A Paupers Pension Tale (Not many nuts to dig up)

Terron

michaels said:

But in a way this is all about modelling the known unknowns not the black swan events where the past is no guide to the present.  once your retirement time horizon is increased from 30 years to 45 years the odds of such an event goes up to - I'm not sure if it is linear increase in risk with time or actually exponential.

The historical data does include at least two such events - the great depression and the oil crisis. Just before the latter is where most SWR failures happen. The question is not whether black swan events will happen. They will. It is whether they will be worse than the above. The ones that are better aren't a problem. The exact chance is unknowable. You can only plan for known risks and try to have a enough of a reserve to be flexible.

For the UK WW2 was another very bad event, but war getting the country into debt was something that had been seen before. For the US it was good for pensions. It is the major reason the rate based on UK stocks iis lower that the US one. But 28.5 times isn't so easy to remember as 25 times.

harlequinnyc

It is really difficult to change your mindset from SAVE to SPEND. This whole forum is a frenzy of how to accumulate more and trying to predict the future; which is why I enjoyed gambleruk's original post and the thought of being in the moment, sheltering from the rain under a tree and thinking of how lucky they were. No good being the richest in the graveyard

pensionpawn

gambleruk said:

First of all many thanks to all the positive comments, I will admit I was a tad apprehensive when I first posted this as thought there might have been a few people who would have just been so negative about my plans. I once posted years ago when I had paid my mortgage off and basically all the replies were I should not have done that and paid into my pension instead, if I had done that then I certainly wouldn't be where I am now. It is an interesting point though, I could have worked for 5 more years and maybe doubled my pension pot but is a larger pension pot worth 5 years of freedom at a relevant youngish age ?

Just to throw some figures at you all which I did not do on my original post, our "number" is 12k per year to live comfortably and not having to worry about bills etc. We are lucky I suppose that we live in the North West in a lovely village with the countryside on our doorstep. I have found through the past 6 months that I am even managing to save £100/£200 per month as I originally estimated £400 per month for food but the wife works for one of our large supermarkets so with discount and cheap food she brings home I have been amazed on how little we have spent. We also still have our 19 year old son still living at home, thankfully he is working as well as studying still and is hell bent on moving out as soon as he can which will no doubt save us even more money in the long term.

Like I have already mentioned I am sure our costs will rise once the local pubs re open next week but I am looking forward to it and seeing it as a challenge to balance the books every month. Again I am lucky that my main hobbies are reading, running, walking the dogs, listening to music, all of which cost very little, I did put a pot of £1000 away from my redundancy money to use for buying and selling records which as been my main hobby for the past 5 years, if times really did become hard then I have my 1500 lps to fall back on which are increasing in value at a scary rate at the moment, hopefully never come to that of course. I also never switch the tv on during the day except at weekends for the footy, some days I never switch it on at all, I find it keeps me active not having it on and everything I need to do gets done. I did think the Winter months would have been tougher than what they were but they flew by and now if last Summer is anything to go by then it will be sat in the sunshine reading many a good book.

Lastly for the time being a big thanks to Baron_Dale for the link to the over 50's spending thread, really enjoyed reading how other people spend and save money. 

It is good to see a thread that reminds people that you don't need a huge pot(s) for a comfortable 'Life 2', you just need a pot sufficiently large to keep you happy in your 'post kids', 'post work' and arguably 'post mortgage' life. Draining all your 'disposable' income during your 20's - 40's for a FIRE strategy is not for us, neither is working significantly past 55 to amass such a huge pot that it will never erode thus avoiding LTA tax becomes the new fixation. You have to live life in the moment too as tomorrow is never promised! We have solar to offset our energy bills and future electric commuting, keeping our pre-mortgage mandatory outgoings to £1k per month. As we've both qualified for the full new SP at 67 we just need to plug the gap between then and now. Making sure that both of you have sufficient squirrelled away to both be away to draw down your personal allowances has been our target / motivation over the last ten years and we hope to achieve that in the next 24 months in tandem with ratcheting down our hours to 60% for my wife by December (she's already at 80%) and 80% for me by next April.
Regarding the mortgage, our strategy since the financial crises was to focus heavily on pension contributions as they attract a 20% uplift and interest rates are at a never to be seen again low. We're currently in the process of fixing ours again, this time for 5 years at 1.24%. Not reducing the mortgage has kept us on track to achieve a tax free drawdown of £30k pa in 24-30 months. We'll still have the mortgage to pay (and I appreciate how much a relief being mortgage free must be) however we will have managed to generate to modest pots, which will erode through drawdown, that will provide us with a comfortable Life 2. Of course, who wouldn't want a pot greater than £500k or pushing LTA? However for us we're not willing to sacrifice the next ten years to achieve something that is very unlikely to make a huge difference to our happiness. Good luck everyone!

german_keeper

I have recently made the decision to jack it in at the end of August next year. That will be the point when I am fully paid up for state pension (assuming I am correct that earnings of 52 x LEL gives me a full year of Class 1). Originally I was planning on going at 60 but this will be just after my 58th birthday. I am a Civil Service lifer and generally for most of my career I have been happy enough. Although of course you wouldn't have seen me for dust with a lottery win. But nowadays, at least in my department, it's a horrible place to work, the senior management are so far out of touch with the workforce. 

So I'm not 100% sure the numbers will quite add up but a large chunk of our income will be index linked DB so we won't starve. I realised that I could take advantage of the Marriage Allowance to enable us to have virtually £25k pa tax free and also a decent cash buffer. By drawing down my DC pot over 9 years instead of 7 and taking 25% of each withdrawal tax free it should all be tax free, whereas over 7 years I would probably have been paying tax on some of it. I am looking to save up some leave between now and next August and hopefully walk out the door beginning or mid July. The knowledge that I am rapidly approaching the final year is a lovely feeling.     

c'est_moi

This is a great thread, and it struck so many chords with me.

I posted a couple of years back about my own plans to leave work well before my retirement date and I had some lovely positive comments, and some not so positive. At the time I changed some details as I didn't want to make myself too easy to spot by people in work. But now I have finally gone and done it I can be more accurate with the details!

This is my story. I left work after 29 and a half years last December. I was aged 51. I have a pension I can start to claim in three years time. This will give me about £1200 per month. In addition I will get my lump sum of c. 32K. My husband is still working, at he is bringing home £1400 a month. The plan was to live off our savings (c £150 000) for the three and a half years until my pension kicked in. As it happens we have been living quite easily off my husband's salary so far. Covid has of course helped to reduce costs - no commute costs have saved £150 on petrol per month! Plus we would have probably spent an extra 3 - 4 K on holidays abroad. We have still had/will have 4 UK holidays this year instead though.

I have not yet paid in for a full state pension and will pay in to make up the extra years, but there is no rush to do that yet. I have half heartedly looked for a PT job but to be honest I am enjoying the stress free life I now have, though I would not rule it out. I do 'earn' about £25 per week on online surveys etc, and use this to pay for treats like funding my hobbies, but I have not even spent all of that so far. We are mortgage free - paid it off four years early to allow that savings pot to amass. My main worry is major work needing to be done to the house, and I can't pretend that does not give me anxious thoughts, but that is what the savings and lump sum are there for. We still run two pretty new cars and really could get rid of one of them if need be.

I Have to say that I have not had one second of regret of walking away from work and I know how very lucky I am. I am now only 52 and my time is entirely my own - even though covid has put many of our plans on hold. My hobbies are cheap - geocahing, sea glass collecting, walking, sewing, reading, gardening. I love having unlimited time to do them. I love not having that constant nagging voice in my head reminding me that I need to be doing things from work. My job was making me ill and my work place was becoming increasingly toxic. In the end my well being was more important than money. I am lucky I have a very supportive husband and my job paid well enough to provide me with enough cash in the savings and a decent pension, even taking it early.

I have found that I have needed far less money than I though I would in retirement. I know that big. unexpected bills will come our way, but I have also experienced the pure joy of being able to make last minute plans because the weather is great and because I have just been in the mood to go out there and enjoy life on my terms.

barnstar2077

c'est_moi said:

This is a great thread, and it struck so many chords with me.

I posted a couple of years back about my own plans to leave work well before my retirement date and I had some lovely positive comments, and some not so positive. At the time I changed some details as I didn't want to make myself too easy to spot by people in work. But now I have finally gone and done it I can be more accurate with the details!

This is my story. I left work after 29 and a half years last December. I was aged 51. I have a pension I can start to claim in three years time. This will give me about £1200 per month. In addition I will get my lump sum of c. 32K. My husband is still working, at he is bringing home £1400 a month. The plan was to live off our savings (c £150 000) for the three and a half years until my pension kicked in. As it happens we have been living quite easily off my husband's salary so far. Covid has of course helped to reduce costs - no commute costs have saved £150 on petrol per month! Plus we would have probably spent an extra 3 - 4 K on holidays abroad. We have still had/will have 4 UK holidays this year instead though.

I have not yet paid in for a full state pension and will pay in to make up the extra years, but there is no rush to do that yet. I have half heartedly looked for a PT job but to be honest I am enjoying the stress free life I now have, though I would not rule it out. I do 'earn' about £25 per week on online surveys etc, and use this to pay for treats like funding my hobbies, but I have not even spent all of that so far. We are mortgage free - paid it off four years early to allow that savings pot to amass. My main worry is major work needing to be done to the house, and I can't pretend that does not give me anxious thoughts, but that is what the savings and lump sum are there for. We still run two pretty new cars and really could get rid of one of them if need be.

I Have to say that I have not had one second of regret of walking away from work and I know how very lucky I am. I am now only 52 and my time is entirely my own - even though covid has put many of our plans on hold. My hobbies are cheap - geocahing, sea glass collecting, walking, sewing, reading, gardening. I love having unlimited time to do them. I love not having that constant nagging voice in my head reminding me that I need to be doing things from work. My job was making me ill and my work place was becoming increasingly toxic. In the end my well being was more important than money. I am lucky I have a very supportive husband and my job paid well enough to provide me with enough cash in the savings and a decent pension, even taking it early.

I have found that I have needed far less money than I though I would in retirement. I know that big. unexpected bills will come our way, but I have also experienced the pure joy of being able to make last minute plans because the weather is great and because I have just been in the mood to go out there and enjoy life on my terms.

So good to read your positive story!

I enjoy inexpensive hobbies too.  I have long held the philosophy that keeping your regular expenses low gives you a great deal of flexibility.  The ability to save and invest regularly, to splash out on one off expensive luxuries, or just to weather the odd storm (like an unexpected boiler repair or need for a new washing machine etc.)

I always tell people I will be 53 when I retire, but I plan on going the week before my 53rd birthday so I can tell myself I retired at 52! :  )

Alice_Holt

bluenose1 said:

harlequinnyc said:

Great advice, thanks so much. Great point about claiming credits for NI, as I am sole carer for my Mother. I will also look into the married couples tax relief. Unfortunately, no chance of VR for me. Really appreciate your input. 

If you are your mums Carer you need to check what Attendance Allowance you may be entitled to, not just for the credit, though if she is getting Pension Credit it may affect her additional benefits but worth looking into.

        Just to clarify:
      Attendance Allowance (AA) is a disability benefit the mother may be able to claim -
    https://www.ageuk.org.uk/globalassets/age-uk/documents/factsheets/fs34_attendance_allowance_fcs.pdf

   If the OP's mother is in receipt of AA, then the OP (after finishing full-time work) may be able to claim Carers Allowance (CA), this would entitle him to ongoing NI contributions towards his state pension (and c.£67 pw):
https://www.gov.uk/carers-allowance/eligibility

  Re Pension Credit (PC), if the OP's mother is in receipt of guaranteed PC, they should take advice on whether the OP should claim CA or if the mother should claim the Severe Disability Premium (SDP) on her PC:   
https://www.disabilityrightsuk.org/pension-credit-additional-amount-severe-disability 

If not eligible for CA, the OP may wish to consider Carers Credits:
https://www.gov.uk/carers-credit

michaels

c'est_moi said:

This is a great thread, and it struck so many chords with me.

I posted a couple of years back about my own plans to leave work well before my retirement date and I had some lovely positive comments, and some not so positive. At the time I changed some details as I didn't want to make myself too easy to spot by people in work. But now I have finally gone and done it I can be more accurate with the details!

This is my story. I left work after 29 and a half years last December. I was aged 51. I have a pension I can start to claim in three years time. This will give me about £1200 per month. In addition I will get my lump sum of c. 32K. My husband is still working, at he is bringing home £1400 a month. The plan was to live off our savings (c £150 000) for the three and a half years until my pension kicked in. As it happens we have been living quite easily off my husband's salary so far. Covid has of course helped to reduce costs - no commute costs have saved £150 on petrol per month! Plus we would have probably spent an extra 3 - 4 K on holidays abroad. We have still had/will have 4 UK holidays this year instead though.

I have not yet paid in for a full state pension and will pay in to make up the extra years, but there is no rush to do that yet. I have half heartedly looked for a PT job but to be honest I am enjoying the stress free life I now have, though I would not rule it out. I do 'earn' about £25 per week on online surveys etc, and use this to pay for treats like funding my hobbies, but I have not even spent all of that so far. We are mortgage free - paid it off four years early to allow that savings pot to amass. My main worry is major work needing to be done to the house, and I can't pretend that does not give me anxious thoughts, but that is what the savings and lump sum are there for. We still run two pretty new cars and really could get rid of one of them if need be.

I Have to say that I have not had one second of regret of walking away from work and I know how very lucky I am. I am now only 52 and my time is entirely my own - even though covid has put many of our plans on hold. My hobbies are cheap - geocahing, sea glass collecting, walking, sewing, reading, gardening. I love having unlimited time to do them. I love not having that constant nagging voice in my head reminding me that I need to be doing things from work. My job was making me ill and my work place was becoming increasingly toxic. In the end my well being was more important than money. I am lucky I have a very supportive husband and my job paid well enough to provide me with enough cash in the savings and a decent pension, even taking it early.

I have found that I have needed far less money than I though I would in retirement. I know that big. unexpected bills will come our way, but I have also experienced the pure joy of being able to make last minute plans because the weather is great and because I have just been in the mood to go out there and enjoy life on my terms.

IT would need about 720k++ DC pot too get £1200 per month from age 55.  Not sure this is the right thread.

barnstar2077

michaels said:

c'est_moi said:

This is a great thread, and it struck so many chords with me.

I posted a couple of years back about my own plans to leave work well before my retirement date and I had some lovely positive comments, and some not so positive. At the time I changed some details as I didn't want to make myself too easy to spot by people in work. But now I have finally gone and done it I can be more accurate with the details!

This is my story. I left work after 29 and a half years last December. I was aged 51. I have a pension I can start to claim in three years time. This will give me about £1200 per month. In addition I will get my lump sum of c. 32K. My husband is still working, at he is bringing home £1400 a month. The plan was to live off our savings (c £150 000) for the three and a half years until my pension kicked in. As it happens we have been living quite easily off my husband's salary so far. Covid has of course helped to reduce costs - no commute costs have saved £150 on petrol per month! Plus we would have probably spent an extra 3 - 4 K on holidays abroad. We have still had/will have 4 UK holidays this year instead though.

I have not yet paid in for a full state pension and will pay in to make up the extra years, but there is no rush to do that yet. I have half heartedly looked for a PT job but to be honest I am enjoying the stress free life I now have, though I would not rule it out. I do 'earn' about £25 per week on online surveys etc, and use this to pay for treats like funding my hobbies, but I have not even spent all of that so far. We are mortgage free - paid it off four years early to allow that savings pot to amass. My main worry is major work needing to be done to the house, and I can't pretend that does not give me anxious thoughts, but that is what the savings and lump sum are there for. We still run two pretty new cars and really could get rid of one of them if need be.

I Have to say that I have not had one second of regret of walking away from work and I know how very lucky I am. I am now only 52 and my time is entirely my own - even though covid has put many of our plans on hold. My hobbies are cheap - geocahing, sea glass collecting, walking, sewing, reading, gardening. I love having unlimited time to do them. I love not having that constant nagging voice in my head reminding me that I need to be doing things from work. My job was making me ill and my work place was becoming increasingly toxic. In the end my well being was more important than money. I am lucky I have a very supportive husband and my job paid well enough to provide me with enough cash in the savings and a decent pension, even taking it early.

I have found that I have needed far less money than I though I would in retirement. I know that big. unexpected bills will come our way, but I have also experienced the pure joy of being able to make last minute plans because the weather is great and because I have just been in the mood to go out there and enjoy life on my terms.

IT would need about 720k++ DC pot too get £1200 per month from age 55.  Not sure this is the right thread.

Not if you plan on running the pot down.  No one lives forever!

c'est_moi

I don't know if this is the correct place for me or not - I was just sharing my experiences of taking the jump from the diving board over three years before I could access my pension. I don't have a pension pot really as I understand it as it is public sector. The reason for me sharing it on here was to say that despite my reservations the last 6 months have taught me that it is possible to live on one salary after nearly 30 years of living on two - and losing the one which was by far the highest. I know that the key factors for me were paying off the mortgage early, saving like crazy whilst we could and most importantly having a supportive partner in a job they love.

I know that by no standards am a 'pauper'. This thread just struck a chord with me because when I read other FIRE threads I am genuinely amazed at how much money some people will need in their retirement. What we currently live on, and even more so what we will have at age 55 and the 67 when state pension kicks in, is far more than many families have to live on. And we are just a couple with no rent or mortgage to pay.

I suppose I shared my story on here for all of those who are, like I was, trapped in a job they hate and feeling like it they will be suffering for years. I cannot begin to tell you how good it felt to give in my notice. Once I sat down and did the maths and realised that we really could live on what we already had - it was like a huge weight lifted of my shoulders.