I'm addicted to pension saving and it's leaving me short.

Workerdrone

Hi, I can't remember if I've posted something similar but here goes. I'm 47 and like a lot of people I became more serious about retirement planning as I approached 40. I don't earn a massive amount and its unlikely due to circumstance I ever will. After the September inflationary pay rise I will be on £39,970. My wife is a band 7 nurse and earns around 45k. We have an 80k mortgage and keep around 30k in the offset in various pots to pay for things (car maintenance, new car, holiday, Christmas etc)

About 10 years ago my wife and I agreed it was going to be increasingly difficult for her to do night shifts at 60 so we put in place a plan to both finish work at that point. As she won't be able to pull her 2016 section until 67 she will have around 11k from her 95 section available plus 33k lump sum. I started a small sipp for her which should have around 50k in by retirement which we plan to draw down over the 7/8 year until the 2016 and SP kick in. We also agreed I would put as much as possible into my work pension which will help our income when she leaves work.

The way our finances work is, she pays the mortgage, her phone, car insurance, denplan, contact lenses etc and I pay the rest of the bills, then between us we put an amount of £911 into the offset (For the past year we've usually spend the same amount from the offset as we put in every month, just due to things needing replacement, holidays etc). We balance the savings so it leaves us with £350 fun money each per month.

Other than the 80k mortgage we have no debt (and the mortgage is fixed at 2.75% until 2026)

So for the past 10 years every time I've had an inflationary pay rise or made a saving on a bill ive followed the mantra of not letting my lifestyle grow to my income and instead saving the difference into pension. In effect i've not given myself a pay rise in a decade.

In doing so I am now via salary sacrifice putting £1472 into my pension every month. My only real indulgence is my daily coffee run ( a habit from covid), I work from home so this little treat gets me out of the house once a day. But with inflation being what it is my daily budget of £11.29 doesn't go far.

My fund seems to have stagnated at around £240k (Im not concerned, Im just buying more units at a cheaper price month on month), but the lack of northward direction does make all this saving for no obvious gain seem a bit demoralising.

I feel having another £200 a month disposable cash for myself would ease matters. I suppose I look around and see people splashing the cash and wonder if I am making the wrong decision.

The thing is I could do it in a heartbeat, just reduce my monthly contributions, but having put so much blood sweat and tears into getting to the £1472 a month number I just can't bring myself to scale it back. Plus I'm a bit of a security freak and the only way I see of getting a decent retirement lifestyle is to make the sacrifices now.

So a lot to unpack here, not really sure why I wrote this, I just needed to get it off my chest. Does anyone have any similar experiences of oversaving or anything to add?

P.S Im aware retirement is not guaranteed. I might pop my clogs before 60, but I have made peace with the fact at least my family will be provided for.

HappyHarry

There is a balance to be struck between saving for the future and living life now. Only you can find that balance.

Something to consider is that if you are diligently saving towards retirement, you should have a final goal in mind - not just save £x per month/year.

I would also suggest that you need to get yourself in the mindset that when you retire, you will be comfortable dipping into these retirement savings. I have seen many people who saved diligently for retirement through their working lives, then struggled with the change of mindset required to actually spend some of their hard earned retirement savings. 

Marcon

Workerdrone said:

Hi, I can't remember if I've posted something similar but here goes. I'm 47 and like a lot of people I became more serious about retirement planning as I approached 40. I don't earn a massive amount and its unlikely due to circumstance I ever will. After the September inflationary pay rise I will be on £39,970. My wife is a band 7 nurse and earns around 45k. We have an 80k mortgage and keep around 30k in the offset in various pots to pay for things (car maintenance, new car, holiday, Christmas etc)

About 10 years ago my wife and I agreed it was going to be increasingly difficult for her to do night shifts at 60 so we put in place a plan to both finish work at that point. As she won't be able to pull her 2016 section until 67 she will have around 11k from her 95 section available plus 33k lump sum. I started a small sipp for her which should have around 50k in by retirement which we plan to draw down over the 7/8 year until the 2016 and SP kick in. We also agreed I would put as much as possible into my work pension which will help our income when she leaves work.

The way our finances work is, she pays the mortgage, her phone, car insurance, denplan, contact lenses etc and I pay the rest of the bills, then between us we put an amount of £911 into the offset (For the past year we've usually spend the same amount from the offset as we put in every month, just due to things needing replacement, holidays etc). We balance the savings so it leaves us with £350 fun money each per month.

Other than the 80k mortgage we have no debt (and the mortgage is fixed at 2.75% until 2026)

So for the past 10 years every time I've had an inflationary pay rise or made a saving on a bill ive followed the mantra of not letting my lifestyle grow to my income and instead saving the difference into pension. In effect i've not given myself a pay rise in a decade.

In doing so I am now via salary sacrifice putting £1472 into my pension every month. My only real indulgence is my daily coffee run ( a habit from covid), I work from home so this little treat gets me out of the house once a day. But with inflation being what it is my daily budget of £11.29 doesn't go far.

My fund seems to have stagnated at around £240k (Im not concerned, Im just buying more units at a cheaper price month on month), but the lack of northward direction does make all this saving for no obvious gain seem a bit demoralising.

I feel having another £200 a month disposable cash for myself would ease matters. I suppose I look around and see people splashing the cash and wonder if I am making the wrong decision.

The thing is I could do it in a heartbeat, just reduce my monthly contributions, but having put so much blood sweat and tears into getting to the £1472 a month number I just can't bring myself to scale it back. Plus I'm a bit of a security freak and the only way I see of getting a decent retirement lifestyle is to make the sacrifices now.

So a lot to unpack here, not really sure why I wrote this, I just needed to get it off my chest. Does anyone have any similar experiences of oversaving or anything to add?

P.S Im aware retirement is not guaranteed. I might pop my clogs before 60, but I have made peace with the fact at least my family will be provided for.

What does your wife say about all this?

HappyHarry said:

I would also suggest that you need to get yourself in the mindset that when you retire, you will be comfortable dipping into these retirement savings. I have seen many people who saved diligently for retirement through their working lives, then struggled with the change of mindset required to actually spend some of their hard earned retirement savings. 

If OP is 'addicted' to saving as they say in the title to their thread, then sounds as if they'll fall squarely into that category and never reap the rewards of so much sacrifice earlier in their life.

OP - £1472 is a curious old number. Could you bring yourself to round it down to a much rounder £1450, and then possibly nibble off a bit more once you've adjusted to that reduction?

Workerdrone

Marcon said:

Workerdrone said:

Hi, I can't remember if I've posted something similar but here goes. I'm 47 and like a lot of people I became more serious about retirement planning as I approached 40. I don't earn a massive amount and its unlikely due to circumstance I ever will. After the September inflationary pay rise I will be on £39,970. My wife is a band 7 nurse and earns around 45k. We have an 80k mortgage and keep around 30k in the offset in various pots to pay for things (car maintenance, new car, holiday, Christmas etc)

About 10 years ago my wife and I agreed it was going to be increasingly difficult for her to do night shifts at 60 so we put in place a plan to both finish work at that point. As she won't be able to pull her 2016 section until 67 she will have around 11k from her 95 section available plus 33k lump sum. I started a small sipp for her which should have around 50k in by retirement which we plan to draw down over the 7/8 year until the 2016 and SP kick in. We also agreed I would put as much as possible into my work pension which will help our income when she leaves work.

The way our finances work is, she pays the mortgage, her phone, car insurance, denplan, contact lenses etc and I pay the rest of the bills, then between us we put an amount of £911 into the offset (For the past year we've usually spend the same amount from the offset as we put in every month, just due to things needing replacement, holidays etc). We balance the savings so it leaves us with £350 fun money each per month.

Other than the 80k mortgage we have no debt (and the mortgage is fixed at 2.75% until 2026)

So for the past 10 years every time I've had an inflationary pay rise or made a saving on a bill ive followed the mantra of not letting my lifestyle grow to my income and instead saving the difference into pension. In effect i've not given myself a pay rise in a decade.

In doing so I am now via salary sacrifice putting £1472 into my pension every month. My only real indulgence is my daily coffee run ( a habit from covid), I work from home so this little treat gets me out of the house once a day. But with inflation being what it is my daily budget of £11.29 doesn't go far.

My fund seems to have stagnated at around £240k (Im not concerned, Im just buying more units at a cheaper price month on month), but the lack of northward direction does make all this saving for no obvious gain seem a bit demoralising.

I feel having another £200 a month disposable cash for myself would ease matters. I suppose I look around and see people splashing the cash and wonder if I am making the wrong decision.

The thing is I could do it in a heartbeat, just reduce my monthly contributions, but having put so much blood sweat and tears into getting to the £1472 a month number I just can't bring myself to scale it back. Plus I'm a bit of a security freak and the only way I see of getting a decent retirement lifestyle is to make the sacrifices now.

So a lot to unpack here, not really sure why I wrote this, I just needed to get it off my chest. Does anyone have any similar experiences of oversaving or anything to add?

P.S Im aware retirement is not guaranteed. I might pop my clogs before 60, but I have made peace with the fact at least my family will be provided for.

What does your wife say about all this?

HappyHarry said:

I would also suggest that you need to get yourself in the mindset that when you retire, you will be comfortable dipping into these retirement savings. I have seen many people who saved diligently for retirement through their working lives, then struggled with the change of mindset required to actually spend some of their hard earned retirement savings. 

If OP is 'addicted' to saving as they say in the title to their thread, then sounds as if they'll fall squarely into that category and never reap the rewards of so much sacrifice earlier in their life.

OP - £1472 is a curious old number. Could you bring yourself to round it down to a much rounder £1450, and then possibly nibble off a bit more once you've adjusted to that reduction?

We discussed it just this morning. She is of the same mindset. She works with a lot of twenty somethings who spend money like water, debt doesn't seem to bother them. Perhaps it's generational or perhaps its leaving uni with 50k debt, a car on PCP and a new build house full of furniture on tic seems the norm. She tends to save any overtime she gets, perhaps a more in depth discussion is needed. Perhaps I'm just stuck in a rut with working from home the past 8 years. 

Workerdrone

If OP is 'addicted' to saving as they say in the title to their thread, then sounds as if they'll fall squarely into that category and never reap the rewards of so much sacrifice earlier in their life.

OP - £1472 is a curious old number. Could you bring yourself to round it down to a much rounder £1450, and then possibly nibble off a bit more once you've adjusted to that reduction?

Perhaps I need to treat it as you would treat any other addiction.

gwynlas

Whilst your saving is admirable it appears to have become an obsession and a lot could happen in the next 20 years. Your wife might change roles so no longer working nights or either of you could suffer a life changing illness. Life is for living and whilst you do not need or want to spend at the level of your income please cut yourself a little slack and increase your allowance. Once you reach pension age with your mortgage paid off unless you ae in very  good health you might not be able or want to do an awful  lot outside the home. A family member denies themselves heating at times or indulging in a coffee when out and about in order to leave the money in the bank to their children. Their children are all established in theitr careers and this inheritance will make little difference to their lives so they try to discourage this parsimony

Workerdrone

gwynlas said:

Whilst your saving is admirable it appears to have become an obsession and a lot could happen in the next 20 years. Your wife might change roles so no longer working nights or either of you could suffer a life changing illness. Life is for living and whilst you do not need or want to spend at the level of your income please cut yourself a little slack and increase your allowance. Once you reach pension age with your mortgage paid off unless you ae in very  good health you might not be able or want to do an awful  lot outside the home. A family member denies themselves heating at times or indulging in a coffee when out and about in order to leave the money in the bank to their children. Their children are all established in theitr careers and this inheritance will make little difference to their lives so they try to discourage this parsimony

It is good advice, hence why I have come to this realisation and need to do something about it. I do have plans to spend in retirement and to holiday at the drop of a hat, but making plans and dipping into the bank are different things. I hear it can be hard to transition to decumulation.

Emmia

Do you have another payrise coming up?

Perhaps this time, and next time, don't adjust the additional contribution, but let the rise flow into your bank account.

You're still piling money away with nearly £1,500 a month going in but perhaps it's time to have a little more disposable income & to enjoy the payrises.

IAMIAM

This is just my opinion. I would buy additional pension from a civil service pension with any savings I had to fund retiring early. 

If you even got a 1 day a week government job, just to buy the max £8k additional pension and then quit. It is worth doing in my opinion. If your wife did the same you would have circa 16k annual pension salary extra. 

IAMIAM

I also know someone, who lent 50k from their mortgage lender for an 'extension' at age 58.
Bought the maximum additional civil service pension with it (7k). 
Went part time for a whole year to claim the 20% tax relief back on it.
Then went back to full time until age 60.
Retired age 60.
Took the maximum lump sum from the pension.
Paid off mortgage.
Lives happily ever after! 

Murielson

Don't quite understand where Civil Service pension comes into the discussion for the original poster, maybe I'm missing something?

I'm quite lucky in that I have also been able to not take a pay rise in the last 7 or so years and everything has gone directly into pension. Wife and my salary have been such that we can accommodate this and with salary sacrifice, I am using pension route for tax efficiency and saving for the future (pension) and this year actually took a salary cut with balance heading to pension

Wife is in Civil Service and also wishes to retire at age 60 in 2 years time so that is what we will also be doing, similar to OP target retirement date

Just remember to leave yourself with enough to live on comfortably so that you can continue the life you have been having in retirement rather than actually starting to live then