FIREside Chats

becky_rtw

Hello can I come in? Great thread Ed. 

We are MFW and have been about 5 years which is what started the convo about retiring early. I also am bone idle and hate working glad to hear others admitting this too. Hubby has been finding work harder and harder and the pandemic hasn't helped. 

Hubby has NHS pension which he will pay into until 55, but not take until 60, and owns his business so we will have a sizeable pot from that once he retires and sells plus our property which we can sell as part of the business or separately if we want. That's been our main plan for a few years. He takes a very minimal salary out and we live quite cheaply. Our number was assessed in 2019 as 17k but we've budgeted more on the basis that we may spend more when we have more time. 

I am a HR tax payer and have good earning power, but have chosen to opt out of pensions mostly as I am aiming to retire at 42 😳

I am mostly saving a sum for us to travel and have fun with the first year or two. I have PBs and a small stocks and shares ISA.  Nothing very advanced, but I don't want to take loads of risks as we are less than 4 years to our planned date now. I'm hoping that will give us around 100-125k. 

We are hoping to buy a place in France eventually, but may rent for a while there first. 

edinburgher

@becky_rtw - ooft - £17k a year including travel I'd describe as "very lean fire"! £125k will produce perhaps £4,500 - where will the rest come from? 🤔

becky_rtw

Sorry probably not clear. 😂 The 100k is for spending, not generating an income. 
Hubby's pension and the business and property sale will more than cover the rest. 
The 17k did include holidays at our usual level (hiking or running somewhere by train for a week or two a year). We have very cheap tastes. And a railcard 😂

Cheery_Daff

Can I join your excellent thread please? 😁 My plan isn't quite so well developed as some of yours... but I've learned so much already just reading this thread... I'll try to answer questions (and will probably ask as many as I answer...)

Why?
Because while I quite like my job, I also quite like doing lots of other things too, and would rather not be beholden to *having* to work. Also, more seriously, Mr Cheery and I have a rather large age difference (17.5 years). This wasn't a problem when we got together at 25/43, but now that I'm 40 and he's 58, it's becoming increasingly apparently that I don't want to wait to retire til I'm 68 and he's 86 😮 Also, he left his main job at 47, and I'd quite like to not be too far behind that age or I'll be jealous 😂

How much will we need?
Hmm. This is where my planning falls short of some of yours... We do have some certainty - Mr Cheery took his work pension last year (£47k lump plus £600 a month) so that will continue, and he's due the state pension in just over 8 years. I reckon if we've paid the mortgage off by then, we'd both be able to live off that for a few years (frugally) until my works pension kicks in (earliest 57 by the looks of it). Maybe.

How will we get there?
As above. Mr Cheery's pension amount is already set - he didn't do anything savvy, just stopped paying into it when he left work at 47, and got round to claiming it at 57. I need to figure out if there's something more sensible I should be doing with mine...

I currently have a small pot in USS from old job (before 2016 so in the final salary thing according to my statement). Paid in for 5.5 years (was doing a PhD forever so didn't start paying any pension til age 30) and that has a £6k lump sum plus just over £2k a year, and I'm not paying in any more.

Current pension is TPS, career average scheme (and I'm still getting my head around what this means, as I've read two different things on their website today and don't quite understand). Also currently has just over 5 years - currently standing at £4k annual, or £18k lump and £2k annual. 

How long?
Mr Cheery is already effectively 'retired' (actually self employed but minimal earnings, and none for the last year). 

I'll be 41 this month, and would love to be out of my job by 50.

I do need to work some things out though...

We currently have about £188k left on the mortgage (we were mortgage free before we bought this ridiculous house! Would 't swap it though, but downsizing is an option in the far distant future). With our current overpayments we've brought the mortgage end date down to Feb 2033 (from Feb 2043) BUT I want to drop down to four days a week from September, which is going to scupper some of our overpayments until wages gradually rise again. 

So there are things I need to figure out.

* what effect does dropping a day have on my pension? Would I lose some of the contributions I've already paid in (if they go on highest earning 3 years within 10 year period - during which I'd mostly have been working part time)? If so, what is the best option? I'm not working full time for another 17 years - or even another year if I can help it! 

* If I leave work at 50, Mr Cheery will already be claiming the state pension - could we live on that plus his work pension for the next 7 years until I'll be able to claim my work pension? I feel like we would if the mortgage was paid off...

* would it be better to throw all extra money into my pension as extra contributions, rather than paying off the mortgage? My instinct says not - we couldn't access that til I was 57, and we'd still have a monthly mortgage payment when I was 50, meaning I couldn't give up work altogether, but I've not done the sums.

* daft question, but how do you all know 'my pension pot is £200k' figures? I can't find an overall number anywhere for either, just monthly/lump figures.

Anyway, enough waffle from me - I imagine I'll mostly be reading for inspiration until I get my head around everything... 😊

edinburgher

@Cheery_Daff - welcome 

For DC pensions, add up the pots. For DB pensions, I multiply accrued annual payment by 25 (as that's roughly what I'd need in DC to replace the same income). 

Tartan_Mum

Thanks for starting this @edinburgher, fascinating thread. Spent some time putting a spreadsheet together because I (we) are embarrassingly uninformed about all of this. I’ve got some reading to do. 

South_coast

Cheery_Daff said:

* how do you all know 'my pension pot is £200k' figures? I can't find an overall number anywhere for either, just monthly/lump figures.

Cheery, I think it depends on what type of pensions you've got. Mine (DC - think that's the right term 🤔) tell me what's in them, but not what that actually means in terms of what I'll get:


One of mine (the top one) sends me an illustration every year, but I don't get anything from the other one. I work on the assumption that the pension co's want the money to replenish itself in the same way as FIRE, so divide by 25 (4% withdrawal rate) to get a rough idea of what I'll get x

becky_rtw

Can't help with the questions Cheery but good to see someone else with an age gap (ours is 12 years). It adds to the complexity of long term planning I think. 

killerpeaty

@SouthCoast you are right with saying that your pension is DC as you know how much goes in but not the expected outcome.

@Cheery_Daff you would need to check with the pension that you are currently with to work out if putting more in is worth it. You have a DB so you would need to contact the administrators to understand how it works with them as they are all different.

Cheery_Daff

Thank you all, most helpful. @edinburgher that's useful to know - my head seems to work best on a monthly amount so I'll see what I can figure out. @becky_rtw

Thanks again for all your advice - off to set up a spreadsheet and see what I can figure out...