Peering over the hill...

Chiglepig

I had mine last week (OAZ) and felt fine, but anecdotal reports from friends suggest that the second dose is worse and if you already have antibodies, the reaction to the first is worse.

But I couldn't stop smiling!

Grogged

Zola. said:

Which one did you have @Grogged? Anecdotally I have heard of a few folk feeling grim after the Oxford/Astra one, but the Pfizer one seems to be easier on folk.

It was the Oxford/Astra one.
People at work recon that Astra is worst on first jab and Pfizer on second.
MrsG certainly seems to be at more extreme end of reactions though!

Grogged

Chiglepig said:

I had mine last week (OAZ) and felt fine, but anecdotal reports from friends suggest that the second dose is worse and if you already have antibodies, the reaction to the first is worse.

But I couldn't stop smiling!

We're both glad we had it and a few days under the weather is better than the alternative!

powerspowers

Definitely worth it but hope you both feel better soon

Grogged

The March Update

March’s quote of the month – “It’s not illegal to hoard chocolate eggs officer!”

Usual money stuff first; gossip, tea and biscuits follows...

 

Mortgage

End 2020            £87,985

Mar 2021            £85,987

Change               £1,998

%Change            2.3%

Overpaid            £3,143

Mar 21 OP          £73

 

The goal for 2021 is to pay off £10,000, with a view to paying it off in full in 9 (stretch of 8) years.  We’re scheduled to pay £8K off through normal payments.  I will look to make between 2 and 4 extra payments throughout the year.  Our NW mortgage is structured so that if you OP by at least £500 you get to either instantly reduce eth term or monthly payment.

Currently at £194 of the £2,000 target for 2021 and broke into the £85s!

 

EF/Cash

End 2020            £24,550

Mar 2021            £26,900

Change               £2,350

%Change            9.6%

Target                 £27,300

In Mar 21            £-72

 

R@tesetter have announced that they are closing and will repay all outstanding loans and interest in April.  Whilst we’ll get less than £100 back in total, at least it will be in one payment, rather than monthly over the next 4 years.

The plan for 2021 is to add a month to the EF and continue this every year going forward.  This will enable early retirement if needed (although not by much!).

Each month I aim to open a new 12 month high interest (lol) account to try and maximise the EF savings.  This will ultimately provide a years buffer, the excess will be held in PB, etc.

That plan went to pot a bit, as we actually moved £5,000 into PB, rather than opening a new monthly account.  With average luck, we should “win” 3 times a year, which would match or beat the current high interest savings rates on offer.  That £75 (3x £25) works out at 0.7%.

Pensions

End 2020            £221,400

Mar 2021            £237,400

Change               £15,900

%Change            7.2%

Target                 £350,000

In Mar 2021       £10,932

 

Pension (as dividends if taken today)

Annually             £3,343

Target                 £8,761

Monthly             £279

The state pension would be added on top of that (another £9K at today’s rate).

This could be boosted by drawing down on the capital, etc.

 

The big ii pension portfolio is managed on the same philosophy as MrsG, except it currently has triple the number of funds in it.  These all do the same job as the Vanguard funds but pay better dividends and are all long term holds.  Still continuing to rebalance, which have been timed around dividend dates.  Where transaction costs have been incurred, they have been covered by the incoming dividend payment.  This will increase the dividend payments from 1.8% to 3%, without (hopefully) affecting any growth potential of the funds themselves.

 

We are mortgage neutral with our savings, so if needs be, at least the mortgage is covered.

 

Grogged Towers News

 

We had our first jabs, which was nice.  Very well organised, we both felt a little under the weather next day, but MrsG decided to go into full effect mode, which lasted 3 days.  We’re both OK now and looking forward to our second jabs in June.

In MSE news we renewed the car and house insurances and by shopping around (and cashback) have saved 50% on last years premiums.  The majority of this was because we kept renewing the house insurance with NW, our mortgage provider.  Interestingly, by going direct to their insurer we could have saved about 25%, we went with another well know brand (Av!va) and saved 50%.

In biscuit news, I’m still limiting my nemesis to plain digestives.  This in no way condones the amount of chocolate eggs and oranges bought, but… My precious…

And MrsG won an award, which we’re chuffed to bits with.

Stay safe,

G.

Grogged

The MrsG March SIPP Update

 

This is the story of the good SIPP MrsG which started her voyage in June 2020 with an investment of £1,440 and a transfer from a previous plan.

As MrsG earns no income, her maximum contribution per year is £2,880, which the kind tax man will top up to £3,600.

 

The aim is to get a pot of £50,000 by retirement in 2035.

 

We decided to up the contribution we make by £40, which is £50 after tax releief.
Currently contributing £250 per month (£200 + £50 tax relief).

 

The portfolio is fully invested, with the aim of keeping a running cash balance of £5 to cover the quarterly charges.

 

Weight Symbol Investment

82%                     Equities

6%         VMID    FTSE 250 UCITS ETF

21%       VHYL     FTSE All-World High Dividend Yield UCITS ETF

24%       VWRL    FTSE All-World UCITS ETF

30%       VEVE     FTSE Developed World UCITS ETF

1%         V3AM   ESG Global All Cap UCITS ETF

18%                     Bonds

18%       VAGP    Global Aggregate Bond UCITS ETF Distributing

 

February            £12,985

March                 £13,627

 

We’ve made a decision to include some ESG (Environmentally sound) investments and have started to invest in their newly launched Global ESG ETF fund.  Currently stands at 1 share, but this will be topped up with March’s dividends and Aprils contribution.  We’ll balance it over time so that the four main funds will all have the same weighting (21%).

 

Average monthly income fell by nearly another £1 to £9.22 after 10 months – it will not get a boost until the next quarterly dividend in April of about £52.

The estimated annual income today is £110 after charges.

Total return to date is 5.6%, estimated annual return is 6.4%.

This is expected to even out at about 4% when the portfolio has been running for a full 12 months.

 

Annual values are calculated as (current value / portfolio age) * 12.

They will be a little patchy until a full 12 months have elapsed.

 

The bond funds pay dividends monthly and the equity funds quarterly.

 

The current weighting is 84/16 equities/bonds.

The plan is to move to 80/20 by retirement.

 

Each monthly payment will be allocated to the funds furthest away from their weighting, so for the next few months that will be V3AM Global ESG fund.

This flexibility allows the right weightings to be maintained going forward.

The portfolio is kept balanced after every monthly and dividend payment.

 

The aim is for simple 6 fund portfolio that replicates much of what a LifeStyle fund would do, but at a cheaper cost overall.

 

The portfolio is held with Vanguard, which whilst not the cheapest, is close for the level of investment and peace of mind.  It also helps that there are no transaction costs, so every penny can be invested.

 

Stay safe,

G.

Grogged

How we approached our Retirement Planning

There has been a good discission on @South_coast thread (and if you’re not subscribed https://forums.moneysavingexpert.com/discussion/6086041/keep-calm-and-carry-on – why not?).

I thought I’d talk about our approach, we decide on the RIP approach (Retirement Investment Planning) as we have a terrible sense of humour about acronyms, we hadn’t heard of FIRE or it’s siblings and it summed up how our plan would end (did I mention the terrible sense of humour?).

We decided we needed to know 3 numbers, how much we needed to retire (the size of the pension pot), when you want to retire and, er, when our retirement would end (the RIP bit…).

We decided to end our retirement at 90, here is a good starting point if you’re the curious type…

https://www.ons.gov.uk/peoplepopulationandcommunity/healthandsocialcare/healthandlifeexpectancies/articles/lifeexpectancycalculator/2019-06-07

How much do I need to retire on?

There is no one answer, so we came up with 3!

Minimum Pension

You need to include all your necessary annual expenditure.

This needs to include all your utility bills, essential insurances (house, pets, etc.), council tax, grocery shopping for you and your pets, EF and rent if you’re renting.

You do not need to include mortgage, car, travel, holidays, work-related, treats, etc. or anything else you absolutely do not need to live on - this is why it’s the minimum pension.

This gives you the minimum you need to live on.

Standard Pension

Top up with anything you feel is part of your normal life.

You do not need to include mortgage or any work-related expenses.

If you want a car, holidays, treats, etc. then include that.

Luxury Pension

Top up with anything you want for your dream retirement – yachts, butlers, that trip to space you always wanted, your bucket list, etc. – whatever takes your fancy.

This can be one-off things or annual, your call.

The Number

Armed with the above, you can now calculate the number you need to retire on.

The first bit of maths is to work out how many years are between your retirement date and the state retirement age.  As most people don’t retire on 1 January, assume you’ll need to fund the first year of state pension.  That way you won’t fall short.

Multiply this number by your chosen retirement plan.

The second bit of maths is to work out how many years of retirement you will have from state retirement age.

Multiply this number by your chosen retirement plan less the amount of state pension you will get (for simplicity, £9,000 is currently the full state pension per year, you’ll need to check your entitlement - https://www.gov.uk/check-national-insurance-record).

And finally, add these two numbers together to get your number.

If you have a mortgage and it won’t be paid off at your retirement age, add what you think will be the balance to your number.  This will be paid off on your first day of retirement.

If you have any one-off luxury items (that space trip, bucket list, etc.) then add this to your number as well.

You now have your final number.

What have we assumed?

The first assumption is that every year we’re going to fund your retirement by taking a lump sum from your pot – i.e. it will reduce by whatever level of pension you’ve decided on.

At the end of your retirement you will have spent it all.

What about inflation, etc.?

It’s also assumed that the rise in value of your pension pot will cover the effects of inflation (cost of living expenses) and the future value of money.

The assumptions are valid to get you started and can be refined as much as you want to take account of estimated inflation rates, the growth rate of your pension funds and any income your pension funds pay.

An example

You want to retire at 60 and live to 90, the state retirement age is 68 and you are 40 years old with a current pension pot of £35,000 and will owe £12,000 on your mortgage.

After crunching your expanses, you have worked out you'd like an annual pension of £20,000.

Your pension will last 30 years.

You’ll need to fund 9 years yourself (remember you’re fully funding that first year).

You’ll have 21 years of state pension to help you out.

We need 9 years at £20,000, plus 21 years at £11,000 (£20,000 minus the state pension of £9,000).

Our minimum number is £411,000.

We also need to add on the £12,000 of mortgage and subtract the pension pot we already have.

Our new number is £388,000.

This means you will need to save £19,400 per year.

At this point have you stopped reading, because the numbers look scary?

Couple of points to make:

Firstly, whilst your pot needs topping up by £19,400, you only need to contribute £14,500.  Pension tax relief will make up the difference.

You may pay into a company pension scheme, if so, you are already making headway.

Remember, there are there ways to trim that number – we’ve not talked about any savings you may have, is your pension too high, could you downsize when retired. etc.

You’ll have also noticed that everything above talks about you and your, if there are two of you, then it’s a joint number, which can make all the difference.

Final thoughts…

When you sit down for the first time, it can be an Eek! number, it was for us.

We’re 12 years away from retirement and about 60% of the way towards our number.

With 12 years to go, we’ll probably miss it, we have options to downsize, move to one car (assuming cars are a thing in 12 years) or have a more modest retirement than planned.

Like most people, it’s only relatively recently that we’ve been actively planning to retire on our terms, before that we just assumed we’d have a nice retirement and didn’t realise how much we could affect having that by just going Eek!

Take care and I wish you happy planning.

G.

South_coast

Ooh, thanks for the plug (although I think you'll lose followers if you send people my way - they'll all be asleep 🤣)! My figures are all very finger-in-the-air and on the back of an envelope, you've been much more scientific 😀

Busy_Mee

Hi Grogged spotted you on the FIREside chat thread and wandered across to have a read. 

The post above is spot on and I wish I had got my head around retirement a bit earlier. 

Our catalyst for the MSE spreadsheet life was a rather large mortgage and Mr Mee's looming 60th Birthday and his declaration he wasn't working a day beyond his 60 th Birthday. He didn't and has been happily retired for 18 months now. I am reaping the rewards of the MSE spreadsheet life and retiring in 17 weeks aged 57.

We are really fortunate in that we have 2 x 40 yr + DB pensions, we are now mortgage neutral and have a decent safety net pot should the SHTF.  

I need to understand investments better, but found myself scrolling quickly past any of your posts detailing globals and equities singing lalala, kittens and unicorns.

 I have taken the easy option of a Vanguard Life strategy SiPP . I have invested 27k over the last 2 tax years to max out the tax relief and will add another 12 k this tax year. The rest of the money is locked away in fixed rate cash ISAs, with a small experimental S&S ISA with Nutmeg.

We will continue with our mortgage until the term ends (0.79% interest offset mortgage), chipping away as we can, so that the final payment doesn't break my heart 

Grogged

Thank you very much @Busy_Mee.
I'm glad Mr Mee is enjoying his retirement and you're so close too! Exciting times.
Their life strategy funds are great and easy to understand.
All we've done is invest in the underlying funds directly, partly because it's cheaper and partly to learn and understand more.
Like you we're going to continue to pay our mortgage with some OP and the rest into the pension, so we can maximise the benefits now.