How much to live on

hugheskevi

Farway said:

mortgage free is such a relief once that mill stone has gone

I've seen many say this, but personally I never felt any different after closing my mortgage account. I think it was because I always monitored net worth as my key metric, not the individual components. I recall a number of financial quizzes asking what my mortgage payment was, and critcising if I did not know it - but to me it was just a number in a spreadsheet that went out each month immediately after salary went in.

I suspect using 0%, fee-free, credit cards extensively to facilitate pension and then ISA contributions contributed to how I felt about the mortgage, as the minimum payments on the credit cards were bigger than the mortgage payment. Also, once our ISA balances exceeded the mortgage balance, it didn't really feel like the mortgage was anything other than a convenient borrowing source rather than being necessary. Even now with the mortgage all paid off over a year ago, we have £46K of 0% debt left, but that is matched with cash deposits and the debt is just getting paid off as offers end (ie normal Stoozing).

I'm still waiting for international travel to be easier before retiring, so date of retirement has been postponed until May 2022, I'm planning to give notice at work and start to sell house in February. This helpfully means we will use up our Personal Allowances in 2022/23 and get a National Insurance qualifying year. The revised retirement date (which was initially Christmas) fits better with selling house and things like sorting out ISA contributions for the year before leaving (not a big deal, but nice to have everything sorted for many months before we head off).

For some time now, I have been monitoring property sales in the area we plan to retire to (mid-Wales). Although there have been plenty of adequate places, there hasn't been anything really good for us in for several months. This week a near-ideal property was put on the market (link here) - it was rather strange to think that if we were not going traveling there is a very high probability we would buy that house and retire as soon as the purchase was finalised in a few months from now. Retirement still doesn't seem all that imminent with another 9 months to go, and a lot of work preparing to sell house and get ready for travel during that time.

blue.peter

hugheskevi said:

For some time now, I have been monitoring property sales in the area we plan to retire to (mid-Wales). Although there have been plenty of adequate places, there hasn't been anything really good for us in for several months. This week a near-ideal property was put on the market (link here) - it was rather strange to think that if we were not going traveling there is a very high probability we would buy that house and retire as soon as the purchase was finalised in a few months from now.

Coincidentally, I'm actively looking to move house. My present house is already on the market. I've been finding very much the same as you: although I'm spreading my geographical net pretty wide, there seem to be very few houses available, and none that I actually want to buy. Like you, I've seen a few adequate places, but I want more than just adequate. It's definitely a sellers' market at the moment, which is why house prices have been shooting up over the last year or so.

The house to which you've linked looks gorgeous. Although it's within my price range, there's no chance at all that I'll buy it: it doesn't tick my boxes. Wrong features, wrong location for me. It'll be a lovely home for someone else. I do hope that you can find somewhere as good as that when you are ready to move.

sheslookinhot

hugheskevi said:

Farway said:

mortgage free is such a relief once that mill stone has gone

I've seen many say this, but personally I never felt any different after closing my mortgage account. I think it was because I always monitored net worth as my key metric, not the individual components. I recall a number of financial quizzes asking what my mortgage payment was, and critcising if I did not know it - but to me it was just a number in a spreadsheet that went out each month immediately after salary went in.

I suspect using 0%, fee-free, credit cards extensively to facilitate pension and then ISA contributions contributed to how I felt about the mortgage, as the minimum payments on the credit cards were bigger than the mortgage payment. Also, once our ISA balances exceeded the mortgage balance, it didn't really feel like the mortgage was anything other than a convenient borrowing source rather than being necessary. Even now with the mortgage all paid off over a year ago, we have £46K of 0% debt left, but that is matched with cash deposits and the debt is just getting paid off as offers end (ie normal Stoozing).

8 May 2022 is my retirement date. 8th is a Sunday and I’ll be on a 2 day week by then, so the bank holiday and a days annual leave means I will leave on the 27 April. 

I intend to live off my TFLS from a small SIPP together with a SIPP drawdown under the personal tax allowance. I will defer my DB pension until April 2023, as a Late Retirement Factor adds 9.5% to the annual pension. 

Although on 3 days a week at present I don’t consider myself semi-retired, but a part time worker. 

I plan on buying a camper as soon as what I want becomes available, or a new one. However, I would like to do the Camino De Santiago next year, so the van can wait.

MaxZorin

Pleased to see this thread make a resurgence.  Whilst I find the Pensions board really useful, I sometimes find it difficult to relate to the figures being discussed so it’s pleasant to see others having a fulfilling retirement on numbers similar to what I’m aiming for.

I’m currently 40 and have 20 years of Civil Service pension, a combination of Classic and Alpha.  I don’t earn a massive salary but previously worked Shifts which came with a very good allowance which allowed us to overpay our mortgage when rates were higher.  Our outstanding mortgage balance is now under £10K.  My wife recently came into some inheritance from her Grandparents.  This, combined which reduced outgoings as a result of a recent house move, has allowed us to focus more on retirement savings.  We’re both keen to ensure we have something tangible to show from her inheritance so we use this to pay the mortgage whilst I invest the amount we previously paid from my salary into an ISA.  My wife is self-employed, though currently seeking regular employment, so we’ve increased payments to her personal pension.  We’ve also put some into fixed rate accounts to make further pension contributions in the next couple of years and have commenced a few house improvements.

I’m keen to retire as close to 50 as feasible and think a retirement income of around 20K in today’s money will be more than sufficient.  The early years will be funded solely from ISAs, 55 to 60 from ISA and Classic pension and 60 to SPA from LISA, Classic and Alpha pensions.  My wife’s personal pension will also likely support us from when it’s accessible.

McCloud has given me considerably more flexibility in retirement planning and thankfully the choice of what scheme to be in for my 2015-2022 service doesn’t need to made until I decide to take it.  I think it’s likely Alpha will be better value for me due to its higher accrual rate.  I’ve completed some spreadsheet modelling using current figures to take the various actuarial reduction factors into consideration.  I enjoy my current role and have no particular desire for promotion (I’ve managed staff previously and have no desire to do so again and most promotions would come with that responsibility).  One thing I need to look into further are the survivor benefits for both schemes, something I hadn’t considered until @hugheskevi helpfully mentioned it one of his very useful and detailed posts.

The current plan is to continue to invest as much as we can in a combination of ISA, LISA and DC pensions.  Whether retiring at 50 is feasible will likely be dictated by how much we can contribute over the coming years and striking that difficult balance of enjoying today whilst saving for the future but I’m grateful for the foundations my DB pensions will provide in retirement.

sheslookinhot

Make sure you are maximising contributions to yours and your wife’s pensions before you make additional mortgage payments 

drummersdale

MaxZorin said:

Pleased to see this thread make a resurgence.  Whilst I find the Pensions board really useful, I sometimes find it difficult to relate to the figures being discussed so it’s pleasant to see others having a fulfilling retirement on numbers similar to what I’m aiming for.

I’m currently 40 and have 20 years of Civil Service pension, a combination of Classic and Alpha.  I don’t earn a massive salary but previously worked Shifts which came with a very good allowance which allowed us to overpay our mortgage when rates were higher.  Our outstanding mortgage balance is now under £10K.  My wife recently came into some inheritance from her Grandparents.  This, combined which reduced outgoings as a result of a recent house move, has allowed us to focus more on retirement savings.  We’re both keen to ensure we have something tangible to show from her inheritance so we use this to pay the mortgage whilst I invest the amount we previously paid from my salary into an ISA.  My wife is self-employed, though currently seeking regular employment, so we’ve increased payments to her personal pension.  We’ve also put some into fixed rate accounts to make further pension contributions in the next couple of years and have commenced a few house improvements.

I’m keen to retire as close to 50 as feasible and think a retirement income of around 20K in today’s money will be more than sufficient.  The early years will be funded solely from ISAs, 55 to 60 from ISA and Classic pension and 60 to SPA from LISA, Classic and Alpha pensions.  My wife’s personal pension will also likely support us from when it’s accessible.

McCloud has given me considerably more flexibility in retirement planning and thankfully the choice of what scheme to be in for my 2015-2022 service doesn’t need to made until I decide to take it.  I think it’s likely Alpha will be better value for me due to its higher accrual rate.  I’ve completed some spreadsheet modelling using current figures to take the various actuarial reduction factors into consideration.  I enjoy my current role and have no particular desire for promotion (I’ve managed staff previously and have no desire to do so again and most promotions would come with that responsibility).  One thing I need to look into further are the survivor benefits for both schemes, something I hadn’t considered until @hugheskevi helpfully mentioned it one of his very useful and detailed posts.

The current plan is to continue to invest as much as we can in a combination of ISA, LISA and DC pensions.  Whether retiring at 50 is feasible will likely be dictated by how much we can contribute over the coming years and striking that difficult balance of enjoying today whilst saving for the future but I’m grateful for the foundations my DB pensions will provide in retirement.

When I complete my 40 years in October I’ll have around 38 & a half years in Classic with about 18 months in Alpha - I am looking to take partial retirement next year around June when I’ll be 59 but haven’t the foggiest idea what my best option will be under the McCloud ruling - I have been on a few My CSP events and the impression I got was that they don’t think they will have any form of “calculator” available for a year or more to determine what each option might mean for each individual - but I expect circumstances vary a great deal so it’s a complicated business. I’ll just choose the option I feel is best at the time using whatever information is available, I suppose.

GunJack

sheslookinhot said:

Make sure you are maximising contributions to yours and your wife’s pensions before you make additional mortgage payments 

This isn't usually an option if you're in a DB/CARE scheme.... plus, when you know what your income is going to be in retirement, it's better to get the outgoings down beforehand, which for many is the mortgage.

For example, I know at 60 my income will be £21k (not including the PCLSs), so to have regular monthly outgoings of £6K rather than £15.6k inc. mortgage is a bit of a no-brainer..... people without DB pensions seem to overlook this all the time, and tend to assume everyone has nothing but DC. 

...and the mortgage overpayment would not produce enough, if put into a DC pension, to pay off the mortgage with the 25% TFLS by the time I get to 60...

drummersdale

GunJack said:

sheslookinhot said:

Make sure you are maximising contributions to yours and your wife’s pensions before you make additional mortgage payments 

This isn't usually an option if you're in a DB/CARE scheme.... plus, when you know what your income is going to be in retirement, it's better to get the outgoings down beforehand, which for many is the mortgage.

For example, I know at 60 my income will be £21k (not including the PCLSs), so to have regular monthly outgoings of £6K rather than £15.6k inc. mortgage is a bit of a no-brainer..... people without DB pensions seem to overlook this all the time, and tend to assume everyone has nothing but DC. 

...and the mortgage overpayment would not produce enough, if put into a DC pension, to pay off the mortgage with the 25% TFLS by the time I get to 60...

Is that annual outgoings of £6k rather than £15.6k?  I think from a personal perspective I would be happier paying off my mortgage - using my own circumstances I would be c£700 a month better off which I could then add to a savings account.

GunJack

drummersdale said:

GunJack said:

sheslookinhot said:

Make sure you are maximising contributions to yours and your wife’s pensions before you make additional mortgage payments 

This isn't usually an option if you're in a DB/CARE scheme.... plus, when you know what your income is going to be in retirement, it's better to get the outgoings down beforehand, which for many is the mortgage.

For example, I know at 60 my income will be £21k (not including the PCLSs), so to have regular monthly outgoings of £6K rather than £15.6k inc. mortgage is a bit of a no-brainer..... people without DB pensions seem to overlook this all the time, and tend to assume everyone has nothing but DC. 

...and the mortgage overpayment would not produce enough, if put into a DC pension, to pay off the mortgage with the 25% TFLS by the time I get to 60...

Is that annual outgoings of £6k rather than £15.6k?  I think from a personal perspective I would be happier paying off my mortgage - using my own circumstances I would be c£700 a month better off which I could then add to a savings account.

yes, with no mortgage annual outgoings £6k (council tax, utilites, insurances, sky, phones, etc. - our CT is £2200 pa), if still paying mortgage it would be £15.6k pa. So, for me to pack it in at 60, I need to overpay to clear the mortgage by then.

missile

GunJack said:

drummersdale said:

GunJack said:

sheslookinhot said:

Make sure you are maximising contributions to yours and your wife’s pensions before you make additional mortgage payments 

This isn't usually an option if you're in a DB/CARE scheme.... plus, when you know what your income is going to be in retirement, it's better to get the outgoings down beforehand, which for many is the mortgage.

For example, I know at 60 my income will be £21k (not including the PCLSs), so to have regular monthly outgoings of £6K rather than £15.6k inc. mortgage is a bit of a no-brainer..... people without DB pensions seem to overlook this all the time, and tend to assume everyone has nothing but DC. 

...and the mortgage overpayment would not produce enough, if put into a DC pension, to pay off the mortgage with the 25% TFLS by the time I get to 60...

Is that annual outgoings of £6k rather than £15.6k?  I think from a personal perspective I would be happier paying off my mortgage - using my own circumstances I would be c£700 a month better off which I could then add to a savings account.

yes, with no mortgage annual outgoings £6k (council tax, utilites, insurances, sky, phones, etc. - our CT is £2200 pa), if still paying mortgage it would be £15.6k pa. So, for me to pack it in at 60, I need to overpay to clear the mortgage by then.

After paying council tax, you live on £3,800 pa or £73.00 per week?