Cheery's country living adventure

Cheery_Daff

Nutcase243 said:

Cheery, 'average of the best three years in the last ten' will apply to final salary defined benefit scheme - you will have e.g. 6 80ths of the salary each year (and probably a lump sum based on that). 'Accrue 1/57th of salary each year' will apply to final salary career average - you know in monetary terms what value of income you will get when you retire, and they (usually) uprate that in line with CPI each year. Different versions of 'defined benefit' but definitely better than 'defined contribution' where you're at the mercy of the markets.

Hope that helps - I've thoroughly enjoyed reading your thread and hearing about the chickens.

Thank you, yes that's helpful! I think what was confusing me was the way it was laid out on the website - I found a PDF of the same info and those things were under different colour headings, making it obvious they didn't apply to the same thing. Sets my mind at rest about part time anyway.

Oops, Mr Cheery has arrived with cake, back in a bit!

Cheery_Daff

South_coast said:

I think a key point in the planning is to know exactly how much you're going to need to live on (with/without mortgage, simple lifestyle/slightly more indulgent lifestyle etc) and then work out how to achieve it. Which means getting all over your current figures - but you knew you wanted to get your YNAB up to date anyway 🤣!

Yep, you're right, of course. At the minute, all monthly 'savings' (basically the amount of Mr Cheery's pension) are being thrown at the mortgage OPs, so the amount we're currently living off (excluding mortgage) is about £1830 a month. However, YNAB tells me our average monthly spending (excluding mortgage and longer term savings) was

£2497 in 2019
£2255 in 2020
£1609 so far in 2021

So aiming for £2500 would seem safe, although of course without me working, it's certainly likely that diesel would reduce, and various other expenses. 

Cheery_Daff

Fortune_Smiles said:

Morning Cheery 🌞

sounds as though you're where we've been for the last few years with modelling retirement options.  Do remember that you are just generating options at this stage - any plans can be altered or overhauled as life unfolds.  It's ok to go round in circles and to have several potential routes in mind.  As time goes on some routes my drop off the plan and others might open up.  After all - Agent Million is waiting to visit!

Fortune x

Ha, you're right of course, I hadn't factored in Agent Million at all! At the minute (and I realise this is extremely dull and repetitive, but at least you're not in the room with me, so feel free to yawn or wander off)

Scenario 1
I work full time til 57, then retire completely. Mortgage overpayment continue as now - paid off by Feb 2033. I'd get about £77k on retirement at 57 (which we wouldn't need for living expenses, as between us we'd have approx £2400 a month coming in and no mortgage).

Scenario 2
I work 4 days a week from Sept 2021 until I retire at 57. Mortgage overpayments reduce by the amount I've dropped in salary, then increase again when Mr Cheery gets state pension in 2029 - paid off by 2035. I'd get about £63k on retirement at 57 (which we wouldn't need for living expenses, as between us we'd have approx £2250 a month coming in and no mortgage). 

Scenario 3
I work 4 days a week from Sept 2021, then drop to 3 days when Mr Cheery claims the state pension in 2029 (with me age 49). Mortgage overpayments continue at my reduced rate, (with my wages shortfall made up with Mr Cheery's state pension), and the remaining balance is paid off with my lump sum, leaving us with approx £15k of the lump sum, plus around £2000 a month coming in. These pension figures are estimates - the pension calculator doesn't allow for two different part time periods before retirement. 

Scenario 4
I work 4 days a week from Sept 2021, then leave work completely in 2030 at age 50. We pay the minimum off the mortgage (let's assume the minimum payment continues as it is now - which I know it won't) - means when I claim my pension at 57, there's approx £49k left on the mortgage, which my lump sum might just about cover (there's no provision on the online calculator for stopping paying into the pension before age 55). We'd have approx 6 years with an income shortfall of approx £1400 a month, which equals £100,600. 

Ok. That's probably enough messing around for now. Scenarios 1-3 are doable. Ideally I'd like scenario 4 So that means 
* keeping an eye on expenses (within reason)
* increasing earnings (both through extra income eg MB, and through climbing the greasy career ladder)
* throwing as much of the extra at the mortgage as possible earlier on

If the mortgage was gone by 2030 (when I'm 50, and would like to retire), that would mean our shortfall would be less than £500 a month, which equals £36,000 over the 6 year period, and is also achievable by side income, reducing expenses etc. 

So business as MSE usual then  

Of course in all this I'm forgetting Mr Cheery's self employed earnings, which aren't loads, but are an extremely  valuable contribution - when that's back up and running (post pandemic), that can get thrown at the mortgage too. 

I'm not entirely sure what all that told me that I didn't already know (especially as I seem to have created a very similar version of the same spreadsheet several months ago!) But it does make me feel better pinning it down, and make me feel like I'm doing the right thing overpaying the mortgage, rather than eg putting extra into pension contributions. Once I'm 57, even with working part time and retiring at 50, our joint income will still be enough to live on and have plenty of treats, so being mortgage free in those 6 years between leaving work and pension is more important (for us) than having extra pension later. 

Not even going to try modelling different scenarios if one of us dies - we'll cross that bridge if it happens (I've got life insurance so he'd be fine, and I could go back to work if necessary, and either of us would probably sell the house and move somewhere smaller). 

Right, need another cup of tea after that! 

South_coast

I'm loving the plotting, but phew! I like the sound of option 4 - actually, I like the sound of option 5 better (clear the mortgage by 50 and then retire). How much would you need to OP to achieve that? What could you cut back on now to make that possible? No need to answer, just trying to get you thinking 😀😀😀

Cheery_Daff

Ha, yes I just read that back and realised it sounds like an extra scenario all by itself 😂😂 Will add it to the spreadsheet, and check the mortgage spreadsheet, and report back...

Cheery_Daff

Ok

Scenario 5
I work 4 days a week til 50, then retire completely. We also pay of the mortgage completely before I'm 50, which requires either (a) an overpayment of £1000 every month between now and then (unlikely - we currently overpay £600, but will be losing £500 of my salary), or
(b) the throwing of every bit of spare income, salary increments, promotion increments, Mr Cheery's self-employed income, premium bonds winnings, surveys, MB dosh etc at it.
We then have approximately six years after I retire but before I claim my pension, during which time we have a deficit of approx £500 a month, which we need to deal with by reducing spending, or increasing income, or savings (a total of £36,000). 

I've not included any salary increments etc in current calculations, so that will help things along as they usually go straight off the mortgage. 

Until the kitchen is done (July) we're adding any extras to the kitchen fund (even though we already have enough in savings to pay for it - this is just for peace of mind), and then all extras can go off the mortgage again. We'll keep on with the £1500 monthly payment until my salary drops (October), and then reduce to £1000. 

Sounds like a good plan to me!

South_coast

👍👍👍       

Cheery_Daff

Not doing too badly on extra income this month so far- £50 covid study vouchers, £75 premium bond winnings, and so far £66 MB! MB doesn't get properly totted up til the end of the month though, and none of the rest has hit the bank account yet, and in any case all of it is going in the kitchen fund for now anyway.

Cheery day here. A walk with Mr Cheery, lots of sitting around making pension calculations 😂 and I've done some work on the kitchen ceiling too - put up another piece of plasterboard (just four left now before the builders get here), and sealed round another couple. Nearly at the point where I can paint the ones that are up there now which is great!

Cheery_Daff

Brrr, isn't it cold??

Been adventurising in the city today - an unsatisfying trip to the dentist, and then a lovely, although freezing, lunch with pals in their garden.

Dentist confirmed that my crown had brought most of the tooth out with it, and the rest wasn't worth saving. Also did a couple of xrays and confirmed that I don't need the two fillings I thought I did - the discomfort is actually gum disease and bone loss 😮😮 Most distressing. Have to see the hygienist for a good clean every 3 months (how embarrassing), and also have to have the rest of that tooth extracted. Sigh. Couldn't get both of them on the same day til mid May 😕 (not that I wanted them on the same day - what a rotten day that's going to be!!)

Ho hum. 

Seeing friends was lovely though, and they'd made some bread which was nice. They also had some excellent ancient sleeping bags as visitor-warmers, and I'd had the foresight to take a hot water bottle 😂😂 Still freezing though, so I'm just under a blanket trying to defrost before I head out to give the chickens some treats, and check on my seedlings after the frost.

Nothing money-saving to report today. Nothing's happened in the bank, made the grand total of 8p doing MB this morning 😂😂 

Had an email from the MSE energy club saying they'd got a better deal, but none of the green ones seemed that much better than my current one, and most were with tiny new companies with no feedback, so I think we'll stick where we are for now. Should probably sort out a smart meter too, but it just feels like Yet Another Thing at the minute and I confess isn't very high on my list! 

Plans for the rest of the day...
* chicken treats and poo pick house (theirs, not ours!)
* check seedlings
* put up another piece of plasterboard
* bit more sealing round panels
* 15 mins sorting clothes in bedroom
* nice long hot bath! 
* bit more crocheting 

Let's see how it goes...

Cheery_Daff

Ok, chickens cleaned out and given treats, seedlings checked and given an extra blanket, bath run

Just had a quick check of my state pension forecast - currently have 17 qualifying years, with two more available to top up (one at £277, the other at £693). Need another 18 years in the next 28 to qualify for full pension (currently at £88.50 a week apparently).  

Need to do some sums, and possibly ring them, to see whether it's worth me paying that bit of extra to get those two qualifying years, since I don't plan to work another 18 years... 

Not sure what the implications are - didn't really occur to me to even think about this til this week, so I was pleased to see I'm only missing 7 years in total (3 while I was at university, plus another four while I was doing my PhD - I can top up the last two of these apparently). Need to do some reading - can I top up later with different voluntary contributions, and if so, would it be worth doing that instead? Or are £277 and £693 bargainous amounts for a year's worth of contributions, and I should get in there before the deadline? (I've got a year before the deadline for the first one so no rush!)