FIREside Chats

edinburgher

@powerspowers - welcome - finding out about your pensions sounds like a very good goal

@Staffordia - she sounds like a good woman. Mrs E is usually more than happy to tolerate whisky buying because free whisky...

@OhIJustLostMyShoe - wow - £500k in 11 years! You must have a fantastic job.

@greent - I always find your posts fascinating, but a little confusing, sounds like a life well lived and a lot of hard work. Also, unless I'm missing something, you've already well exceeded your goals if you proceed with the £900k transfer? That alone would generate £30k at a conservative 3% withdrawal rate. I suspect you are going to overshoot massively.

OhIJustLostMyShoe

edinburgher said:

@OhIJustLostMyShoe - wow - £500k in 11 years! You must have a fantastic job.

I suppose, but I'm surrounded at work by people who earn a hell of a lot more than I do - so I don't usually feel like that's the case! 

Feels like the bigger challenge now is battling rising costs (not least because further pay-rises aren't going to happen quickly).  So many of our friends and colleagues are buying bigger and faster cars, expensive holidays, pricey clothes etc and although we're not so tight-fisted that we don't go on holiday, I do think being thrifty makes an enormous difference to how much we're able to invest.  I do get tempted by satellite / cable TV occasionally, but it never lasts long enough to take the plunge, and my wife is very good at talking me out of unnecessary purchases.  Also, it has that nice double impact with FIRE, since the lower we keep our expenses the lower the target needs to be.

Karmacat

I'm loving the posts!  I want to join in, but I feel a bit of a fraud on here too, because I'm already there - I retired 4 years ago, having done no detailed planning at all for anything - job, house, pension, investments, anything.  I'm very lucky that things have played out as well as they have.   These are my broad stats:
£300k house, just an ex-council semi-d in the south of England.  I have no dependants, if I need equity release, that's fine.
£65k private pension.  It's still sitting there - I'll probably use drawdown, for big projects.
£110k savings, mostly in ISAs.  I never liked the idea of being trapped into what were very restrictive schemes back in the day.  One third of all my investments are in stocks and shares - at my age and with the amounts I have, that proportion seems okay, but does anyone have any input on that?
£50k French apartment.  The worst investment I ever made, but at least money simply rolls in once a quarter now that the mortgage is paid off, I don't send money over to France any more.
£8k in euros in France.  Really not sure what to do with this money.  Expenses are covered and more by the rent, but still ...  Some should be invested, but I dread the implications for my UK tax form, I just managed to simplify it.
£9334 per annum state pension.  I retired in 2016 because of chronic fatigue, but the next 18 months was an absolute nightmare for my whole extended family, and it wasn't till 2018 that I could consider myself retired and fancy free, so to speak   Health has improved, extended family situation has improved, I've done some necessary work on the house.

I have much less money than most people plan for, but honestly, now that I have the state pension, I feel perfectly comfortable with my situation.  I'm surprised at that, I thought I'd end up living in a camper van or something, but apparently not.  Big spends in the future: double glazing, one last wall of repointing, replastering, an electric folding bike and holidays (until the fatigue hit, I went on slightly adult versions of student backpacking, and loved it; after the fatigue, it's cruises only if I'm abroad).  It seems I could afford a little car, but there are energy problems around that.

Grogged

@greent we're of a similar young age.
One of the things we decided on was to switch from ISA saving to pension saving in the SIPP.
The main reasons for this was that if we really needed the money we could access our SIPP early, as I suspect you could do soon if needed.
Also we get the immediate tax relief top up as we transfer the money in.
I suspect your husband could benefit from this and effectively use the ISA to top up the SIPP by the maximum allowance, reducing his tax liability at the same time.
This is what I did last year, using an ISA to top up the SIPP to the value of my salary.
We've only done this because we had the safety net of being able to access the SIPP if absolutely necessary.

ajmoney

I am coming to sit in the background of the thread and see if I can understand everything.  I have skim read the posts so far but kind of go into a blind panic once I start reading things I don't "get".  Here is a bit about me.

Why am I investing?

I don't necessarily intend to retire early but I would like it to consider it or allow the financial independence to give me options.  I have been money savvy for over 20 years where savings are concerned.  I am currently separated and never expected to be doing this journey on my own so it is probably even more important to get my head around it.

How much do I think I will need?

I haven't checked my figure recently so probably should do that but the one I worked out once was £370656.  I will review this later today.

How am I going to get there?

I have a really good public service pension, the current projection would give me a monthly salary of £10.5K a year and a lump sum of £43.6K although I still have another 6 and a half years of contributions towards this so it will improve all the time.  I also have a S&S ISA with A£gon as my investment which currently totals around £31k so I am a very long way away from being able to afford anything.

How long do I have?

I am 42 now.  My public sector contract ends when I am 48 (unless I get an extension to it) and I am aiming to be as close to mortgage free as I can at that point to give me more options in a future career.  I guess I would like to retire by 60 if I decide on that option.

Not much to write compared to a lot of you.

ajmoney

I have done a quick recalculation of my FIRE figure (as I understand it) based on my current budget so it includes all my savings, the mortgage and anything work related that would have gone and my figure is similar to above, £351300.  When I was married and prior to our current way of living I loved travelling and in my mind that is how I have always thought I would spend a lot of my retirement time.  I have no idea if I will ever get anywhere near this figure or how I work that out.

rara32

So interesting to read others approaches. It is interesting what you said about the number of public sector workers Ed and us being 'worriers'. I have to admit that it feels like there are cuts and savings having to be made all the time which I think doesn't help and it definitely makes me lean toward a scarcity mindset when it comes to investments - it took me a long while after rationally knowing it was the right thing to actually set it up. I think for me it's also background (very similar to greent's). It's been enormously helpful thinking about this aspect as I can see how counterproductive it could be if I keep too much in cash or fall into the one more year syndrome. Lots to think about and lots of great examples of what others are doing to ponder over the long weekend. Happy Easter everyone!

Busy_Mee

I am definitely a public service worrier. I have been a civil servant for 40 years, literally leaving school on the Friday and starting work as a civil servant on the Monday. I have loved the security of the employment, whilst being able to work in a number of very different roles and disciplines. I had a very insecure childhood and the security of my job and meeting Mr Mee gave me the stability that I craved. 

Money is a very emotional issue for me, and I do worry about not having enough and like the comfort of being able to solve problems by throwing money at it. I hate the thought of wasting money and gambling hard earned cash frightens me. I am that person who has been to Vegas twice and never gambled a penny 

Knowing we would both have good DB pensions has meant that I never really engaged with retirement planning until Mr Mee was approaching 60 and my main driver was to address our large interest only mortgage. At the time I also had a very obnoxious boss and I vowed to get myself in the position so that I could walk away if I wanted. The knowledge that we are financially secure has proved to be very liberating over the last couple of years and I heartily recommend it 

Deciding when to go has been the hardest part and trying to determine when you have "enough" money that you feel you can comfortably walk away.  Anyway we are there now....have I mentioned that I only have 17 weeks to work 

Suffolk_lass

Creeps in, feeling like an imposter, to interfere a bit and wish I had known more earlier, and discreetly "listens" to preceding 44 posts while warming hands...
Why am I investing? - I am not. Now. I still save but we are in the gap between finishing work and reaching SPA. The balance of equities is a bit high with DH's 3-to-go portions of his DC pot (we used the 25% TFLS to pay down the mortgage which has now gone - last October when a 7 year BS Bond paid out), and three S&S ISAs - two on the Charles Stanley Direct Platform and one a managed Fidelity one. I manage the CSD ones for both of us and we lost a significant lump of Woodford money - an aside, I am saving into PBs now and LOADS of space between current and max holding
How much do I think I'll need? - Surprisingly, less than I thought. With no commuting, no NI contributions, no smart shoes or clothes, no travel, growing more veg, getting eggs and milk delivered I now shop once a month in a supermarket and once a month at the market - this is an area others could consider. I was way out of control and have a supplies hoarding inclination (let's just say I am set for the next Suffolk siege) - I was around £7-800 a month (or £8,500-9,000 per annum) but now at £3000 per annum, with £200 monthly average plus £400 stores and leftovers for normally big Christmases. We have hobbies (DH is active in a biking thing and we have two HDs in the garage - don't ask!) and both novice beekeepers (expensive)
How am I going to get there? - We have paid off our mortgage and DH owns 50%, and I, 25% of a house in the nearest town. DS owns the other 25% (21st birthday present). Sadly the hoped for buyout has been scuppered - he dropped out of uni before graduating (or discussing with us) and his current employment situation, while improving, is unlikely to make that a near-time prospect. I might gift him my 25%. I also own 50% of a house in Scotland with my Sis. Our 91 year old mother lives there, having paid us a lifetime rent of £15k each. 
How long do I have? - I am 63 (two weeks ago), DH is 62. I will need to buy 4 years of voluntary NI contributions before SPA as most of my working years were in an opted out of SERPS (State Earnings Related Pension Scheme) as I was a Public Servant in a DB scheme, paying less NI than everyone else - so my qualifying years before 2016 only count towards the Basic State Pension, not the new full one. I cannot reach 100% of that but each year I do buy, increased my weekly pension by over £4.50 a week, so unless I am dying, it will be worth the expense (currently £780 for each year).
A few bits of grandma sucking eggs advice to consider -

1. If you pay higher rate tax and can stretch, pay more into a pension so you get the tax relief, and if it is occupational, the employer contribution or not if a SIPP, AVP scheme (most) or DC pot managed by others. Currently the tax relief is based on your rate, not a set amount (predict this will change at some point)
2. If you have children, consider child benefit thresholds - and if you have children and don't claim child benefit and don't work - you should, and then waive the benefit so you receive the state pension credits. You might also want to increase payments into a pension to take your assessable income (or your partner's) below the CB threshold
3. If you stop work before SPA be aware the State Pension calculator on gov.uk anticipates your benefits based on working until the April before you reach SP age - so if your forecast is the minimum number of qualifying years for a full state pension, be sure to also check out benefits accrued (years earned to date) and put this into your FIRE calculator so you understand the implications of not buying any more.
4. As @Karmacat mentioned, if you do not have a partner or dependents you might want to consider equity release - you might want to anyway but be aware of compound interest impact (preaching to the converted, here)
5. Be aware of lifetime allowance for all your pensions - especially public sector workers - it may mean your pot value is a lot bigger than you think - mine was.
6. We are front-loading our non-working be drawing down DC pot that DH has. As soon as we did, the investments were moved to a lower risk, higher bond/cash investment portfolio - many don't realise this happens with a managed fund
7. If you are being really savvy about investing and saving, why counterbalance this by not looking ore closely at what you spend? We are not as frugal as we could be (don't need to be) but I have not paid full price for any toiletry branded item for about five years. They sit on my list when I have one left and when they are on offer, I buy in multiples that will last several months. And making my coffee at work instead of buying them paid several thousand off our mortgage - I "Tilly tidied" them into an instant saver account and regularly paid lumps off above the threshold I set myself (£100)

Busy_Mee

Hooray Suffolklass. I wondered where you were. You have been my pensions guru over the last couple of years