The Piano Diary

savingholmes

Commiserations on the SIPP - I need to ring up and move mine to better investments too. Well done on the investments input.

Well done of keeping an eye on your general budget. 

glass_half_full

Thanks @savingholmes. Yes, its tricky at the moment, so many funds are underperforming. Not sure there is an answer other than maybe actually now is a good time to buy to get value.

glass_half_full

Dear diary and all,

Had an enjoyable evening last night watching DS playing a gig in his band. Really nice to see him enjoying himself with them.

Not sure where I am going with this diary entry, but need to put down some thoughts here, it helps me to think things through, even if I don’t arrive at any useful conclusions!

On the investment front, I spoke too soon. The FTSE100 has now fallen to its lowest rate in 2023. Not all of my funds are UK based. My original fund of £188K has fallen to £182K, around -3.65%. Then I need to factor in inflation of 8.5% so the overall effect must be around a drop of more than 10% in real purchasing power over the last year. So the overall fund total is now £285K, down £5K in a week.

Not sure if it is Brexit, Covid, the war in Ukraine or maybe all of the above and more. It feels like we are at a turning point in terms of many things. I think many previous assumptions about how things would play out are now no longer reliable. I remember reading a report published in January this year based on research by the PLSA (Pensions and Lifetime Savings Association). They published three levels of income that would be required in retirement to achieve certain lifestyles (first number is for a single person, second figure for a couple) ie

Minimum lifestyle: £12,800 or £19,900 a year

‘A pensioner on a "minimum" lifestyle budget should be able to cover some DIY maintenance and enjoy a week's holiday plus a long weekend in the UK. The money would only cover public transport and not a car.’

Moderate lifestyle: £23,300 or £34,000 a year

‘The rise in annual income required for a "moderate" lifestyle is more in line with inflation, with an increase of 12 per cent to £23,300 for a single retiree and 11 per cent to £34,000 for a couple. Moderate' retirees should be able to go away for two weeks in Europe each year and one long weekend in the UK. Pensioners on a 'moderate' lifestyle income should have enough to receive some help with home maintenance and decorating each year and to buy a three-year-old car and have it replaced every ten years.’

Comfortable lifestyle: £37,300 or £54,500 a year

‘Comfortable' retirees should be able to afford a new kitchen and bathroom every 10 to 15 years, as well as three weeks holiday abroad, a two-year-old car replaced every five years and extra luxuries such as beauty treatments and theatre trips.’

I think this may be the crunch issue ie what kind of lifestyle will be affordable in the future. If you want more in terms of lifestyle then you need to save more or work for longer. So inevitably, I think the conclusion is becoming, well I will need to adjust expectations more towards the lower end of the scale. I remember growing up that going abroad for a holiday was unusual. I only remember one holiday where we went abroad before I was 18. Since then of course it has become maybe an expectation of a foreign holiday once per year. But it feels like the model is starting to come apart ie the intensity of the work required to deliver the lifestyle just isn’t doable any more. So then the only option if you want to back away from the intensity is to downscale the lifestyle expectations. I think this is a key realisation for me that I value my sanity / peace of mind and physical and mental health more than the lifestyle. But of course this is easy to say (type) than it is to actually do. Its easier to commit to being frugal in theory than in practice. I think part of the solution is to start to practice this more limited lifestyle in advance of retirement so as to make sure it is doable in real life as well as in theory.

The other factor in all this will be supporting DS and helping him to get set up in his life. This would probably be the only other factor making me carry on working.

 

savingholmes

Hi - In your position - I would take your current realistic budget. Try to work out what costs would stop if you weren't working and which might rise e.g. hobby, going out and entertainment spends. Work out what the real number is for you as a couple. If you are mortgage free that makes a huge difference to your costs.

On the DS front - perhaps read Millionaire next door - not always a good idea to offer too much help. If a butterfly is helped out of its crysallis it's wings don't develop properly - it can be similar for young adults.

glass_half_full

Thanks @savingholmes, some good advice there. The budget is becoming clearer to me over time as we try to live on one salary. And good advice on helping adult children, there is definitely a risk in keeping them too dependent on us.

glass_half_full

There has been a development on the work front. Someone higher up in the organisation is leaving and I was asked if I would be willing to step into the role for 6 months in an interim capacity. I wasn’t sure if I wanted to do it, but was approached by someone who has coached me in the past and who I really respect. So we spoke about it and I decided to at least discuss it with the people concerned. I did have some conditions, mainly around making the job doable, I’ve seen too many people struggle over the last couple of years being given jobs which turned out to be impossible. Anyway, they agreed to the conditions so I decided to accept it. I was surprised by how much of a boost I felt when I actually got the formal offer. I will need to be careful to manage myself going into this so I don’t get burned out. I think I’ve learned a lot about that over the last couple of years and some habits which will stand me in good stead. I’m still going to continue with the financial plan, and keep the same saving habit going. I think this will give me something to focus on rather than wishing the time away.

We are off tomorrow really early going away for a week visiting my brother and his family so looking forward to some down time for the first time in a while.

South_coast

Well done on the temporary promotion. It sounds like you have gone into it with some good boundaries in place, so everyone has a clear idea of what to expect. 

Have a good break 😀 Hopefully your pensions have done some rebounding too - I haven't checked mine, but my S&S seems to have gone mad this week (in a good way)!

savingholmes

Congratulations on the promotion. Hopefully that will speed your journey if you want it to.

glass_half_full

Thanks @South_coast and @savingholmes! Yes, the stock market seems to have finally rebounded after months of quite sluggish growth! It means my fund has returned to just about where it was when I consolidated it all some time ago. Back to work tomorrow and then a bit more time off with DS and his GF.

savingholmes

That must be a relief on the rebound.