utilities, broadband and council tax. We agreed if he was paying towards the food - we could meal plan and make sure we are getting stuff he wants to eat / cook. If I don't feel he's earned enough wouldn't charge that much. He's currently on target to earn really decent money though so that would still leave him a lot for himself as long as he keeps his freelance work. He is really investing in himself though to try and develop the right skills so very proud of his bias towards taking action. We are considering going to uni next weekend to pick up the rest of his stuff and give his key back. We still haven't had it confirmed whether or not he has to pay his uni accommodation bill! Really hoping not - or they reduce it - really hard to be in this limbo state.

mark55man

your call - but £440 seems a little high - not sure where you live, but my DS could get a shared house for £70-£80pw in our town with almost no looking around, and possibly even cheaper with a bit of work.  obviously a family home will be nicer than some HMO type property, but ...   

clearmydebts

Approx what is his take home pay SavingH?

still_hopeful

I have followed with interest, and would like to add some thoughts on the pension question.

We transferred two pensions a couple of years ago, although the multiples were much higher than yours, including one at 61. However, we went into it very much with an open mind and were prepared to really challenge our thinking. Our IFA also took loads of time to get a picture of our attitudes, ambitions and approach to risk, and we explored lots of scenarios. It was in no way a tick-box exercise, which I worry a little is how you regard it - it seems as if you have already made up your mind and just want someone to rubber-stamp it.

I am of course playing devil's advocate a little here, since we did exactly what you would like to do! I would just advise you to really spend the time with your IFA to look at your finances and life plans as a whole, you might be pleasantly surprised at how you could meet your goals even if the transfer doesn't happen. One of the most interesting parts of the whole process was the range of projections he produced for different scenarios - if we didn't transfer and stayed in our home; if we didn't transfer and relocated to a more expensive area; if we did transfer and stayed put; and if we did transfer and relocated. All of the scenarios were tested against varying economic and growth assumptions.

One final word of caution - really consider your appetite for risk and how you would feel if you saw a massive drop in your pension funds after transfer. Ours fell by over £100,000 between January and the end of March, and while there has been some recovery they are still below the peak. We are accepting of that, but it really does test what you think in theory you could stand. The pensions board saw many upset posters who seemed surprised that pensions could fall. I get the feeling you like to control things and plan to the tiniest detail, so consider how you would react to things being so far out of your control.

All the best with your decisions, however it pans out.

savingholmes

mark88man said:

your call - but £440 seems a little high - not sure where you live, but my DS could get a shared house for £70-£80pw in our town with almost no looking around, and possibly even cheaper with a bit of work.  obviously a family home will be nicer than some HMO type property, but ...   

£440 would include £200 for food (which he could help pick). He's way over 6ft and eats loads. Our bill has gone up over £200 since he came home. The £240 is a contribution towards the mortgage and then a third of our utility bills, including BB and Council Tax. We love him but if have brought him up to be independent he was planning to go and live with a relative in a city for £550pcm with food on top. I was brought up with 10% for Saturday job and 1/3 when you worked full time so it doesn't seem unreasonable to me. 

clearmydebts said:

Approx what is his take home pay SavingH?

He earned £1K gross last month and is due to earn at least £1600 this month with the potential of a one off £4-6K!! A room in a shared house around here would be more. We haven't charged him so far at all even though we had pre-paid him £ for uni - and he got a student loan while at home - as he has other debts and has had medical bills. I also wouldn't charge him if he had no income. I suggested a sliding scale between the £200 to £440 depending on his earnings. I know a lot of parents are happy to have their kids living with them long term but that's never been our plan and rightly or wrongly we believe in financially disincentivising that. We both left home straight after uni at 21 (he is 22). As I've said in an earlier post - putting him through uni has cost us a fortune we didn't have while we have been repaying debt - I don't think it is unreasonable to expect him to contribute now and I believe t is good training for him. My BIL stayed home until age 27 - we absolutely wouldn't want that. DS is now planning to be home until after Xmas and then hopes to go travelling again.

savingholmes

still_hopeful said:

I have followed with interest, and would like to add some thoughts on the pension question.
Thanks for your interest. Forgive me if I sound at all defensive - I've been trying to get this sorted since Jan.

We transferred two pensions a couple of years ago, although the multiples were much higher than yours, including one at 61. However, we went into it very much with an open mind and were prepared to really challenge our thinking. Our IFA also took loads of time to get a picture of our attitudes, ambitions and approach to risk, and we explored lots of scenarios. It was in no way a tick-box exercise, which I worry a little is how you regard it - it seems as if you have already made up your mind and just want someone to rubber-stamp it.

A 61 multiple sounds amazing. I have done multiple models of my own. I really believe it can work massively in our favour. I have over a year's worth of budget forecast for this year for example. I've worked out at today's £ what we need for a 'lean' retirement, what we'd need to maintain our current standard of living and what we'd need for a more comfortable retirement. Once the CCs are gone - we could live on one wage for example - other than we are trying to top up DH's pension between now and age 55. We don't want to stop working altogether we just don't want the kind of jobs / hours we do now.

I am of course playing devil's advocate a little here, since we did exactly what you would like to do!
Well done you. I hope to follow you..

I would just advise you to really spend the time with your IFA to look at your finances and life plans as a whole, you might be pleasantly surprised at how you could meet your goals even if the transfer doesn't happen. One of the most interesting parts of the whole process was the range of projections he produced for different scenarios - if we didn't transfer and stayed in our home; if we didn't transfer and relocated to a more expensive area; if we did transfer and stayed put; and if we did transfer and relocated. All of the scenarios were tested against varying economic and growth assumptions.

They have to do that anyway if I proceed to report stage. From my modelling - we could still do some of what I hope to do without the transfer it would just take years longer - and leave DH in a poor position if I were to die before him. (Yes I know life insurance could help with that). If we could take the money at 50 - which not that long ago we could have done - we would have been doing that to pursue our rural dream while we are still young enough to do what we want. I see us still working but relocated somewhere a lot more beautiful.

One final word of caution - really consider your appetite for risk and how you would feel if you saw a massive drop in your pension funds after transfer. Ours fell by over £100,000 between January and the end of March, and while there has been some recovery they are still below the peak. We are accepting of that, but it really does test what you think in theory you could stand. The pensions board saw many upset posters who seemed surprised that pensions could fall. I get the feeling you like to control things and plan to the tiniest detail, so consider how you would react to things being so far out of your control.

All the best with your decisions, however it pans out.

I hope your pensions recover swiftly. One of my small pensions dropped about 10% too but has since recovered. Half the battle is choosing not to look. I've read quite a few investing books, follow F1RE podcasters and am pretty confident we would stay the course. We can be really disciplined when we want to be. One option could for example be taking the 25% tax free lump sum and living on that for a few years without drawing any more pension at all - that would give it more chance to grow etc. The IFA has to model cashflow as part of what they do. The first 'financial' year we are likely to have met our income goals before we hit DH's 55th birthday a few months after mine in which case we may be able to make that income and any tax refund stretch to cover a big proportion of the year before we even access the pension. We currently envisage working until our birthdays to make sure we qualify for full state pension.

I am planning to build up my writing, art, speaking etc side hustles between now and then so that it could be an on-going source of revenue.

MovingForwards

Doesn't sound like you are asking for much rent etc, but as long as it covers the additional costs, that's great. My sibling gets charged £75pw and earns about 3x what DS is. I honestly think if my mom charged more he would have moved out years ago instead of approaching 50 🙈🙈

It sounds like you've covered a lot of angles with your pension plans!

hugglemonster

Hi SH, agree with ds paying his way whilst at home especially when he's earning decent money definitely a balance between supporting your children and also teaching them that these things cost money and they need to learn what needs to be paid for. My ds was asking about mortgages the other day (he's 11) I gave him a brief description about how it works and promised that I will teach him more when he's a bit older. That's the one thing that my parents never taught me, my Mum is great with money but she never taught me anything about mortgages, percentage rates, budgeting etc. to be fair I never asked either but it feels like I could have made some better decisions along the way. I don't blame her for anything though x 

Glad your leg is feeling better, H x

savingholmes

Thanks MF and HM.   being there at 50!! I wouldn't allow that - unless there was an underlying health / disability reason and even then I think offspring should be empowered to live independently if at all possible which it should be for both our kids. I think we may end up supporting DD for longer than DS but in the longer term I think she will want her own place anyway. I read a lot of diaries / stories where parents are tying themselves in knots supporting their adult kids. I don't want to end up in that position - and TBF set the expectation from DS's first ever job. In his earlier jobs from age 16 - I helped him save towards uni and travel but said if he failed to save he had to pay us. I don't want him to repeat our mistakes with £. 

My leg is a lot better - it is hurting today - but more at the rate it used to as the meds started to wear off rather than at a high pain level. DD still isn't feeling well herself. DS didn't sleep all night - mix of meds and caffeine I think. DH and I both slept badly - and he fell off the diet wagon and his sugars have spiked so he's been feeling awful. He's had a 3 hour nap today! I've started doing the MSE OU course but found the videos / sound stuff irritating. It keeps breaking up and buffering! My Utube doesn't do that so I think it is at the OU end. I don't tend to get the math's questions right.... I am still in module 2. I'm looking forward to the investing one. Taking a break and working through the Artist's Way. Enjoying that so far.