FIREside Chats

QueenJess

Nope. Got at least 10 years (probably much more) before I use the cash, so loss more ups and downs to go before then. I don't even check them very often.

ElmoR

hugheskevi said:

ElmoR said:

Is anyone else feeling glum just now as the markets tumble, the funds drop, and the dream seems to edge further away?!

Tumble? The FTSE is 2.65% off its 52 week high, the Dow is 2.94% off. That is just normal volatility, nothing to be concerned about.

My most defensive holding, my ISA for funds that will be needed over the next 12 years, is down 1.9% from 52 week high. Taking into account recent dividends there is almost no impact.

There will be far bigger drops ahead at some point in the future, nothing at all to be glum about at the moment.

Have weathered many downs in the past from, 2004 (when I first dipped my toes) - the 2008-2010 one was ugly but, yes, still ended up with more than invested once we arrived at Jan 2020. It gets more edgy perhaps when you near your jump off point? I know the advice is to leave it where it is and wait longer if you possibly can. At this stage/my age, that means early retirement probably gets pushed back. It must have been horrendous for those reaching retirement this past while.

hugheskevi

ElmoR said:

Have weathered many downs in the past from, 2004 (when I first dipped my toes) - the 2008-2010 one was ugly but, yes, still ended up with more than invested once we arrived at Jan 2020. It gets more edgy perhaps when you near your jump off point? I know the advice is to leave it where it is and wait longer if you possibly can. At this stage/my age, that means early retirement probably gets pushed back. It must have been horrendous for those reaching retirement this past while.

It is a lot more important to be invested properly according to risk tolerance, which being close to retirement will be lower than it was earlier in life.

But agree that when routine daily market movements can be the same as monthly income (due to more being invested) the stakes are a lot higher!

However, it is even worse in the period immediately after retirement, as then there is no way to adjust other than reducing resources at some point over retirement. In most cases going back to work at a similar income level won't be viable after more than a couple of years out, so very important to think about risk tolerance before, shortly after and in the longer term to ensure an appropriate risk level is chosen for all points (easier said than done, admittedly).

Personally I massively value our Defined Benefit pensions, which make the volatility in DC and ISA much less important than if we were relying on the volatile assets to cover our core spending.

Chiglepig

Small pension win yesterday - for ages my TP has been showing a break in service for one month in 2016 , I've periodically asked for it to be rectified, but it was never resolved. Finally I have unbroken service and it's up-to-date with last financial year, so I have currently built up an estimated £15,320 across the two schemes, 16 years in final salary (NPA 60) and the rest career average (NPA 67). The good news is that CA will build faster than the FS did, the not so good news is that for the last year I've been 0.8 rather than full-time and the chances of going back up are looking increasingly slim.

I should add that I am so grateful for the certainty and value that it represents.

edinburgher

@ElmoR - late to the party, but sleeping fine here, I am only losing gains (which have been phenomenal due to currency fluctuations and incredibly lucky (early Covid scare) SIPP transferring which saw us basically pick up a year's after tax wages for free)

ElmoR

Inspired by @Hugheskevi and @Chiglepig I went on a mission to reframe the spreadsheet and cheer myself up...

Several of you have mentioned using 25 times the defined benefit pension amount to calculate net worth, so I had a pop at that. Large sums, much larger than the recently pummeled S&S ISA!

Bit of extra detective work on the DB AVC added years (these are different to regular additional contributions, sitting under the old final salary scheme rules) and how they are calculated, and nailed that down finally (famous last words), so thrown that into the calculations too. Much better.

If I'm learning anything, it is to be very, very sure you understand the works pension intimately.

I'm also kicking myself post divorce (ancient history now, so no emotional sting left thankfully) for the lack of pension considerations that was factored in at that time. I was a mug. Younger women take note. Though I genuinely hope none of you find yourself in that situation!

hugheskevi

ElmoR said:

Several of you have mentioned using 25 times the defined benefit pension amount to calculate net worth, so I had a pop at that. Large sums, much larger than the recently pummeled S&S ISA!

Although it is irrelevant as I wouldn't transfer, I use Cash Equivalent Transfer Value (CETV) to get the capital value of my wife's and my DB pensions. But the CETVs in our scheme are crazily low for a pension with Normal Pension age of 60 and uncapped CPI increases before and after retirement - we are aged 43 and get a multiplier of only 14.4?! Still, I fervently aim to mark-to-market all our assets, and the CETV is the closest I can get to that, so that is what gets used in my spreadsheets.

If I'm learning anything, it is to be very, very sure you understand the works pension intimately.

Pensions are astonishingly powerful but under-used tools. Even basic Defined Contribution pensions are great, and those with Defined Benefit pensions have so many options available.

Even with the crazy low CETV figures, pensions still are more than half our net worth, and you could very reasonably double or even triple the capital figures for the DB pensions to get more genuine estimates of value.

There can also be some big traps with pensions that knowledge can help avoid. For example, my DB pension is final salary, and due to the way the final salary calculation works by looking back at past salary levels, adjusting by inflation and then using highest value, if I were to be in the scheme on 1 April 2022 my pension would fall by nearly 5% as the best salary year drops out of the look-back. I can avoid that by leaving the scheme on 1 March 2022, but no-one would ever tell me that if I hadn't researched it myself and kept the records to do the calculations.

I'm also kicking myself post divorce (ancient history now, so no emotional sting left thankfully) for the lack of pension considerations that was factored in at that time. I was a mug. Younger women take note. Though I genuinely hope none of you find yourself in that situation!

Divorce does vicious things to pensions, and financial plans in general. Of all the various scenarios I model and stress-test, divorce is the only one that I would struggle to deal with. Even death is not an issue from a financial perspective, it would actually leave the survivor much better off, and the same applies to ill-health (assuming it doesn't lead to large healthcare costs).

rara32

Hello, I hope everyone is enjoying the weekend. Weather is a bit miserable here and it's been a busy week at work so have been reading threads about retirement to cheer myself up 🙂. Still loving all of the chat about different approaches and aims on here and have just started reading this thread which is fab. https://forums.moneysavingexpert.com/discussion/6228191/how-much-to-live-on/p1
Very similar to those on the pensions board however a lot of smaller retirement incomes. It has really made me think again about the how much is enough question - which always happens after a tough week at work to be honest. Anyway thought I'd post it as I think the people on this thread might find it interesting too.

Karmacat

rara, that's a brilliant find, thank you!  I've already been retired a good while because of ill health, with much, much less than the money recommended on the pensions board, and really, there isn't anything I've had to veto because of money.  Because of chronic ill health, yes, but not money.  That's meant two cruises a year, for instance.  Actually, I can't bring myself to spend very much on taxis but that's a psychological/historical quirk of mine, rather than money 

edinburgher

rara32 said:

Hello, I hope everyone is enjoying the weekend. Weather is a bit miserable here and it's been a busy week at work so have been reading threads about retirement to cheer myself up 🙂. Still loving all of the chat about different approaches and aims on here and have just started reading this thread which is fab. https://forums.moneysavingexpert.com/discussion/6228191/how-much-to-live-on/p1
Very similar to those on the pensions board however a lot of smaller retirement incomes. It has really made me think again about the how much is enough question - which always happens after a tough week at work to be honest. Anyway thought I'd post it as I think the people on this thread might find it interesting too.

I read through about 2/3 of it, but it is relentlessly "gatekeepery". I am quitting as people shouldn't be treated like naughty weans for going off on the occasional tangent, it's the tangents that make forums fun!

Still, it has made me realise that our figures are probably inflated at the moment, we do have a few expenses that are DD-specific and won't be future Mr and Mrs E problems...

Edit: wow - that was a powerful exercise! Just by stripping out the direct costs for DD (monthly spends, her ISA and classes), I was able to cut £110,000 out of our target number. This has improved our standing by nearly 8% of the total That is maybe a little optimistic, maybe I'll keep the ISA figure in there (£84.60/month) to reflect the desire to give her small but helpful contributions as she hits the usual milestones...