I get the impression you are still relatively young so you are doing all the right things in saving for retirement presumably with a higher equity level than us ( VLS 80 or 100?) I did a spreadsheet for all our income streams in retirement and luckily for us underestimated the value of compound returns so in fact we could have retired several years earlier and have ended up more comfortable than we needed to be. Are you also using stocks and shares isas just in case the pension rules change on when you can access your SIPP?
Well done on giving this your attention from relatively young. I have tried to drum the same message into our daughters and son in law and they are taking it on board.
I'm now in my mid 30s. Young to some, starting to get on a bit as far as others are concerned.
I started out with the attitude in my teens of 'pensions are for old people'. That's all i ever knew it was - old people 'get their pension' and to my green eyes you just got to an age and then stopped working & that was that. I didn't think much beyond it.
Then as i got older the turning point was having about £15k in my Nationwide current account. I'd always picked up interest but this year there was £0.00. I messaged them - hey what's going on with my interest? I then learned about changes in T&Cs which angered me enough to find this forum & learn about not being loyal to a bank but searching for the best rates.
Then it got addictive.
I pushed & pushed, switching accounts, opening credit cards & using them wisely. This was with the goal to get as much money for a house deposit as i could. At age 28 i knew i had to do 'something' for retirement so saw an IFA and started a S&S ISA with £100pm. It was 'a start'.
I bought my house aged 30 and was able to put down about £45k of my own money (plus £10k wife had saved) on a 160k house. I did this on a job of only about £14k-£16k per year and having had a lot of time off sick at one point.
I earn around £1600net give or take and put around £280pm (including workplace) in to retirement (i'm not one of these who shy away from giving actual figures, especially as at the end of the day none of us know each other anyway). I'd do more if i could afford it.
As for ISAs, no not really. I opened a LISA just so that i had that option but the feedback i got from here was that pensions are really the best bet for me, so that's what i put my money in to.
When i was looking at all of this i was looking at a bit of diversification, investing globally. That's what my reading had lead me to believe was going to give me the better return over the long haul.
So imagine my surprise (although i really shouldn't be by now) when i come on here & see folk mentioning VLS is heavily UK weighted.
But it can't be i thought - it has "58% international equities" - that's over half so how is that heavily weighted to the UK?
And i'm thinking then - is 24% considered high? It must be i suppose. If you're wanting a good global spread then what percentages do you really not want to be going beyond?
I don't want to risk asking too much at once but at the same time i know what i'm like & i'll forget to ask...
Back when i was 28 & we started investing via an IFA, he asked us some questions which at the time determined my wife was a little less comfortable than me in terms of risk. We went back after a couple years for a re-evaluation and she'd changed her viewpoint to be much closer to mine.
He still suggested that one of our portfolios remained higher risk where the other was lower risk, to create balance.
Bearing that in mind, for those of you in relationships where your outlook is similar, how do you handle your investments? You don't both invest in the same funds do you? Or do you?
For the record my wife holds VLS80 and HSBC Global Strategy Dynamic and splits her monthly subscription 50/50 via Cavendish Online.
I agree whole heartedly with this and we are in a similar position to you with DB pensions covering the majority if not all of our living expenses so we can afford to be a little complacent with our investments and hold a little too much in cash. The investments tick along and I don't need to worry too much about them. The IFA we are seeing at the moment is a financial life planner. He tells us essentially how much we can spend annually and where from or if we will run out of money and has obviously more extensive investment and tax knowledge. He is not cheap though.
He says our affairs are too complicated and he can help simplify it but I would not necessarily agree with that but as I say we have yet to see his recommendations. We have one DB pension each paying out at the moment and one further one due to kick in early next year for me. I have a SIPP and DH has a DC pot with links to his DB pension due to AVCs and protected rights. We both have a stocks and shares ISA each invested wholly into Vanguard LS60 as is my SIPP. My DHs DC pot is invested in his old company occupational scheme and is already crystallised as his TFLS came from there. We have an interest bearing current account and an internet saver for our cash. Both of us will have full state pensions within the next seven years. Is that unnecessarily complicated?
Your affairs sound relatively simple....and very similar to mine. If you are like me and can live on pensions then you can take a bit of risk with the DC and other money. I've let my allocation rise to 80% equites and just 20% bonds as I'm not really investing for income, more for capital growth. I also like to keep a substantial amount of cash on hand for big expenses, this year I have to have the house painted and that will all come out of the cash account.
One area that can get complicated is taxation and inheritance so you might want to see what your IFA thinks about that. If all they tell you is to move some money into other funds and that they will manage your money for an annual fee then I don't think they are giving much value. But if they want to limit your current and future taxes, then they might be at least worth listening to.
“So we beat on, boats against the current, borne back ceaselessly into the past.”
I'm now in my mid 30s. Young to some, starting to get on a bit as far as others are concerned.
As for ISAs, no not really. I opened a LISA just so that i had that option but the feedback i got from here was that pensions are really the best bet for me, so that's what i put my money in to.
I think given net earnings you are doing well. I agree that Pension Saving is attractive but think you are missing the boat with ISA and LISA. The purpose of them as has been suggested for you is to add options. They given an option to retire before you can access your SIPP in the event of there being a rule change to make people wait longer to enter draw down/ access SIPP pensions.
One tip I would suggest is to consider "rounding up" your mortgage payment to the nearest whole number, we pay 600 pm instead of 593 pm, a colleague pays 350 pm instead of 338. It doesn't cause much pain financially but over the years can have a big effect in knocking time in payment off of it.
Do you balance pension contributions? I got divorced and the court simply added the CETV of the pensions together and divided it by two. Transferred 140k from my pot to the oppositions.
Now with Mrs CRV we again have an imbalance, her pot is much less valuable than mine so in our mid 50s (me), early 50s (her) we are trying to pour as much into her SIPP as we can with the aims of-
1) Reducing joint tax bill in retirement- she can then draw up to PA limit annually, reducing draw down when SP starts to stay within PA.
2) Build a pot so that when I go first she still has a decent pension income of her draw down, her SP and her survivors pension from my DB pension.
We also plan on me starting a SIPP or workplace AVC as it is likely I may start at 40% tax rate this year due to overtime and shift allowances, so probably enough to get back to BR payer level. This will have two aims- either create a pot to be used if care home fees/ personal care enters our life in later life or as a further pot of money for Mrs CRV to draw against or leave to our heirs.
CRV1963- Light bulb moment Sept 15- Planning the great escape- aka retirement!
I think given net earnings you are doing well. I agree that Pension Saving is attractive but think you are missing the boat with ISA and LISA. The purpose of them as has been suggested for you is to add options. They given an option to retire before you can access your SIPP in the event of there being a rule change to make people wait longer to enter draw down/ access SIPP pensions.
But as far as i'm aware you can access your SIPP from age 55? LISA from 60 (subject to change of course). So you actually have to wait longer the the LISA. a standard S&S ISA would be a bit of a bad move in my view as there's no 25% bump.
One tip I would suggest is to consider "rounding up" your mortgage payment to the nearest whole number, we pay 600 pm instead of 593 pm, a colleague pays 350 pm instead of 338. It doesn't cause much pain financially but over the years can have a big effect in knocking time in payment off of it.
What i currently do is that i was paying something like £450pm and after the first 5 years passed i'm now paying say £390 per month.
I was already contributing to an 'emergency fund' of minimum 3 months wages (i go for wages rather than bills as wages is greater so in the event of an emergency i'll be better off than had i only done bills).
That £60 that i've 'saved' through the mortgage renewal goes towards the emergency savings as does any interest my accounts generate.
Once i hit 3 months, which should take me a further 12-14 months of saving, i will reduce the contribution amount and slowly work towards 6 months and perhaps stopping at 12 months.
We took our mortgage over 30 years rather than 25 so as to get the monthly payment down. We're on a 5 year fixed once again. The reason i haven't put more towards it is 1) the emergency savings needs completing 2) our regular savings need building up 3) Our retirement pot is small due to how late we started.
Do you balance pension contributions? I got divorced and the court simply added the CETV of the pensions together and divided it by two. Transferred 140k from my pot to the oppositions.
No but it soon will be as my wife has been given a rise and she will be getting promoted in the near future which will enable this. She doesn't contribute a whole lot less than me at the moment anyway.
or leave to our heirs.
Unfortunately/fortunately (depending on how we look at it) we don't have any of those and it's now highly likely that we wont, which creates freedom & worry but such is life.
At the moment you have to wait longer to access the LISA over the SIPP but the general direction for the SIPP is for it to be made later in life. I agree get as much free cash as possible, and for us with no access to a LISA a pension is the best thing.
I think you are doing well looking at all this, although you say late in life it is all relative, I didn't really take a hard look at it until I hit 53, although I knew I had a reasonable personal pension provision.
Try looking at when you want to retire and with what income, we looked at base needs, would like needs and luxury income needs, reaching 3 figures, aiming for luxury but will be content to reach would like income needs. Time versus money, we exchange time for money but there will be a point when time becomes more valuable to us than money.
No one knows their end point, so you can only plan with an optimistic view point - unless you know for definite otherwise.
CRV1963- Light bulb moment Sept 15- Planning the great escape- aka retirement!
And i'm thinking then - is 24% considered high? It must be i suppose. If you're wanting a good global spread then what percentages do you really not want to be going beyond?
It’s fine. 24% is overweight in the Uk, given Britain’s market cap in the world stocks (6%?) You have plenty diversification regardless. Being somewhat overweight in the home market is considered to be justified. https://personal.vanguard.com/pdf/icrrhb.pdf
Try looking at when you want to retire and with what income, we looked at base needs, would like needs and luxury income needs, reaching 3 figures, aiming for luxury but will be content to reach would like income needs. Time versus money, we exchange time for money but there will be a point when time becomes more valuable to us than money.
My answer to this tends to upset people for 2 reasons.
The initial answer is "ASAP" which doesn't tie in with giving an actual figure.
My reasoning is because working life isn't for me. Or at least 5-6 days of 10 hour days isn't for me i know that much.
It upsets my wife when i say working life isn't for me. She bites back - "well everyone has to work". Well technically not true (but i get her point). I never said i wont work though. I do it because i know i have to in order to live. I just don't see the enjoyment in getting up at 5:30am ready for work to come home at (at the very earliest!) 6:00pm mostly 6 days per week, BUT it's the situation i'm in so i deal with it. The moment i no longer have to do that then i wont but that's getting into off topic realms.
I have great concern about how much is needed in retirement not least because of my dads situation. He saved in to a pension all his life. He became a pensions officer at his final company which he was with for 25-30 years IIRC. Would go on regular meetings regards pensions and would pay in AVCs i think he called it at the expense of having a bit less for day-to-day life.
Got to retirement (65), had 3 years of poor health & then died.
Obviously he didn't have a crystal ball and my mother now picks up a fraction of his pension (made less due to their age gap) but that's the thing - how big a pot do you aim for? How long do people 'plan' on living?
I'm not a big earner so i don't live like a big earner, therefore i have no intension of living a luxurious lifestyle in retirement. So long as i can afford to put the heating on without worry about paying for it, i can feed myself, i can take up a few free or cheap hobbies and can have the odd holiday or so per year (we holiday within the UK really though that may or may not change) then i'm good. I don't need a flashy car, a months holiday every 4 months in the Bahamas, so on & so forth.
My answer to this tends to upset people for 2 reasons.
The initial answer is "ASAP" which doesn't tie in with giving an actual figure.
My reasoning is because working life isn't for me. Or at least 5-6 days of 10 hour days isn't for me i know that much.
Make hay while the sun shines. You have no idea what the future may hold. Focus on today and tomorrow. Let the distant future take care of itself. For many there's no control of what may unfold.
It's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong." — George Soros
Replies
I started out with the attitude in my teens of 'pensions are for old people'. That's all i ever knew it was - old people 'get their pension' and to my green eyes you just got to an age and then stopped working & that was that. I didn't think much beyond it.
Then as i got older the turning point was having about £15k in my Nationwide current account. I'd always picked up interest but this year there was £0.00. I messaged them - hey what's going on with my interest? I then learned about changes in T&Cs which angered me enough to find this forum & learn about not being loyal to a bank but searching for the best rates.
Then it got addictive.
I pushed & pushed, switching accounts, opening credit cards & using them wisely. This was with the goal to get as much money for a house deposit as i could. At age 28 i knew i had to do 'something' for retirement so saw an IFA and started a S&S ISA with £100pm. It was 'a start'.
I bought my house aged 30 and was able to put down about £45k of my own money (plus £10k wife had saved) on a 160k house. I did this on a job of only about £14k-£16k per year and having had a lot of time off sick at one point.
I earn around £1600net give or take and put around £280pm (including workplace) in to retirement (i'm not one of these who shy away from giving actual figures, especially as at the end of the day none of us know each other anyway). I'd do more if i could afford it.
As for ISAs, no not really. I opened a LISA just so that i had that option but the feedback i got from here was that pensions are really the best bet for me, so that's what i put my money in to.
Take the VLS80 as the example: https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/v/vanguard-lifestrategy-80-equity-accumulation/fund-analysis
When i was looking at all of this i was looking at a bit of diversification, investing globally. That's what my reading had lead me to believe was going to give me the better return over the long haul.
So imagine my surprise (although i really shouldn't be by now) when i come on here & see folk mentioning VLS is heavily UK weighted.
But it can't be i thought - it has "58% international equities" - that's over half so how is that heavily weighted to the UK?
So wanting to try and figure it out for myself i click a bit more https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/v/vanguard-lifestrategy-80-equity-accumulation/fund-analysis/geographical-analysis 35% north america, 24% UK, 18% europe, 7% Japan, so on & so forth.
And i'm thinking then - is 24% considered high? It must be i suppose. If you're wanting a good global spread then what percentages do you really not want to be going beyond?
Back when i was 28 & we started investing via an IFA, he asked us some questions which at the time determined my wife was a little less comfortable than me in terms of risk. We went back after a couple years for a re-evaluation and she'd changed her viewpoint to be much closer to mine.
He still suggested that one of our portfolios remained higher risk where the other was lower risk, to create balance.
Bearing that in mind, for those of you in relationships where your outlook is similar, how do you handle your investments? You don't both invest in the same funds do you? Or do you?
For the record my wife holds VLS80 and HSBC Global Strategy Dynamic and splits her monthly subscription 50/50 via Cavendish Online.
Your affairs sound relatively simple....and very similar to mine. If you are like me and can live on pensions then you can take a bit of risk with the DC and other money. I've let my allocation rise to 80% equites and just 20% bonds as I'm not really investing for income, more for capital growth. I also like to keep a substantial amount of cash on hand for big expenses, this year I have to have the house painted and that will all come out of the cash account.
One area that can get complicated is taxation and inheritance so you might want to see what your IFA thinks about that. If all they tell you is to move some money into other funds and that they will manage your money for an annual fee then I don't think they are giving much value. But if they want to limit your current and future taxes, then they might be at least worth listening to.
I think given net earnings you are doing well. I agree that Pension Saving is attractive but think you are missing the boat with ISA and LISA. The purpose of them as has been suggested for you is to add options. They given an option to retire before you can access your SIPP in the event of there being a rule change to make people wait longer to enter draw down/ access SIPP pensions.
One tip I would suggest is to consider "rounding up" your mortgage payment to the nearest whole number, we pay 600 pm instead of 593 pm, a colleague pays 350 pm instead of 338. It doesn't cause much pain financially but over the years can have a big effect in knocking time in payment off of it.
Do you balance pension contributions? I got divorced and the court simply added the CETV of the pensions together and divided it by two. Transferred 140k from my pot to the oppositions.
Now with Mrs CRV we again have an imbalance, her pot is much less valuable than mine so in our mid 50s (me), early 50s (her) we are trying to pour as much into her SIPP as we can with the aims of-
1) Reducing joint tax bill in retirement- she can then draw up to PA limit annually, reducing draw down when SP starts to stay within PA.
2) Build a pot so that when I go first she still has a decent pension income of her draw down, her SP and her survivors pension from my DB pension.
We also plan on me starting a SIPP or workplace AVC as it is likely I may start at 40% tax rate this year due to overtime and shift allowances, so probably enough to get back to BR payer level. This will have two aims- either create a pot to be used if care home fees/ personal care enters our life in later life or as a further pot of money for Mrs CRV to draw against or leave to our heirs.
What i currently do is that i was paying something like £450pm and after the first 5 years passed i'm now paying say £390 per month.
I was already contributing to an 'emergency fund' of minimum 3 months wages (i go for wages rather than bills as wages is greater so in the event of an emergency i'll be better off than had i only done bills).
That £60 that i've 'saved' through the mortgage renewal goes towards the emergency savings as does any interest my accounts generate.
Once i hit 3 months, which should take me a further 12-14 months of saving, i will reduce the contribution amount and slowly work towards 6 months and perhaps stopping at 12 months.
We took our mortgage over 30 years rather than 25 so as to get the monthly payment down. We're on a 5 year fixed once again. The reason i haven't put more towards it is 1) the emergency savings needs completing 2) our regular savings need building up 3) Our retirement pot is small due to how late we started.
No but it soon will be as my wife has been given a rise and she will be getting promoted in the near future which will enable this. She doesn't contribute a whole lot less than me at the moment anyway.
Unfortunately/fortunately (depending on how we look at it) we don't have any of those and it's now highly likely that we wont, which creates freedom & worry but such is life.
I think you are doing well looking at all this, although you say late in life it is all relative, I didn't really take a hard look at it until I hit 53, although I knew I had a reasonable personal pension provision.
Try looking at when you want to retire and with what income, we looked at base needs, would like needs and luxury income needs, reaching 3 figures, aiming for luxury but will be content to reach would like income needs. Time versus money, we exchange time for money but there will be a point when time becomes more valuable to us than money.
No one knows their end point, so you can only plan with an optimistic view point - unless you know for definite otherwise.
It’s fine. 24% is overweight in the Uk, given Britain’s market cap in the world stocks (6%?) You have plenty diversification regardless. Being somewhat overweight in the home market is considered to be justified. https://personal.vanguard.com/pdf/icrrhb.pdf
The initial answer is "ASAP" which doesn't tie in with giving an actual figure.
My reasoning is because working life isn't for me. Or at least 5-6 days of 10 hour days isn't for me i know that much.
It upsets my wife when i say working life isn't for me. She bites back - "well everyone has to work". Well technically not true (but i get her point). I never said i wont work though. I do it because i know i have to in order to live. I just don't see the enjoyment in getting up at 5:30am ready for work to come home at (at the very earliest!) 6:00pm mostly 6 days per week, BUT it's the situation i'm in so i deal with it. The moment i no longer have to do that then i wont but that's getting into off topic realms.
I have great concern about how much is needed in retirement not least because of my dads situation. He saved in to a pension all his life. He became a pensions officer at his final company which he was with for 25-30 years IIRC. Would go on regular meetings regards pensions and would pay in AVCs i think he called it at the expense of having a bit less for day-to-day life.
Got to retirement (65), had 3 years of poor health & then died.
Obviously he didn't have a crystal ball and my mother now picks up a fraction of his pension (made less due to their age gap) but that's the thing - how big a pot do you aim for? How long do people 'plan' on living?
I'm not a big earner so i don't live like a big earner, therefore i have no intension of living a luxurious lifestyle in retirement. So long as i can afford to put the heating on without worry about paying for it, i can feed myself, i can take up a few free or cheap hobbies and can have the odd holiday or so per year (we holiday within the UK really though that may or may not change) then i'm good. I don't need a flashy car, a months holiday every 4 months in the Bahamas, so on & so forth.
Darn. What was i saying about off topic :rotfl:
Make hay while the sun shines. You have no idea what the future may hold. Focus on today and tomorrow. Let the distant future take care of itself. For many there's no control of what may unfold.