FIREside Chats

ElmoR

@glass_half_full thank you! I had visited that site back in 2021 and totally forgotten about it. Once I pin down the years that pensions kick in/early penalties data, I can take another run at it

@Suffolk_lass Thanks too! USS does indeed seem to be going up according to my members page. Why would it be beneficial to move funds from TPS to USS? I must be missing a key bit of reasoning here? The AVCs I paid into USS went into the DC part over the past decade or so. There's a chunk in the DC pot but it hasn't grown much. I did the sums and it has increased 1.8% since I've been tracking it in Feb 2021 (which makes me feel rather disappointed). TPS does indeed have State Pension Age rather than a better age 65-ish for USS in my case. Do you know if the calculators take early redemption charges into account? When I run the predictions for jumping off at age 60 or 65, I was assuming that factored in the early penalties?

Suffolk_lass

ElmoR said:

@Suffolk_lass Thanks too! USS does indeed seem to be going up according to my members page. Why would it be beneficial to move funds from TPS to USS? I must be missing a key bit of reasoning here? The AVCs I paid into USS went into the DC part over the past decade or so. There's a chunk in the DC pot but it hasn't grown much. I did the sums and it has increased 1.8% since I've been tracking it in Feb 2021 (which makes me feel rather disappointed). TPS does indeed have State Pension Age rather than a better age 65-ish for USS in my case. Do you know if the calculators take early redemption charges into account? When I run the predictions for jumping off at age 60 or 65, I was assuming that factored in the early penalties?

Your scheme rules will tell you what your "frozen" USS pension increases by - many public sector schemes use the CPI September rate and apply it the following April. It sounds as though yours is doing something like this (it may be one of those that had the higher RPI embedded in the rules. The previous government passed legislation to reduce mine from RPI to CPI, so worth checking.

It may be possible to move your DC AVCs into your TPS but you need to look at the value they would convert it to (effectively, you would be buying extra TPS years with that as a lump sum).

The things I would consider is whether I could take the USS DB for a lower actuarial reduction because you retain a reserved right to a lower pension scheme age, and whether you could take small lumps from the DC AVC to tide you over for another year or three to reduce the percentage reduction for taking your TPS early.

Also with Teaching, you have the option to semi retire, I believe. You could take a bit of your pension and carry on working part time and paying in to the residual part of that pension

Lots to consider and calculate

hugheskevi

Five months on from my last update on this thread, and now 10 months since returning from our 16-month overland trans-Americas trip. 

My wife and I are now almost both age 47, and we are preparing to move away from London and into a new home somewhere in the north-west of England. We have now discounted Wales, partly due to it being a bit too rural for our preference, partly due to the areas we were considering not being the nicest areas, and partly due to it all being under the Welsh Government. We have narrowed down our preferred places to small towns between Whitchurch and Congleton.

We are planning to buy and sell separately to avoid a chain, and hope to have completed all that by the end of March 2025 and be living in our new house for Spring. This is a little earlier than initially planned due to the forthcoming changes to 1st time-buyer Stamp Duty. The house we are selling will be affected by this, as it is likely to either be bought by FTBs as the price will be just below the £625,000 threshold, or be second in the chain with the bottom of the chain being a FTB. It is frustrating that doing this requires me to hand over about £30,000 to HMRC for the period between buying a new place and selling my current place, when they give the 2nd home Stamp Duty back.

Taking into account house purchase, Stamp Duty, costs of moving (legal, estate agent, van, etc), and allowing £40,000 to cover the cost of new furnishing and a new car, our position if we retired today would be:


From age 55 we would have a net income of about £6,000 per month. The table below shows the gross, net, and survivor positions from State Pension age. All of our income will be from State Pension and DB pensions with uncapped CPI increases once we have reached State Pension age.



I still plan to purchase our new house with an offset mortgage. This will be fully offset as soon as I have sold our current house. This also enables me to contribute a lot more into pensions, as I will use the offset savings for a year or two before we have access to our pension, and then fully offset again once pension is available at age 55. This way I can effectively get tax-relieved income before age 55, albeit at the cost of a bit of interest. So the arrangement is essentially a mini pension-mortgage. This is enabling me to put slightly more than 100% of salary into a pension for the rest of 2024/25 (taking into account my contribution, tax relief, and employer contribution combined), and get all higher-rate tax income from 2024/25 into a pension. The gain from this is massive for my wife, as although she will be a higher-rate taxpayer after State Pension age, she should have basic rate available between 55-68. I should be a higher rate taxpayer in all years from age 55, but still have lots of Lump Sum Allowance available, and the gain from that alone is decent.

The offset mortgage also enables us to buy a house at the upper-end of the range above if we wish, as we can effectively spread the shortfall in our resources between age 47-54 beyond age 55. Even if we purchased a £700,000 house, which is more than I expect to spend (mainly as houses in the north-west costing that are preposterously large for just 2 people) and quit work today, we would still have about £5,000 per month by spreading the shortfall across age 47-67 via the offset mortgage and DC pension. Admittedly, that is not at all in the spirit of the mortgage-free wannabee title of this part of the forum...

We plan to continue working until at least June 2025, but probably not past Christmas 2025. If any redundancies were to come up at work we would be very keen to go. The extra income should go a long way to covering any shortfall in the 47-54 age range of income, depending on how expensive the property we buy is.

So the next 6 months should be very busy, but at the end of it we should be starting the next phase of life, and soon after add the 'RE' to the 'FI'  And not too long after that add 2 large dogs and hopefully a lot of hosting of visitors to justify having a large house just for 2 people and a couple of dogs.

Suffolk_lass

If I were moving to the North-West @hugheskevi, I would be going just a little bit north of Crewe. We really like the wealth of places to visit, and the areas to walk around our friends in the triangle from Holmes Chapel, Knutsford to Winsford. Now HS2 has gone, the landscape will still be there, and it is far enough (south of Knutsford) to go there but be affordable

gallygirl

hugheskevi said:

Our highlights of the trip were:

• Denali National Park, USA
• Yellowstone National Park, USA
• Copper Canyon in northern Mexico
• Chichen Itza and cenotes in Yucatan, Mexico
• Snorkeling at Caye Caulker, Belize
• Actun Tunichil Muknal cave in Belize
• Tikal, Guatemala

So I decide to log on for the first time in a year or so to see how FIRE people are doing...... and fall down a Central/South America holiday hole . Out of Chichen Itza and Tikal which would you recommend Hugh? Without having done too much research I'm drawn towards Tikal simply as it's less well known. We wouldn't be doing a road trip to either.

Great to hear all your plans are going well and good luck with the upcoming move.

D123456789

Good luck with your move up north @hugheskevi I thought the first house you posted a link to was fabulous, but I see your changing area now…

I am wondering what to do , where to put my pay rise money - it’s not a lot so I’ve convinced myself I won’t miss it! 

1.  additional nhs pension 2. SIPP 3. Overpay mortgage 

I probably can’t go majorly wrong with any of those options - any recommendations?

TallGirl

gallygirl 

So I decide to log on for the first time in a year or so to see how FIRE people are doing...... and fall down a Central/South America holiday hole . Out of Chichen Itza and Tikal which would you recommend Hugh? Without having done too much research I'm drawn towards Tikal simply as it's less well known. We wouldn't be doing a road trip to either.

Great to hear all your plans are going well and good luck with the upcoming move.

Great to have you back @Gal@gallygirl

the_end_of_the_rainbow

gallygirl said:

hugheskevi said:

Our highlights of the trip were:

• Denali National Park, USA
• Yellowstone National Park, USA
• Copper Canyon in northern Mexico
• Chichen Itza and cenotes in Yucatan, Mexico
• Snorkeling at Caye Caulker, Belize
• Actun Tunichil Muknal cave in Belize
• Tikal, Guatemala

So I decide to log on for the first time in a year or so to see how FIRE people are doing...... and fall down a Central/South America holiday hole . Out of Chichen Itza and Tikal which would you recommend Hugh? Without having done too much research I'm drawn towards Tikal simply as it's less well known. We wouldn't be doing a road trip to either.

Great to hear all your plans are going well and good luck with the upcoming move.

So nice to ‘see’ you @gallygirl - was thinking about you (& @Courgette and @earthgirl the other day)  and wondering how you were all doing. I know @earthgirl posts on here from time to time but not seen her lately.

How’s life in Spain? 

CCW007

Great to see your post @gallygirl. Along with @Tilly_MFW_in_6_YRS you were an inspiration (as was the case for many others I'm sure) so seeing you both posting is great 

hugheskevi

gallygirl said:

hugheskevi said:

Our highlights of the trip were:

• Denali National Park, USA
• Yellowstone National Park, USA
• Copper Canyon in northern Mexico
• Chichen Itza and cenotes in Yucatan, Mexico
• Snorkeling at Caye Caulker, Belize
• Actun Tunichil Muknal cave in Belize
• Tikal, Guatemala

So I decide to log on for the first time in a year or so to see how FIRE people are doing...... and fall down a Central/South America holiday hole . Out of Chichen Itza and Tikal which would you recommend Hugh? Without having done too much research I'm drawn towards Tikal simply as it's less well known. We wouldn't be doing a road trip to either.

Great to hear all your plans are going well and good luck with the upcoming move.

Central/South American holidays don't fit so well with FIRE, but I wholeheartedly recommend it anyway!

Out of Chichen Itza and TIkal, I would go for Tikal, and it wouldn't be close. However, Chichen Itza is considerably easier to visit of the two from the UK.

The problem is getting there and away. Cancun is the closest major international airport that you could easily fly to and from the UK at a reasonable cost. But that isn't close to Tikal - to visit Tikal you would probably stay in Flores in northern Guatmala. I think you would probably need to fly into Guatemala City and then on to Flores.

There might be the possibility of flying via Cancun, which could enable a few days on the Yucatan peninsula to visit Chichen Itza and the cenotes, before heading on to Guatemala. Depending on how long you would have, if flying via Guatemala City you could spend a few days at Lake Atitlan, and Antigua (to climb Atatenango if at all possible).

An ideal short itinerary with flying would be something like:

• Fly to Cancun, spend 3 nights and see Chichen Itza and cenotes, as well as maybe Tulum
• Fly on to Guatemala City, stay 2 nights in Antigua then 1 night on Acatenango and carry on to Lake Atitlan for 3 nights.
• Fly up to Flores for 3 or 4 nights to see Tikal, before flying home (probably via Cancun)

If you had longer, lots more interesting possibilities would present themselves, but the above would be a very nice couple of weeks away.