The Piano Diary

savingholmes

I think it is exciting when you reach your 'number' - so close.

glass_half_full

Dear diary and all,

This week the DC fund has crossed the target and is now at £401K. This is from the recent surge in US share prices. Not sure if it will stay at this level or not of course. So according to my models we are theoretically at the point where we could stop work and live at the PLSA ‘moderate’ lifestyle for a couple which is £43K. As it happens, I have come to a similar ‘spending in retirement’ budget. OH and I are discussing various options. She is considering going part time from September next year. OH is a couple of years younger than me. I have not yet fully decided what to do next. I took on a new role in January this year and have only just relinquished the previous role, so about to experience the benefit of having done that. I also have a good boss which helps. Current thinking is to finish this time next year. I want to get DS to a position of stability, but I can’t let that be a reason to keep on in my job.

Meanwhile life goes on. Car in for service and needed new tire and front brakes so came to £400. It’s a reliable workhorse that has done nearly 90K. Zero tax and cheap insurance.  It should be good for a few more years. Managing to get the credit card balance down. Its now at £13K and should have it cleared in 6 months or less, this is the focus at the moment.

savingholmes

Great that you've gone past the tipping point. Perhaps look into the £ or your life and 1 more year syndrome. Vicki Robin - she talks on various utubes on what to do after that tipping point and how to create the life you want post financial independence.

glass_half_full

Dear diary and all,

Enjoyed the weekend getting into the Christmas spirit a bit. We went to a play and then to a Christmas market which was nice. Credit card balances have come down from a peak of £18,600 in August to £12,600 now so pleased about that progress. Having had a budgeting chat with OH I realised that we will not be able to overpay the credit cards in December as we will need that money for Christmas related stuff. So will start again in January and should have paid the first one off by February and the second by June. DS is coming over on Friday for our first monthly budgeting chat. I need to help him to get to a sustainable place. The good news is that his GF has made progress towards getting paid work so that is encouraging. I will talk to him about setting up his pension. Three more weeks to go and then we have a decent break.

savingholmes

Merry Christmas 🤶 🎄 

glass_half_full

Thanks @savingholmes! Happy Christmas to you too!

Finally Friday is here. One more week to go before we have a couple of week’s off. Unfortunately, OH fell over whilst running this week. We ended up in A&E around 7pm and finally gave up around 2am and went home. We went to the local injuries clinic the next day where she was seen and x-rayed and she has unfortunately fractured her elbow. Apparently, it doesn’t need a cast and will heal over the next 6 weeks. Thus I am needing to do a lot more around the house!

I haven’t seen DS yet to have the budgeting and pension conversation. We haven’t been able to tie up yet but we will over the Christmas break.

I’ve been looking at the timeline of retirement at my workplace. It looks like I have to request a quotation about 7 months ahead of time from the pension people and then inform my employer at least 3 months before the actual date. I’m thinking of December 2025 at the moment. The modelling I have done suggests that it is all on track. I have tried using Chat GPT to model some assumptions. Its actually really very good and gives useful outputs if you give it the right prompts.

We are reining in the spending a bit this Christmas. Trying to find reasonably priced gifts for DS and his GF. 

savingholmes

Wishing your OH a speedy recovery. 

Pension plans sound good.

glass_half_full

Dear diary and all,

I do like this time of year between Christmas and the New Year. We are lucky to have 2 weeks off and as we are not going anywhere it creates some space in which to unwind and think things through. We had a quiet Christmas, just the two of us. Visited the in-laws on Christmas Day. Time for an end of 2024 review. This year has been a spendy year in which we have spent quite a lot on home improvements and a big holiday.

The main movements on savings and debts are as follows:

	Dec-23	Dec-24	Comment
Pension	323	420	Consolidated all DC pensions together. Big +30% move in 2024. Exceeded target of    £400K.
Savings	5	1	Depleted in 2024.
Credit Card Debt	0	12.4	Holiday and home improvements.
LT Debt	0	13	Home improvements.

 

Pension move in 2024 was big as most of the US indices did really well.

Main goals for 2025.

1.       Plan and prepare for stepping away from work – more psychologically and practically rather than financially as that has mainly been done.

2.       Pay off credit card debt by May 2025.

3.       Build emergency fund back up to £5K.

4.       Support DS in getting to self-sufficiency.

5.       Do better on charitable giving.

Had a good chat with OH on a long walk over the break. I realised that the one last goal I have is to help DS to get into his first house and give him the deposit. But OH pointed out to me that we have already helped him to build up his LISA a certain amount (£6K). And he needs to demonstrate that he and his GF can be self-supporting first. And maybe the first step would be for them to move to a better rental property before buying a small house. I realised that I have been pressurising myself to find £25K to £30K as a deposit for them, but as OH points out, there is a step before that which is that they need to prove that they can achieve a sustainable income that would enable them to get a mortgage. Its probably too soon for the mortgage at the moment. Not for the first time it was helpful to get another perspective on things.

savingholmes

Well done on your achievements.

On the kids - perhaps read Millionaire nxt dr - on the perils of gifting to kids - particularly if they haven't yet developed their own financial muscles... 

glass_half_full

Dear Diary and all,

Just musing a bit on Pension Lifestyling, a bit of a pension nerd topic. In my pension scheme, there is an option for you to let the scheme managers choose your investments for you. In this case, as you approach your target retirement age, your investments are switched to lower risk options such as a liquidity fund, bonds, lower risk equities etc. The general intention is to reduce risk and volatility. In doing so, this strategy reduces losses when the stock market goes down, but also reduces increases during growth periods. The general idea is to protect your pension fund as you approach retirement. I have looked at the difference between being invested in a higher risk fund versus the more balanced ‘lifestyle’ portfolio. In 2024 it would have reduced growth from +30% to +10%. On the other hand, in 2022 the more risky fund fell by 14% and the more balanced fund would have limited this loss to 7%.

	Higher risk fund	More balanced less risky portfolio
Growth in 2024	+30%	+10%
Reduction in 2022	-14%	-7%

 

Over the longer term ie 2 years +, the more risky fund would have always outperformed the more balanced portfolio (in the last 10 years) because although it lost more in, for example 2022, it recovered more in 2023. Of course, the past is no guide to the future. For example, the risky fund could drop by 50% (or more) next year. For me, the decision about whether to switch to a more conservative portfolio depends on how long I could stay in the market and wait for the situation to recover. Given that I am likely to use a draw down strategy, rather than buy an annuity, it may be better to stay invested in the market in equities for longer. Now that we have achieved the target, maybe it makes sense to switch to be more conservative. I’m going to ponder this a bit further and consider my approach.