Starting Over Again - At Least Trying To!

QrizB

Watty1 said:

I get that sounds a very respectable pension so now we have a full confession - I have 3 horses and a large dog and the house is old.  £23,500 sounds good but I would like another £10,000 at least to fund my lifestyle

As a very rough guide, to support an extra £10k pa you'll need another £250k of pension investments. At £2k a month, that'll take 11 years. (In practice it'll take a bit less time since, if you don't retire until you are 73, that's 5 years past SPA and 5 fewer years for your pension to last.)

xylophone

If the old house is large enough, had you considered  sectioning off some rooms to provide accommodation for a lodger (particularly an animal enthusiast)?

The rent could provide a very respectable monthly addition to your pension contributions.

Secret2ndAccount

So you want State Pension + 22k. Pot needs to be about 650-700k. If you want to retire early, add 33k x number of years.
SW Consensus is just okay, but it's not terrible - not a reason to avoid adding to your pension if you have the cash.
It's about 80% equities, which is fine, but a lot of UK investment. Many people like UK bias because it gives them a warm, homely feeling inside, but it has cost a lot in lost gains over the past several decades. Don't know about you, but I don't see that turning around (Britain becoming the leader in everything ahead of USA and Asia) any time soon.
Take a look at this graph:


The blue line is your fund. It's done okay - up 60% in 10 years. The red line is not a magic fund run by a secret team of elves. It's a very simple fund: Go around the world and buy a bit of everything. And don't charge the customer 0.75% of their pot every year for doing it. That fund has virtually tripled in the same time frame. 
So, if you just put all your money into HSBC MSCI World, you would likely do pretty well. Just one thing though. Look at the large downward spike in early 2020 when Covid hit. Are you psychologically ready to deal with 30% (or 50%) of your pension being wiped out in a flash? If you are not, then these funds are not for you - neither of them. I suspect you were fortunate enough not to be looking too closely at your pension value back then. You ignored it and the value came back. That's the approach you need to take - just keep buying because the fund is temporarily on sale. One day you will be very happy that you got those units so cheap, and they are now fully recovered and growing again. Conventional wisdom is that you move some money to a less volatile place a few years before you plan to spend it. Remember, your pension is going to be running into your 80's, so some of the money needs to stay in these slightly riskier funds for many years to come - just keep sweeping a little bit into ultra-safe investments to provide your pension for a couple of years.
Be interested to know what funds are available within the SW pension. If they are only offering you funds with 0.75% annual charges it's time to move it to somewhere more helpful.

Watty1

xylophone said:

If the old house is large enough, had you considered  sectioning off some rooms to provide accommodation for a lodger (particularly an animal enthusiast)?

The rent could provide a very respectable monthly addition to your pension contributions.

This falls into my "ifs and maybes" category.  The house won't split but there is a barn that I would like to convert to a small one bedroom apartment for me.  The council have said no as they view it as a "new build in the countryside" which they do not agree with - despite allowing 100s of new builds by developers but lets not digress

Potentially there may in the spring be a change in planning rules that would allow the conversion so if I could do that I would rent out the house but this is very much "if and maybe" hence trying to get a grasp on what I have and what I can do in the real world now.

Watty1

QrizB said:

Watty1 said:

I get that sounds a very respectable pension so now we have a full confession - I have 3 horses and a large dog and the house is old.  £23,500 sounds good but I would like another £10,000 at least to fund my lifestyle

As a very rough guide, to support an extra £10k pa you'll need another £250k of pension investments. At £2k a month, that'll take 11 years. (In practice it'll take a bit less time since, if you don't retire until you are 73, that's 5 years past SPA and 5 fewer years for your pension to last.)

This was a really helpful post as it gives me some figures to work with.  Thank you. 

So potentially if I could change the £2 k a month to £4 k a month then roughly I could be set for state retirement age?

(A big leap but if I put some effort in to both economise and grow the business maybe a doable thing some months)

Watty1

LHW99 said:

There seem to be (at least) 3 consensus series from Scottish Widows, see forexample:

https://documents.feprecisionplus.com/Factsheet/SWPOC/FS/OV37_SCN.pdf

https://documents.feprecisionplus.com/Factsheet/SWPOC/FS/OV95_TCN.pdf

These two (series 2 / 3) seem similar to each other in composition, but with different Launch dates. Does your SW consensus have a Series No?

Given the performance figures loook the same, they possibly are essentially the same "under the bonnet", and seem to be compared to a mixed 40-85% equity benchmark.

So i logged in again and see that my account just names it as "SW Consensus" and there is no Series No.

LHW99

Secret2ndAccount said:

The blue line is your fund. It's done okay - up 60% in 10 years. The red line is not a magic fund run by a secret team of elves. It's a very simple fund: Go around the world and buy a bit of everything. And don't charge the customer 0.75% of their pot every year for doing it. ........
Be interested to know what funds are available within the SW pension. If they are only offering you funds with 0.75% annual charges it's time to move it to somewhere more helpful.

It would be worth checking with work / SW regarding the actual fund charge though, as many (not all) work pensions have a negotiated lower annual charge, whereas information sheets tend to show the maximum possible.

MallyGirl

Watty1 said:

MallyGirl said:

Hi
you say that you know what you need to live and feel you have an inadequate pension. £375k in a pension is more than most so you might want to give a bit more detail.
At a 'safe' withdrawal rate of 3.5% that should give an income of £13k, then you add the £10.5k of state pension to give £23.5k. With no mortgage that isn't a bad amount.
if you are talking about corporation tax then presumably you have a company - are you the sole director, do you have money held in the company? Do you have other savings/investments/ISAs?

I get that sounds a very respectable pension so now we have a full confession - I have 3 horses and a large dog and the house is old.  £23,500 sounds good but I would like another £10,000 at least to fund my lifestyle - and the lifestyle is not outrageous it just is that the 3 horses are expensive and the house is not cheap to run. (I have no attachment to the house and I do have a plan for it that might be a way out but there is little point on working on "ifs and maybes")

I have no other savings or investments - I had to use everything to pay off the ex and he only settled because I got an injunction!

I am the sole director of the company and I have working capital held in the company of around £50,000

I'm very aware that I am very well off but I really want to keep my horses until they pass so I can't afford to downsize for around 15 years (I have a plan for the horses if I die before then).

So as my fund is short (although respectable) I need to really understand what I have and options moving forwards

As the owner of 2 large, old dogs (expensive in so many ways) and a Victorian house I can totally understand. 

We have a plan C/D which involves us living in the building at the bottom of the garden - which can't be rented out according to the planning people - and renting out the house. It is currently my office with a guest bedroom above so it would be possible. I don't think we will ever do this but it is an option we have considered.
Upping the contributions seems like the best plan - as much as you can afford without killing the company.