Obsessed with pension planning and saving?

jim8888

bostonerimus said:

I've never been particularly obsessed with what to invest in, having decided to use a simple index tracker portfolio 30 years ago. However, in the accumulation phase I was obsessed with planning and meeting my goals. At some times I was saving lots into pensions and general accounts and at other times making extra mortgage payments. Now that I'm retired and have more than met my financial goals I've lost a lot of interest and just let the plan that I put in place play out.

I can relate to that, this is very similar to myself. I still like to monitor my investments but feel almost disappointed that I can't, or won't, tweak things as much as I used to. It reminds me of what Frank Skinner said about giving up alcohol, "It was like losing a good friend". I used to get loads of satisfaction from having a plan, saving for it, watching my investments grow (and sometimes shrink) over time. I don't know how may spreadsheet retirement models I created looking at differing scenarios to fund the retirement I wanted. I finally arrived at one which I've used for about five years now as I moved into retirement and where my pension and savings projections are now being realised. Saying that, I really can't argue against putting as many hours as you think you need into such financial modelling. If it's an obsession, it's a healthy one. 

OldScientist

gm0 said:

@Rich1976 wrote

"unfortunately we won’t know until nearer the time and that’s why I wish there was still final salary type pensions where you know from the outset what it would be worth and not some as yet unknown number which is wholly dependent on the stock market."

And there it is. 

DC drawdown is a terrible solution for an individual retiree in a death pool of one. Is it 70 or 110 ?
And you need to invest in the stockmarket at a particular time on the way in and out - and have sequence risk, cohort start date to contend with.  With a pot based on the timelines when you were able to contribute and save.

Final salary is a terrible solution with healthcare advance and increased longevity dumping massive unexpected costs decades later, also with interest rate going down. Onto what may be dying due to other technology advance companies - or back on the taxpayer.  The mega zombies - pension schemes with a side hustle. BA. BT.

We need to move past both.  It will be hard.  First the death of a thousand cuts of public sector DB needs to be concluded unless in its death throes it can be swept up into a better than individual DC solution..

Sadly although it will not happen - the approximate shape of possible answers is known.  

Provide death pooling so the individual doesn't carry this risk alone (like annuity)

Based on retention of investment returns for sequence and cohort smoothing.  (so sequence risk and retirement date are mitigated - not entirely - but mitigated.

"With profits" reborn. 

Contributions linked.  What you put in determines the target for what you get out. Plus bonus when there is one.  After cross subsidies. And buffers.

A big asset pool to drive out investment and fund management cost.  Half the UK retail financial spiv world disappears. (which is a cost to the treasury tax take although emotionally satisfying).

At arms length from government of the day.  Air gap. With clear face of the bill foundational principles with at the time cross party support to endure for at least decades.

The individual doesn't have to get to grips with stock market investing. 
The company knows how much pension input it is making at the time and it is done.
Death date doesn't matter. 
It meets the key requirements

Why not ?

It's very hard to move there from here.  There are quibbles.  The international wealthy will always still have their own arrangements at the margin.  But that doesn't mean better systems for the UK citizen than the current one don't, or can't exist.

It will require a groundswell of opinion and pressure to demand something better of our politicians.  To convince them that we are *ready* for such a major change.  They are rightly cynical that the primary losers under such a system are those who do best out of the current system.  Who are also disproportionately the most engaged and vocal about anything which threatens their interests.  (Be that insider DB or wealthy DC).  Even if it would be helpful to a broader group of the population.

Think on it

I think what you've described is similar to a Collective Defined Contribution pension scheme (see a brief account at https://www.gov.uk/government/news/brand-new-pension-scheme-launches-in-great-britain and, for those who want the details, https://commonslibrary.parliament.uk/research-briefings/cbp-8674/ ) which pool longevity risk and, to some extent, investment risk.

leosayer

Obsessed might be too strong a word but it given the time I spend on financial plans and investing I refer to it as my second job and the returns have been comparable to my salary for the past few years.

It doesn't stem from any particular event but I do recall my parents seemed to always have money worries when I was a child and my Dad used to ignore bills when they came through the post. My son would never say the same about me although he may say that whilst his parents do spend to enjoy life, they also encourage saving and investing to support future life plans.

I didn't have any particular interest or qualifications in anything financial but I did recognise the important of money in being able to put food on the table, a roof over my head and being able to enjoy some of the finer things in life.  After A levels I decided that financial services was the best place to achieve that so I ended up working at an asset manager that paid really well throughout my 30s and 40s whilst also accruing a DB pension.

Working in financial services certainly gave me the opportunity to expand my knowledge of financial planning but the reality that most of my colleagues didn't take those opportunities and even into their late 50s have given little thought to retirement or investing.

A turning point was in my early 30s that I started to do my own financial plans when I realised, after selling my flat after 5 years of ownership, how little I had paid off the mortgage. So I started to get busy with spreadsheet and started investing with a view to paying it off. We did so around 10 years later. The my attention turned to retirement planning after my employer ended their DB scheme.
My focus has always remained on saving and tax efficiency to get the most out of life now and in the future.

hugheskevi

LLShef said:

@hugheskevi I wish I had known your formula earlier. I have struggled around to figure out what to do myself and in hindsight it could be better to have this wisdom like 7 years ago. Having said so, I guess we often need time to understand how things work in our own situation ourselves. Like your way of making use of credit card transfers, I wouldn't be able to do that- it's like a 0.5 of a full time job managing it. Without some confidence to handle it, I always automatically pay credit cards first each month, then mortgage overpayment (I know, it was not a good move when the rates were soooo low in the past), then volunteer pension contributions.
May I just ask though, how can you "add extra to DB"? I thought we could only add to the DC pot.

Exploiting credit cards is actually not at all time consuming. I just tracked everything on a spreadsheet page, with a visual timeline showing when each offer ended and would need refinancing. That fed-into a cashflow forecast which ensured I could always meet repayments, even if refinancing was not possible. Then when refinancing did happen, that meant the released funds could be put to productive use (eg pension, ISA, mortgage). It was important to have offers ending at different times to make refinancing easy, else your total borrowing will put off lenders - having a spouse to move credit card debts between makes this easier. Then it was just a matter of opening a new card a few weeks before an offer expired, transferring the balance, logging all the details, and closing the legacy card. Keep the merry-go-round topped up by using a 0% purchases credit card with minimum payment for everyday purchases, and anytime you have extra balance available on a new card you have opened (ie new limit > transfer limit from expiring card), move balance from the purchases card. Minimum payment Direct Debits looked after the cards until they came due for expiry and were replaced. The automated spreadsheets do all the work.

Defined Benefit schemes often have ways to increase the DB pension, eg, Added Years, Added Pension, contributions to reduce Normal Pension age, or faster accrual. It is scheme-specific though, so not all schemes will have an option.

Nevergonnaretire

Its funny because only five or so years ago I'd managed to convince myself I was never likely to be able to retire and had pretty much resigned myself to be stuck in a job I really don't enjoy anymore. I was pretty down about it.

Fast forward to now and after managing to pay off the mortgage a couple of years ago have since upped my salary sacrificed considerably and it actually looks like I may be able to go around age 59/60 (7 or 8 years away!)

The above though has come at a cost, I have been completely obsessed with pensions and retirement planning over this time. I am definitely checking pensions and other investments way too often and I think I need to get a grip before I drive my wife insane. Its hard work though as she is 6 years younger than me and has zero interest at all.

LL_USS

hugheskevi said:

Exploiting credit cards is actually not at all time consuming. I just tracked everything on a spreadsheet page, with a visual timeline showing when each offer ended and would need refinancing. That fed-into a cashflow forecast which ensured I could always meet repayments, even if refinancing was not possible. Then when refinancing did happen, that meant the released funds could be put to productive use (eg pension, ISA, mortgage). It was important to have offers ending at different times to make refinancing easy, else your total borrowing will put off lenders - having a spouse to move credit card debts between makes this easier. Then it was just a matter of opening a new card a few weeks before an offer expired, transferring the balance, logging all the details, and closing the legacy card. Keep the merry-go-round topped up by using a 0% purchases credit card with minimum payment for everyday purchases, and anytime you have extra balance available on a new card you have opened (ie new limit > transfer limit from expiring card), move balance from the purchases card. Minimum payment Direct Debits looked after the cards until they came due for expiry and were replaced. The automated spreadsheets do all the work.

Defined Benefit schemes often have ways to increase the DB pension, eg, Added Years, Added Pension, contributions to reduce Normal Pension age, or faster accrual. It is scheme-specific though, so not all schemes will have an option.

Thank you @hugheskevi .
It must be down to individuals then as I would be too worried to handle that merry-go-round. Hands down to you for managing that though. Recently, for the first time I tried not paying off the full credit card balance (as my university was late processing my claims for trips - I would normally take my saving out to pay it). After working out what card balance transfer I could have, I tried - and still had a sum of interest charge. Oh well, I have chicked out - at least for now.

Thanks for your reply regarding DB - I think my scheme doesn't have these options so I'll just continue with extra DC contributions then.

Moonwolf

I come here most days even though I don't post so often, that might make me obsessed.  

I'm ready to leave now, too many changes at work, too many kids who are much cleverer than me and too many health issues that put me off staying.

It is now the balance between leaving earlier and the risk of a bad market and so being short of money; or slogging on for a bit longer with more guarantees but possibly having stayed too long and not getting the benefit.

I'm 58, certainly in the final two years before pushing the button so I learn a little bit more with each visit and tweak my plans.

noclaf

LLShef said:

noclaf said:

Every now and then I see a thread that has so much useful 'perspective' and experiences that I bookmark it...this will be in of those threads!

There are so many variables and individual circumstances that impact how much we want/can save in a pension and that makes it challenging (IMO) when determining out approach.

I don't mean to be crass sharing numbers but just to illustrate my challenges on this topic; at 30 yrs old I had £15-17k total in my pensions...mid 30's went all out on contributions and tweaking fund choices to hopefully enhance/maximise my returns ..at 41 I have £135k ish.....so progress has been made but ideally I want to end up with a £500k + pot...maybe a bit more as I am the 'worrying' type when it comes to finances. I earn ok but nature of my job is I could be out of a job tomorrow and I'm sure I'm not the only one...this year monthly contributions were anywhere from £1.5-2k per month including employer matching but will be dropping down to minimum contributions to obtain max employer match from this month as feel I need to begin focussing on building my ISA's...it could be a bad strategy as 'front-loading' the pensions esp for any higher rate pay seems.the way forward but the job security aspects for the next 10 and a bit years is making me reassess that approach..sorry bit of a brain dump but it's all these unknown and uncontrollable factors that seems to cause me paralysis and jumping back and forth between approach to pensions Vs ISA etc

@noclaf My apology for a silly question but can I just confirm that the size of one's current pension pot is that Amount of LTA used (and the AA used in the year is all the contribution in that year from both employee and employer)? Thank you.

Sorry just seen your response: honest answer I have no idea but also the LTA has been scrapped as I understand? Of course it could be rolled back in the future but based on the previous LTA and my current position (in terms of pension pot) I'm not too concerned anyway.....let's see how it all looks in about 15ish and a bit years!

Apricota

I’m feeling rather obsessed, and have been planning for several years. I’m 52 in March and planning to go at 55 ideally, but will need to considered that year and timings. I’m mainly SIPP and it’s £520, will add to that the maximum £60k per year and intend £700k plus growth. 

Dont wish to derail your thread, but I’m considering different ways to bridge the gap, when to draw different bits etc, working out my number and planning to live till 99. Lots to work through, and I’ve picked up so very much from reading and lurching here. 

Apricota

It’s got to be about the balance also. I have two kids, now just at uni, expensive years still. Have the mortgage all paid off and again worked hard for that. Just keep going really. I agree ref kids and when they might need there own places, would love to be able to help.