Peering over the hill...

longway2go

Vertical layout much clearer

Grogged

The weekend was a bit of a damp squib here, as above tweaked the master spreadsheet with a new tab to make MSE monthly reporting either easier, more standard or both.
Also started the plan for Mrs G SIPP, more later (well very soon in next post! ).
Had a lovely roast pork dinner with all the trimmings on Sunday, with plum tart and cream for dessert. Frozen two pork portions for future meals.
Watched latest Jurassic Park, which went through its set pieces well, but otherwise uninspiring (is it just me that all action films seem to be blatent set pieces with minimal setup for the next one?).
The daily commute to the dining room table is getting tedious, but doesn't look like the office will be opening anytime soon.
We're thinking of getting a rescue dog, somewhere in size between a terrier/spaniel to collie.  It's been a long time brewing, but we've finally decided that when they open we'll start to actively look.  Not had a dog in a few years, so looking forward to being part o fthe club again.
Last night had a really nice homemade paella with home made sangria to wash it down with... 🍷

Grogged

The New Shiny Mrs Grogged SIPP

Background

Mrs G has a very small pension pot of about £7,500 which really isn’t going to pay anything in her twilight years.

We’ve decided to try and boost that by converting it into a SIPP and growing it through contributions funded by exiting the P2P funds we have.  Whilst we won’t be able to contribute all of those in either one year or as one lump sum, we’ll drip feed the money in as we can.

The time frame is 15 years, which means we could contribute a maximum of £61,000 with the transfer and the annual £3,600 we can contribute.  It will probably be closer to £50,000.

For cost and simplicity we’re using Vanguard.

Aims

The strategy is to start with global funds split 70% equities and 30% bonds, growing to 40% bonds over the 15 years.  It’s a passive portfolio, so mostly buy and forget.

We’ll start with a core portfolio of 4 global funds.  Over time we’ll aim to increase these, firstly with some dedicated UK funds and then regional ones.  The aim is to keep the UK element to about 20% for the equities and 40% for the bonds. The other aims are, apart from the core funds, not to exceed 5% for any one fund and the minimum fund size to be £500.  In practice this means that the core funds need to grow to £10K before any more will be added.

Funds

They’ll be a mix of standard accumulation funds and ETF (bought “at best” to avoid charges).

The accumulations funds are there to provide long term growth and stability.

The ETF provide growth and income that funds the portfolio, minimises charges and as they trade same day, allow easier quarterly balancing.

Equities

The two core equity funds will be:

50% - FTSE Developed World ex-U.K. Equity Index Fund - Accumulation

50% - FTSE Developed World UCITS ETF (VEVE)

Bonds

The two core bond funds will be:

60% - Global Aggregate Bond UCITS ETF Distributing (VAGP)

40% - U.K. Gilt UCITS ETF (VGOV)

The Little Acorn

The initial investment has been £900, split £540 to equities and £360 to bonds.

Not a large investment and we probably should have just started with 2 funds, but the groundwork has been laid.

There is still £225 to come from the government, but I don’t think that will be credited until August.

I intend to give regular updates (at least monthly) for those interested in how this will turn out.

Thick_n_Thin

Yes definitely interested in hearing your pension and retirement plans, I have to confess I don’t understand much of what you’ve written above so hopefully I’ll pick up a bit of knowledge! 

Grogged

Thanks TnT, anything in particular I should explain in more detail or in a different way?

MerryHen

Have just finished your diary Grogged. I'm sorry about the death of your mum and dad, their funeral flowers sound all the more beautiful for having been put together by you.

Love your Thursday night is album night idea (and will be nicking it 😄)

I hadn't heard of a Marcus account before, googled to find they've just stopped accepting new customers for now 🤦🏻‍♀️ nevermind!

You sound very on it with your retirement planning. I must confess to not understanding much of pensions either (including my own) so will be following with interest.

Grogged

Thanks @MerryHen.
I think saga and ns&i offer similar rates to Marcus if that helps.

Grogged

We spread mum and dad's ashes in the remembrance grove this morning.
It was a nice simple ceremony with a few words to say our final goodbyes.

Grogged

Fish and chips for tea. First time I've been in a while, like walking into one of those pawn shops you see on TV, big flexi-glass screens and 2 small serving hatches.
Music night is a bit eclectic tonight:
Journey
Steve Miller Band
Hooty and the Blowfish
(Will update as I think we have at least one more to go)
EDIT: As it happens, we didn't as MrsG needed to finish a musical sporcle badge...

Grogged

MrsG SIPP Update

After the first investment of £900 on Tuesday we now stand at £880.

Also started the pensions transfer, so the wait begins.

Also owed £225 from the government, who give you £1 for every £4 you invest.

How did we get here?

(with apologies to Dads Army)

Like most people we’d just taken the Sergeant Wilson approach and assumed all was good with the world and retirement which was years away…

Then coming up to our fifties, we took a look and went all Lance Corporal Jones and panicked in a don’t panic way.

The reality hit with Captain Mainwaring saying we where a “stupid boy” for just assuming we’d be ok in retirement.

So we needed to figure out what we wanted from retirement, when we could take it, even if we could retire…

Planning

The first thing we did was to work out what we needed to live on, from this we could work out what size of pension we needed.  In the words of Douglas Adams, space is big…  and so is the size of the pension pot you need…

Taking an example of needing £2,000 a month to live on:

Retirement         £24,000

State Pension    £9,110

Other Income    £-  

Own Pension     £14,890

In this example, we’d need to fund nearly £15,000 a year.

Pension Pot Sizing

Taking the £15,000 of income needed for our “Own Pension” above, the maths works out as follows for a 2%, 3% and 4% income from the pension pot:

2% Pension Pot £744,480

3% Pension Pot £496,320

4% Pension Pot £372,240

To work out the size of the pension pot you need you divide your “Own Pension” by the rate of return you expect from your pension pot.

Assumptions:

·         Your pot is investment only, I’d count any defined pension as “Other Income” in the above to keep things simple

·         I’ve based everything on todays money. Whilst inflation will eat away at this, it should be countered by rises to the state pension and your investments.

·         You take the pension as drawdown income and not sell any investments.

·         You retire and take your state pension straight away.

From this you can tailor it to what you need.

MrsG SIPP

When we looked at the pension pots we had, MrsG only had a very small pension from a previous employer and this would only provide a pension of between £150 and £300 per year.

We could either leave it alone or try and boost its potential.

As MrsG does not work, we could potentially increase it to between £50,000 and £60,000.

This is just by topping it up by the maximum she’s allowed of £3,600 yearly, plus any investment growth over the next 15+ years. This would give her a pension of at least £150 per month, a massive improvement.

She can contribute £2,880 per year (£240 if paid monthly) and the government will top that up to the £3,600.

The intention is to draw down, rather than take an annuity or a lump sum.