Mid-life musings

SouthCoastBoy

My priority was always to pay off my mortgage, which I achieved quite a while ago. This has left me plenty of time to save for retirement, with the added benefit of housing security for my family, it also meant when the kids were young my wife was able to stay at home, something we all benefited from, some things are more important than money.

Yankee24

Early_Retire_Free said:

In my experience (having been retired for 7 years), the regular outgoings are pretty easy to model.  What nobody can answer is how much variable expenditure you need.

When you are retired, you will have a lot of time on your hands and you will want to fill that time which can become quite expensive.....or not.  Our variable expenditure (mainly holidays) is the same as our fixed costs.

Also, you will want to think about how much you want to help the children with education, setting up home, weddings etc.  Should not be underestimated.

This.    We front loaded the kids when we inherited…  passed it straight thru.  Paid off all the student loans, gave house deposits.  Kept some back to help with child care costs.  I am not being tied down with regular babysitting.  This has been freeing.  We now know that we don’t have to have anything left and our London flat is our care home fees.    This has made us braver.  

We are just downsizing (but increasing price) and moving back into London.   After a year of paying for renovations I will retire.  57.  Husband older so will go at 60. 

Ibrahim5

SouthCoastBoy said:

My priority was always to pay off my mortgage, which I achieved quite a while ago. This has left me plenty of time to save for retirement, with the added benefit of housing security for my family, it also meant when the kids were young my wife was able to stay at home, something we all benefited from, some things are more important than money.

My wife stopped work when we had our first child. I always thought it would be bad financially but it wasn't a problem at all. It amazed me that in 20 years of women at work asking what my wife did not a single one said they would prefer a career over being a housewife. A very small proportion of women are very career orientated and go ballistic at that suggestion. Got me wondering what proportion of men are career orientated. If they were financially provided for, I don't think many men would work either.

kimwp

nicknameless said:

kimwp said:

Bumblingbee said:

I think it's unlikely that the state pension would be abolished, but I guess who knows what will happen! I certainly couldn't have foreseen a lot of the last 5-10 years 🤣

With regards to paying off our mortgage, there perhaps is more to be gained via investments but it doesn't interest me. Certainty and security is something I value, there is plenty of time after that to try and make gains if we wish and it will give us financial freedom. 

Likewise when we hit the pension number I'd expect us still to be working and contributing at least whatever is required for our employers contributions, so I'd expect this to bridge the gap between the value today vs the value in the future - but I can worry about that when we hit the number 

I chose to pay off my mortgage before thinking more seriously about my pension (other than setting it at the max that would be employer matched). I would probably be better off financially if I'd put more in my pension early, but when I think about the peace of mind I had in 2020 when people were being laid off at work and I didn't have to worry about paying my mortgage - no regrets about my choice.

Understand that completely to an extent.  But, for example, if at any point someone is paying off their mortgage in lieu of higher rate tax relief in a pension (assuming they will not be HR tax payer in retirement) then they need to give their head a shake IMO.  Personally I feel much more secure having financial independence next year than 3-4 years hence.  And needing that security for the what ifs implies you had no emergency fund to cope .......

I think I'd only just started to become a 40% tax payer at that point (though it hadn't played a part in prioritising overpaying my mortgage) and an emergency fund that covered a year of expenses, including mortgage - so I knew that I had enough for a year and my mortgage would be paid off at that point. A unique situation. I'm not justifying my decisions, but even knowing what did happen and that I'd be better off financially if I'd done things differently, I'm happy with the decisions I made - they were the right ones at the time because it meant I had very little financial worry in a very uncertain time.

Bumblingbee

Just reviewing my pensions prior to paying in my lump sum which I have had put aside for a few months. I have 2 x pension plans - one I haven't interacted with much as it is relatively new as its where my workplace pension payments go. The annual management charge is 0.3% (Aegon SIPP), which seems excessively high. I'd welcome opinions on what a good > reasonable annual management charge is? I assume I could both continue to regularly pay in, and also regularly transfer out to my other pension? Thoughts welcome!

Albermarle

Bumblingbee said:

Just reviewing my pensions prior to paying in my lump sum which I have had put aside for a few months. I have 2 x pension plans - one I haven't interacted with much as it is relatively new as its where my workplace pension payments go. The annual management charge is 0.3% (Aegon SIPP), which seems excessively high. I'd welcome opinions on what a good > reasonable annual management charge is? I assume I could both continue to regularly pay in, and also regularly transfer out to my other pension? Thoughts welcome!

Normally there are two charges with pensions.
A platform/ management charge, which is charge by the provider for managing the pension.
Plus a fee for the investments held
You pay the former explicitly as it is taken out of your pension monthly. The latter is taken within the investment fund, so you do not see that.
Some pension providers just have one charge for both.
Basically if the 0.3% is just the platform charge, it is about normal ( can be less or more). If it includes the investment fees , it is very cheap.

Bumblingbee

Thanks @Albermarle, I've attached the snip which shows the fees. I assumed it was high as this pot is roughly 1/4 of my other one but the fees are 3-4 times higher! 

Albermarle

Bumblingbee said:

Thanks @Albermarle, I've attached the snip which shows the fees. I assumed it was high as this pot is roughly 1/4 of my other one but the fees are 3-4 times higher! 

0.4% all in is not bad at all. ( 0.1 % for the investment is pretty much rock bottom)

Your other pot may have a lot lower platform charge, but presumably there will be investment fees on top. I would be surprised if overall it would be much less than 0.4%.

Bumblingbee

@Albermarle I think you're right, I just can't seem to make sense of it. Unfortunately my statement for that one doesn't clearly lay it out, its more opaque. I clearly have management charges laid out of c£3.50 per month in my transactions but no others, but those figures don't tally with the overall charges on my statement. I've since changed my funds to ones with lower charges to reduce costs but I can't find reference to the other part of the fees 😕 

Bumblingbee

I gave the pension provider a call today who confirmed on the other pension the platform fees are 0.17% on my balance up to £25.5k (rounded for ease) and 0% there after. Therefore it looks like I'll need to do regular transfers from the one I actively pay into into the one with lower fees