Cutting it Fine - the challenge is on!

savingholmes

I think if you are using a DC pension to create lump sums - that's not too bad if you can convert it to a flexible drawdown pension. If however you are using a DB pension - often you lose £12 or more of your pension forever for every £1 you take as a lump sum. That can have a major impact on your retirement income. The plus is that you are guaranteed the lump sum - where if you die young - you might not ever draw enough pension. The negative is come about 12 years after retirement - you could potentially see the long term impacts of the lump sum  in lower pension and it could be quite harmful.

As a comparison - if you were part of the fire movement - they reckon you need a lump sum of 25 times the amount you want to draw per year to afford to retire early. I think you can see on that basis that losing £12 for every £1 of a lump sum is potentially expensive. The ideal is to repay your mortgage (or put your £ into a S&S ISA to repay it) before you hit retirement age if possible - unless your life expectancy is relatively short ie you have life limiting health conditions ... Hope that helps your thinking...

I am not a financial advisor - and you need to get your own financial advice... 

SandyShores

Thanks for the comments @savingholmes -  its something we won't go into lightly.  Yes, it is a DC pension we are thinking about using to pay some of the mortgage down.

I'm drawing a small DB pension early, as I was able to take the max lump sum just in time to use it for a deposit for a house.  Unfortunately our spendy ways had left us renting, and it really was the only way for us to get back on the property ladder - or rent forever.  I did some sums and found I would definitely see a loss if I lived to my later years, but hopefully by then we will have paid off the mortgage, and will reap the benefits of being rent free instead.  It was the right thing for us at the time, and I did some sums and was willing to sacrifice earlier payments for less.  Its interesting that its about 12 years, I thought I had worked it out a bit longer, but I'm not sure I had taken into account the tax I've being paying on my small pension whilst I'm working.

Looking at my pension calcs, I am not planning to draw my final salary pension until state pension age as it should be pretty healthy by then, and the aim is to take the smallest lump sum needed to say goodbye mortgage.  I actually can't believe I'll be at state pension age in only 10 years time.  Talk about cutting it fine! 

SandyShores

Well, 1st of the month - a nice fresh month and a chance to make a fresh start into this new year.  January was a bit blah - well with lockdown, lack of seeing people and stuck in the house all blooming day.  Last day of the month I made a lovely shepherd's pie, and today I made chicken soup and dumplings - there's nothing like it for warming the soul (and making the house smell of cooked chicken) 

Sadly the back is still playing up, but it is getting better - have to be patient as it all takes time and will heal.  I need to look after my sleep a bit better - here I am on the computer at 10pm - I only meant to pop on for a minute or two.  I keep purchasing books, so in future 9pm - 10pm will be reading hour!  Walking has been helping but today was just today busy with work and cooking etc. so tomorrow I will get some steps in.  Its nice that the days are drawing out, can't wait for the warmer weather to come along.  My stress levels are definitely a bit high, which I know is okay as long as you can find equal relaxation time - walking definitely helps,  its harder to relax at home since being banned from the office. 

I need to find some time to sort a few things out around the house this week.  The clutter is building up in some cupboards, which puts me on edge, but there are no charity shops open.  I need to look into fleabaying some stuff as you can have it collected from home by the delivery companies now.  Right, off to get some shut eye, tomorrow is another day and all that stuff

savingholmes

I think a house largely pays for itself - assuming it keeps increasing in price. You're also right that those that pay rent in retirement years run out of their pensions much faster than those who own their homes and have largely cleared their mortgage.

SandyShores

Just sorting out the budget and its a nice short month, so although the food budget is a bit low it should more than stretch.  Leftovers last night went down a treat, and there are left over fresh veggies to make a lovely veg. soup later on tonight.  I've also dug out a spicy mexican rice recipe for Thurs.  Friday may be pizza so a night off cooking.  I'm not sure how I'm going to overpay the mortgage by £100 this month, but I'll try to save some from the food money and hopefully DH might have some work from his second job - otherwise it will be my savings.  I'm starting to breathe a bit more easily as the budget hasn't gone out of control since we bought the house (and starting spending on making it a home).  Who knew it could all be so easy (well ever since I got DH's overspending bug under control).  But I have got to be ready for any unexpected events.

Now the house is in place, and the pensions are coming along, its time to concentrate on life a bit more.  First thing is to get healthy - which means getting enough sleep, keeping supple, eating healthy, getting outside 3 times a week, running and weights.  Not to forget walking - apparently if you listen to something e.g. ted talks or a book when you are walking you are more likely to keep going.  When the local gym opens I'm going to look into membership as I absolutely love sauna's.  Sleep is coming along well, especially with my new reading hour, which means I put away my electronics and have started making a dent in all these books I've purchased - so that's a double win.  Decluttering is top of the list too (mental and physical), as well as 'hugging it out' - apparently hugs calm you and raise your oxytocin - who knew it!  I've signed up for one of the courses I've been looking at and have a few queued up - got to keep that learning going - and of course there are books to buy, including one on CBT.  I read a great article about this and how your thoughts affect your feelings, and your feelings affect your mood, but you can adapt your thinking to make a difference to how you feel.  Of course, from all this hopefully a new rewarding job will arrive and/or some life enrichment/new hobbies and skills.  Sounds a huge list, so I've written it all down in the lovely book I bought from Paperchase at xmas - part of the mental decluttering.

SandyShores

Not too bad a day at work, sorted a few things out.  One of our team was feeling a bit hard done by because of the changes and its put me in a negative mood too.  Part of me want to complain about the changes, and the other just wants to leave - which isn't as easy as it sounds.  I think I'll take the middle road, and make my feelings known at appropriate times, but at the same time look for other work.  Sounds like a good compromise.  I think there's something CBT in this - recognising your feelings and sorting the thinking to sort your feelings which helps your mood?  DH was winding DD up earlier, which upset her which upsets me.  He doesn't mean to upset her, then he gets grumpy because he's upset her and then I feel stressed.  I can sort the thinking about this out - it will all be okay again in the morning after a good night's sleep, so lets worry about it then - I just wish DH could have a bit more empathy.  Is it possible to do, or is he a lost cause?

Anyway, soup was delicious, back is kind of okayish, did some shopping for staples today and wasn't too busy, going to do some reading now so electronics off and tomorrow will be walking and some hand weights.

savingholmes

Depends why he has an empathy gap... 
Good luck with the decluttering
I think visualisations can be helpful - but you have to marry it with action
E.g I once wrote down my ideal job details in the pub with a friend - I then went and searched immediately for jobs and found one and applied within a couple of hours and had the interview and started 3 weeks later

SandyShores

Quick drop in of the morning.  Had my banking rewards back and so my xmas 21 fund went up £7.  Then I've just noticed my Amzon points are over 1000, so that's another £10.  I usually use the voucher on something we are going to buy anyway and put the cash equivalent into the xmas fund.  Just another £10 to find this month to keep up the target of £30 per month by xmas.

My putting down the electronics went slightly awry yesterday as I opened up an email just before 9pm (big mistake) from Toms to say my refund had been successfully processed (yay) and they had given me a store credit (not so yay).  I've emailed them to ask them to refund me please.  Their refund process says they will give you the choice, so whether I just didn't tick the right box I don't know.  Anyway I've messaged them and should get a response by the weekend. I used paypal, so can try their complaints process if I need another avenue.  I don't think I'll bother purchasing with them again, it was such a pain returning as everything goes back to the netherlands.  Apparently they are a U.S. company - must read the small print in future.  Anyway, after researching that, I managed about 20 minutes of reading before dropping to sleep, so I need to put down the electronics a lot earlier.  It doesn't help when there is slight family drama before bedtime.  I think everyone was tired and people react differently when they're tired.  I'm anything for an easy life so I can just get things done and get to bed.  DH is a bit of a moaner, so exerts energy arguing and moaning - I'm always saying to him that in the two minutes he's moaned about doing something he could have actually done it.  Whereas moaning causes discussion and arguing and more moaning and words being said that weren't meant.  Calm was restored this morning, but I'm not happy to have conflict just before bedtime, its not good for relaxation.  

Being in the pub with a friend, what a lovely thought   Who knew that one day we would see that as such a treat.  I've a few friends who I meet up with after work, when our meetings in the next big city coincide, for an after work drink/meal.  Its a once every six months or so thing, and I've missed about three of those now - oh how I've missed them.  Its one of those huge pubs where everyone is crowded in together and the noise of after work talking is so loud, its such a brilliant atmosphere and makes me appreciate the quietness of home.  I'm looking forward to the next time it will happen

SandyShores

Worky day today.  Not much else happening.  No walk as the weather was too bad, so I must get out tomorrow.  Sat with a facemask on at the moment and then its off to bed to read one of my books and then sleep.  Better sleep is having a good effect, so is thinking before I feel (CBT ).  Must work on the decluttering from tomorrow as well and over the weekend, but I must work on getting some good playlist uploaded to my music list for running - hopefully a good music list will help as well.  Night all.

savingholmes

Great news on your £30 challenge. Hope you also get other refund sorted.