Cheery's country living adventure
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ππ RT ππ now you must know what everyone else was complaining about when you were managing changes πΒ
Well, no more complaining from me (for now, at least). I've always said I like change,Β so I'd best put my money where my mouth is ππ my phone smileys work so I don't have to use that little drop down menu thing so that's something at least.Β
So,Β Saturday! I'm going to do the local monthly 5k organised by the running club,Β and then a day of pottering. And by the end of the weekend I WILL have sorted both house and car insurance and read the MSE pensions booklet ππ€ΈββοΈ
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Good luck with sorting out the insurance!! You can do it!! XMortgage Balance as of Jan 24 Β£36,500 Starting Mortgage Balance (June 2019) Β£72,000. 2024 Overpayment Challenge: Jan Β£558.40, Feb Β£588.11, Mar Β£497.326
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Evening MSE chumsΒ
Cheery day today. Got up to do the local 5k thing but left it a bit late so went off on my own instead down one of the flat trails and did about 3.7 miles, most jolly. Then a little pop to a local market town with Mr Cheery for supplies. No cafe today, quite shocking... but I did pick up a couple of small haberdashery items as I am making Mr Cheery a hat!Β If I can manage it, it'll be great - the one he wears regularly cost about Β£45 and they don't make them any more, so he's most distressed. Not sure mine is going to be an exact replica mind you...Β
Also got out in the garden and started laying out old floorboards ready to build my new compost bin. There's going to be quite a bit of sawing, but now Mr Cheery has the new fancy-pants chop saw, I can just mark stuff up then carry it into the building site house and the sawing can be over in seconds. Most jolly.Β
Anyway, I only popped in to leave an, as usual, overly ambitious list for tomorrow.... The weather is due to be vile and I plan to stay indoors as much as possible So, in no particular order
* Sort out the damn house insurance!
* Sort out the car insurance
* Move dosh to savings account
* Open new savings accounts for both of us
* Read and digest the MSE pensions guide
* Finish making Mr Cheery's new hat!
* Change the bed sheets
* Put some washing on
* Hang washing up
* Do some financial planning and think about targets - I'll be losing about Β£1600 in pay in total if all these strikes go ahead so need to have a bit of a think about things...8 -
Afternoon chumsΒ
So. I have done NOTHING off that list so far today... BUT we have made HUGE financial strides today by doing a LOT of sums regarding Mr Cheery's pension...
Now, I've always been of the opinion that there was no point him taking it early while I was still working. However, between us we never got round to getting the actual figures, because they were never available online. But now they are, so we've spent a happy couple of hours playing round with their calculator.
If he takes it when it's due (at age 65) he'll get Β£9972 annually, plus a tax free lump sum of Β£29,404.Β
If he takes it tomorrow (age 57), he'll get Β£8733 annually, plus a tax free lump sum of Β£27,714.
So taking it tomorrow seems to be a Β£1289 annual reduction, and a lump sum reduction of Β£1690.
This is a defined benefit scheme, so this is guaranteed income for the rest of his life, and there aren't the same new options for taking the whole pot and investing elsewhere like there are with the defined contribution schemes (I've read the whole of the MSE pensions guide this morning...)
There are also options for playing around with the figures, adjusting to a lower annual amount to get a higher tax free lump sum. So if, for argument's sake, he took a round figure of Β£8000 annually from tomorrow, he'd get a lump sum of Β£38,524.Β
So what we're wondering is, are we missing something?? There doesn't seem to be any advantage really to leaving it where it is. Yes, if he took it at 65 he'd get Β£1690 more as a lump sum, and Β£1289 more annually - but if he took it now, by the age of 65 he'd have already had almost Β£70,000 in annual payments anyway.Β
This all feels counter intuitive - but bear in mind he's not doing figures for 'retiring early' - he actually left work in 2008 so hasn't been paying in since then anyway.Β
The other thing to bear in mind is that we have a rather large age gap (18 years). So let's say he went with drawing Β£8000 annually from tomorrow, which would give us a lump sum of Β£38,524. I still work full time, and my salary covers all our costs, so we'd likely bung the maximum overpayments to the mortgage (just under Β£20k) straight away - which would bring the mortgage free date forwards by about 3 years, and reduce the overall interest paid by over Β£13k. We'd still have about Β£18k of lump sum left which can be added to DIY/emergency/holiday etc funds. Plus there'd be an extra Β£8000 a year coming in, which could be mostly saved.Β
He doesn't earn much from elsewhere, so would still be under the income tax threshold. By the time his state pension kicks in age 67, he'll then get another Β£8900 (or whatever it is by then) on top of that - which will at that point likely put him over the tax threshold but perhaps not. But at that point I'll be near enough 50, and I expect already working rather part time, and perhaps even in a position to give up work myself and just live off his pension til I'm in a position to draw on mine.Β
Can you spot any big flaws in our thinking here?? Have we missed something obvious?? Should he just claim his pension tomorrow?!6 -
Sounds like a very sound argument for marrying an older man
Depressing though it is, have you checked what happens to his pension when he dies and what you get a. if he hasn't taken it and b. if he has?
I've been doing pension calculations too, to try to work out how much extra I need to add at the end of this tax year, and how I manage my contributions on an ongoing basis. I'm not complaining about how much I'm paid - I earned very little for years and am now being paid VERY well, but I've gone from not being able to afford to pay as much into my pension as I should have done to not being allowed to put as much in as I can finally afford! So lots of maths involved to try to maximise it this year and next so that I might actually have a reasonable pension pot when I do want to slow down or even stop working...Β7 -
I'm definitely not an expert. My thoughts are to get your hands on the money and enjoy whilst you are both fit and healthy enough.
If it was me I would be planning on making more mortgage overpayments from some/all of the Β£18000 & Β£8000 or using it to pay the normal payment and increasing your pension contributions.
Fashion on a ration 2024 66/66 coupons remaining
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OneΒ income, home educating familyΒ6 -
Cheery - that was some very interesting reading!
Think I may have to invest some time in sorting out OH's pension finances.Β We currently live off of my salary and his small inheritance....
(We have the same age difference btw)
Food for thought indeed! xx - RT4 YEARS 10 MONTHS DEBT FREE!!! (24 OCT 2016)(With heartfelt thanks to those who have gone before us & their indubitable generosity.)...and now I have a mortgage! (23 AUG 2021)17 YEARS 4 MONTHS LEFT OF 20 YEARS6 -
Just a couple of comments/questions.Β
Taking the pension now seems to be the most sensible to do. Will allow you to overpay your mortgage, save on interest, and give you a savings cushion behind you. I can't think of any drawbacks apart from the one mentioned - what would happen on death. Do you have life insurance to cover the mortgage if either of you die?Β
My question is about the regular saver. I cant really see the benefit of going to all the trouble of opening these regular savers when the interest is now so low that it works out more or less the same as the easy access savings account recommended on MSE. Am I missing something there?
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Thank you lovely people! To answer some questions...Β
Greenbee - there's no calculator for if he dies online, but it seems that the amount I'll get is linked to the amount he gets - so if he takes it now and then dies, I'll get slightly less than if he took it in 8 years and then died. Looks like I'll get 5 times his annual (whatever amount that ends up being) as a lump, plus about half his annual as my annual. So if he takes it now, I'll get slightly less. What I don't know is whether I get that lump sum if he's already taken a lump sum previously, or whether I just get the annual pension (most likely the latter I'd think).Β
BaileysBabe that's an interesting thought actually - I hadn't thought about using his pension contributions to increase my own pension contributions! Mind you, since I probably can't draw my own pension til he's well into his 80s we might as well use it now...Β
Moneywhizz - in terms of life insurance, we have it for me, but not for him (he was far more expensive and I earn far more!). If I die, the mortgage will get paid off, and he'll get my pension. If he dies, the mortgage won't get paid off - but at the minute my wages cover everything anyway and as above I'll get some of his pension. As for the regular saver - I did it last year because I ended up with two that were paying 5%, linked to current accounts that were also paying 5% or 3%. That meant about Β£10k in total mostly at 5% which was much higher than the easy access savers. This time the regular savers are only 2.75%. I've got a post office easy access account at 1.45% but figured I might as well get a little bit extra if we could! (Not that I've got round to it yet mind you...)
Anyway, enough financial dithering for tonight. We've just been out for a curry with some pals, and I STILL haven't sorted the house insurance. But tomorrow is Monday Finances Day so all goodΒ Β6 -
As long as you have a reasonable idea of what the situation could be you'll be fine.
I've managed to not do a number of things from my list which I could have done quite easily, but I've spent far too much time lying around on the sofa in front of the fire, looking at everyone whinging about the new forum Β7
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