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    • Cottage Economy
    • By Cottage Economy 10th May 18, 8:31 AM
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    Cottage Economy
    Mind the 'age' gap: retirement planning
    • #1
    • 10th May 18, 8:31 AM
    Mind the 'age' gap: retirement planning 10th May 18 at 8:31 AM
    Thought I'd start this thread to see if there is anyone else in the same boat and ask for help and ideas. I am currently retirement planning for DH and I based on a 12 year age gap. DH 57, me 45. Everything I read seems to be very US-based.

    So far, I have identified a few things I need to take into account.

    The plan has to be based on my predicted lifespan.

    For couples of approximately the same age, retirement planning starting from NRA usually spans 30-ish years. Our has to span 40-50. My life expectancy is 84, nearly 40 years away. With advances in medical science I estimate that I will need to plan to live until I am at least 95.

    I have to retire early

    Couples usually make plans to retire around the same time so they can enjoy some time together. I will still be working when DH retires and if I retire at the normal 60/65 he will have spent the greater part of his retirement alone. He may not even be in the best of health by then. I have to retire early, 55 ideally, so we have to save and invest a lot more money and get better returns to build a bigger pot.

    We have to take bigger risks

    To build up our retirement accounts, we have to take greater risks with the money to get better returns. For a man of DH's age, it is almost common 'lore' to hold no more than 40% in equities and 60% in bonds, but I am only in my 40s and therefore have a longer timespan to invest in. Some financial articles I have read suggest it is important to invest based on the age of the younger individual, not the older so asset allocation should be based on my age and attitude to risk to avoid fianancial 'drag'.

    We may have to delay taking the state pension

    In the UK, for every five weeks you delay taking the state pension you get a 1% increase, which equates to 10.4% increase if you delay for a full year. Depending on how we are building up our retirement accounts, this may have to form part of the planning.

    We have to consider long-term care costs

    With DH 12 years older than me, we may need to find the money for care costs, however, I will still need living expenses. Our plan has to ensure we don't exhaust our accounts making sure he is cared for, leaving nothing for me.

    I will inherit less of DH's pensions as I am a 'trophy wife'

    Being 12 years younger means that DH's occupational pension provider considers me a 'trophy wife' and instead of getting 50% of DH's FS/DB pension when he dies, I get a reduced sum, about 2.5% for every year between us over 10 years, so 5% less.

    We will have to use drawdown options

    Drawdown pots can be inherited, annuities cannot. To maximise my income in retirement, it will have to be drawdown for both DH's SIPP and my personal pension.

    We don't have children so are not bothered about leaving an inheritance to anyone.

    We can run our retirement accounts and assets right down if necessary, but of course not knowing when we will die is the perennial problem. I'm a little irritated at the thought of all the sacrifices we have and will continue to make and then not get all of the financial benefits.

    Other ideas being mulled over

    We have a single storey long Victorian brick barn on the smallholding. We could convert that and move in, splitting the holding down the middle and selling off the main house, rather than sell up to a small place when we can't cope with a bigger house any more. That could release some cash.

    Would front-loading my occupational pension contributions at the start of the financial year with an employer match help build a bigger pension pot?

    Should I take on the mortgage alone and extend the term when my sole income can cover it (approximately 3-4 years time)? This would reduce the monthly payment, and the difference used to build a bigger pension pot ready for my retirement. Taking the tax-free lump sum at the start of drawing DH's pension would bring it down and then I can do the same when I start drawing my pension.

    Phew. Anyone else struggling with retirement planning for an age gap?
    Last edited by Cottage Economy; 11-05-2018 at 8:41 AM.
    'Save £12k in 2018' £3500/£6,000 (58%)


    "...success in personal finance isn't about mastering the technicalities. It is about mastering yourself."
Page 1
    • Noobie2011
    • By Noobie2011 10th May 18, 9:01 AM
    • 268 Posts
    • 46 Thanks
    Noobie2011
    • #2
    • 10th May 18, 9:01 AM
    • #2
    • 10th May 18, 9:01 AM
    Thought I'd start this thread to see if there is anyone else in the same boat and ask for help and ideas. I am currently retirement planning for DH and I based on a 12 year age gap. DH 57, me 45. Everything I read seems to be very US-based.

    So far, I have identified a few things I need to take into account.

    The plan has to be based on my predicted lifespan.

    For couples of approximately the same age, retirement planning starting from NRA usually spans 30-ish years. Our has to span 40-50. My life expectancy is 84, nearly 40 years away. With advances in medical science I estimate that I will need to plan to live until I am at least 95.

    I have to retire early

    Couples usually make plans to retire around the same time so they can enjoy some time together. I will still be working when DH retires and if I retire at the normal 60/65 he will have spent the greater part of his retirement alone. He may not even be in the best of health by then. I have to retire early, 55 ideally, so we have to save and invest a lot more money and get better returns to build a bigger pot.

    We have to take bigger risks

    To build up our retirement accounts, we have to take greater risks with the money to get better returns. For a man of DH's age, it is almost common 'lore' to hold no more than 40% in equities and 60% in bonds, but I am only in my 40s and therefore have a longer timespan to invest in. Some financial articles I have read suggest it is important to invest based on the age of the younger individual, not the older so asset allocation should be based on my age and attitude to risk to avoid fianancial 'drag'.

    We may have to delay taking the state pension

    In the UK, for every five weeks you delay taking the state pension you get a 1% increase, which equates to 10.4% increase if you delay for a full year. Depending on how we are building up our retirement accounts, this may have to form part of the planning.

    We have to consider long-term care costs

    With DH 12 years older than me, we may need to find the money for care costs, however, I will still need living expenses. Our plan has to ensure we don't exhaust our accounts making sure he is cared for, leaving nothing for me.

    I will inherit less of DH's pensions as I am a 'trophy wife'

    Being 12 years younger means that DH's occupational pension provider considers me a 'trophy wife' and instead of getting 50% of DH's FS/DB pension when he dies, I get a reduced sum, about 2.5% for every year between us over 10 years, so 5% less.

    We will have to use drawdown options

    Drawdown pots can be inherited, annuities cannot. To maximise my income in retirement, it will have to be drawdown for both DH's SIPP and my personal pension.

    We don't have children so are not bothered about leaving an inheritance to anyone.

    We can run our retirement accounts and assets right down if necessary, but of course not knowing when we will die is the perennial problem. I'm a little irritated at the thought of all the sacrifices we have and will continue to make and then not get all of the financial benefits.

    Other ideas being mulled over

    We have a single storey long Victorian brick barn on the smallholding. We could convert that and move in, splitting the holding down the middle and selling off the main house, rather than sell up to a small place when we can't cope with a bigger house any more. That could release some cash.

    Would front-loading my occupational pension contributions at the start of the financial year with an employer match help build a bigger pension pot?

    Should I take on the mortgage alone and extend the term when my sole income can cover it (approximately 3-4 years time)? This would reduce the monthly payment, and the difference used to build a bigger pension pot ready for my retirement. Taking the tax-free lump sum at the start of drawing DH's pension would bring it down and then I can do the same when I start drawing my pension.

    Phew. Anyone else struggling with retirement planning for an age gap?
    Originally posted by Cottage Economy
    Myself and my wife are in a similar position with a 9 year gap as I am 40 and she is 31. To be honest we are just getting our heads around the pensions we are in for work and the benefits we would get depending on what we paid into each (based on my wife being a higher tax band with her wage and on salary sacrifice so also NI saving).

    To date all we have done really is said we both want to retire at 55 and are currently working on that but it does mean when my wife retires I will be 64 which is not old for retirement but does mean 9 years of me not working while my wife does. Also we do not and will not have children so that is less of a worry in terms of inheritance so we have factored our house equity in(mortgage free by my retirment) and plan to split the equity between money for retirement and moving abroad.

    Our biggest headache at the moment is working out how much extra we would need when I retire to potentially allow my wife to retire earlier than 55 as she will not be able to drawdown her work pension until 55 so would have to survive off my pension and any house equity which we could do but need to make sure we are not depleting it too fast and come up short later in life.

    For me there are so many unknowns so we have factored our budget around when we both hit 90 as you have to pick an age that suits you otherwise you would end up planning far beyond that and spend your whole working life building a massive pot. Plus the figures quoted that you need in retirement are all over the place and not consistent and do not tend to lend well to couples sonwe have just simply estimtaed our basic expenses when retire and then added on things like holidays, clothes, eating out etc to get a figure we are happy with and are working to that.
    • LHW99
    • By LHW99 10th May 18, 9:04 AM
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    LHW99
    • #3
    • 10th May 18, 9:04 AM
    • #3
    • 10th May 18, 9:04 AM
    Not particularly sure on many of your issues as we don't have your problem. However, I think that with the new SP, deferment only get you about a 5.8% increase. 10.4% was with the pre-2016 version. So you both get your own pensions, based on your own records. Best to check what you have now on the gov.uk site.
    Also, does what you get as a spouse's pension from your OH's scheme depend on whether he dies before / after the pension is in payment?

    I can't comment on the bonds - equity split. I think 40 / 60 is the traditional suggestion, but IMO the longer you are planning for, the higher equity proportion is likely to be relevant - provided your risk appetite is suitable. We are older than you both, but are still 90% in equity as we don't expect to take major drawdowns on our DC funds for some time.
    • Cottage Economy
    • By Cottage Economy 10th May 18, 9:56 AM
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    Cottage Economy
    • #4
    • 10th May 18, 9:56 AM
    • #4
    • 10th May 18, 9:56 AM
    Our biggest headache at the moment is working out how much extra we would need when I retire to potentially allow my wife to retire earlier than 55 as she will not be able to drawdown her work pension until 55 so would have to survive off my pension and any house equity which we could do but need to make sure we are not depleting it too fast and come up short later in life.
    Originally posted by Noobie2011
    This is a big headache for me also. We have five years before DH wants to retire at 62 and 10 years before I want to go at 55. I just don't think we can build a pot big enough in that time without substantial lumps sums or a lottery win! I've discounted any potential inheritances as they are not my money to factor in to my planning and I'd rather my parents and MIL spent it on themselves/nursing care. I'm pretty sure DH will spend the first five years of his retirement alone, but don't know how many years that will continue after that.

    ...so we have just simply estimated our basic expenses when retire and then added on things like holidays, clothes, eating out etc to get a figure we are happy with and are working to that.
    Originally posted by Noobie2011
    That's what I'm doing at the moment. I've been tracking the figures since we moved to this place almost two years ago and am at the point where I'm going to start making some plans based on it.

    Not particularly sure on many of your issues as we don't have your problem. However, I think that with the new SP, deferment only get you about a 5.8% increase. 10.4% was with the pre-2016 version. So you both get your own pensions, based on your own records. Best to check what you have now on the gov.uk site.
    Originally posted by LHW99
    Thanks for spotting that. I hadn't realised that happened.

    Also, does what you get as a spouse's pension from your OH's scheme depend on whether he dies before / after the pension is in payment?
    Originally posted by LHW99
    Yes. I'm working on the assumption he will live to a good age. If he doesn't, if he dies before he starts taking his pension (which could be between 5 and 10 years time) then I get a lump sum equivalent to 4x his pensionable pay plus a further lump sum from the pension. And we have two term life assurance policies, although one was based on our last mortgage and doesn't have long to run.

    We are older than you both, but are still 90% in equity as we don't expect to take major drawdowns on our DC funds for some time.
    Originally posted by LHW99
    Wow! That's high! At the moment we have a 60/40 split in DH's SIPP. I can't do anything with it until we come up with a basic retirement strategy and know whether the SIPP will fund the gap between DH retiring at 62 and taking his work pension at 67, or whether he should take his FS/DB pension early and take the actuarial reduction, leaving the SIPP. Or use both and save any excess into my pension.
    Last edited by Cottage Economy; 10-05-2018 at 10:05 AM.
    'Save £12k in 2018' £3500/£6,000 (58%)


    "...success in personal finance isn't about mastering the technicalities. It is about mastering yourself."
    • Cottage Economy
    • By Cottage Economy 10th May 18, 10:02 AM
    • 969 Posts
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    Cottage Economy
    • #5
    • 10th May 18, 10:02 AM
    • #5
    • 10th May 18, 10:02 AM
    I actually joined RetireEasy yesterday to try and get some help working it out. As I can download the lifeplan as an Excel spreadsheet I figured it would give me a head start and I can adjust the cell formulas as I need to.

    I'm only on the middle plan, but considering the premium one as it does scenario modelling and I would like to work out a few basic scenarios to see how things change.
    Last edited by Cottage Economy; 10-05-2018 at 10:05 AM.
    'Save £12k in 2018' £3500/£6,000 (58%)


    "...success in personal finance isn't about mastering the technicalities. It is about mastering yourself."
    • p00hsticks
    • By p00hsticks 10th May 18, 10:28 AM
    • 6,281 Posts
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    p00hsticks
    • #6
    • 10th May 18, 10:28 AM
    • #6
    • 10th May 18, 10:28 AM
    Our biggest headache at the moment is working out how much extra we would need when I retire to potentially allow my wife to retire earlier than 55 as she will not be able to drawdown her work pension until 55 so would have to survive off my pension and any house equity which we could do but need to make sure we are not depleting it too fast and come up short later in life.
    Originally posted by Noobie2011
    We've an 8 year age difference - OH is 8 years older than me. We had originally agreed that he would retire at 65 and me at 60, when one of my DB pensions kicked in, but redundancy and company take over meant that it was slightlier earlier than planned in both cases.

    We have low outgoings (no mortage or expensive tastes) and are currently plugging the gap using savings (cash ISA and various saving accounts) and his state pension until my DB pension kicks in
    • Noobie2011
    • By Noobie2011 10th May 18, 10:47 AM
    • 268 Posts
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    Noobie2011
    • #7
    • 10th May 18, 10:47 AM
    • #7
    • 10th May 18, 10:47 AM
    We've an 8 year age difference - OH is 8 years older than me. We had originally agreed that he would retire at 65 and me at 60, when one of my DB pensions kicked in, but redundancy and company take over meant that it was slightlier earlier than planned in both cases.

    We have low outgoings (no mortage or expensive tastes) and are currently plugging the gap using savings (cash ISA and various saving accounts) and his state pension until my DB pension kicks in
    Originally posted by p00hsticks
    Yes our current plan was for me to retire at 55 when my work pension becomes available and then use some of that plus my wifes wage to get us through until she retires at 55 so 9 years later. Then it would be both our work pensions plus maybe some funds from our house sale(as moving abroad but not using all our house sale money for new property) to carry us through another 3/4 years when my state pension kicks in. Then 9 years later my wifes state pension kicks in.

    So at the moment we are starting with the state pension as knkw those dates and amounts, then factoring in an estimated house proce sale, then adding in the 9 years where my wife is working. Then based on what we have forecast we want to live on between me being 55 and my wife 90 shows us what we are short. Then we know what we need to pay into our work pensions to plug that gap and also gives us a good idea of how much extra we would need if my wife retired earlier.

    It is the only way it makes sense to me but I may be way off. Plus for things like house sale price and work pensions we have not factored in any interest or house value increases so less of a risk in my eyes but you would hope that our pension pots and house value would have gone up as they are a mixture of between 15-25 years away.

    We are also lucky enough to have a sharesave scheme through my wifes work which we will pay into and looking back at recent years the profit on this investment is quite large but not factored any of this money in yet
    • Mojisola
    • By Mojisola 10th May 18, 11:32 AM
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    Mojisola
    • #8
    • 10th May 18, 11:32 AM
    • #8
    • 10th May 18, 11:32 AM
    Yes our current plan was for me to retire at 55 when my work pension becomes available and then use some of that plus my wifes wage to get us through until she retires at 55 so 9 years later.
    Originally posted by Noobie2011
    Just curious - why do you want to stop working so early if your wife is still going to be out all day?

    Wouldn't it be better to stay employed - even if it's only part-time - rather than spending nine long years short of money and at home alone (unless your pension and her wages are going to fund lots of activities to keep you busy).
    • Noobie2011
    • By Noobie2011 10th May 18, 11:43 AM
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    Noobie2011
    • #9
    • 10th May 18, 11:43 AM
    • #9
    • 10th May 18, 11:43 AM
    Just curious - why do you want to stop working so early if your wife is still going to be out all day?

    Wouldn't it be better to stay employed - even if it's only part-time - rather than spending nine long years short of money and at home alone (unless your pension and her wages are going to fund lots of activities to keep you busy).
    Originally posted by Mojisola
    I think like most when I say retirement I mean a chance to do certain things that were hobbies up until now as actual potential earners. I already do a couple of things now which earn me a few pennies but if had more time doing them they could earn decent money and I enjoy them.

    On our projections we would not be short of money so that would not be the issue and I am not a career person so am quite happy where I am at the moment so once money is not a factor anymore at 55 when predicted I would no longer want to work for someone else even if it meant keeping the higher wage.

    You raise a good point in the potential 9 years at home thing and that is why rather than me working longer we are looking at my wife retiring earlier and if have the means to start providing for that now then that would be our favoured option.
    • Mojisola
    • By Mojisola 10th May 18, 11:45 AM
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    Mojisola
    I
    On our projections we would not be short of money so that would not be the issue and I am not a career person so am quite happy where I am at the moment so once money is not a factor anymore at 55 when predicted I would no longer want to work for someone else even if it meant keeping the higher wage.

    You raise a good point in the potential 9 years at home thing and that is why rather than me working longer we are looking at my wife retiring earlier and if have the means to start providing for that now then that would be our favoured option.
    Originally posted by Noobie2011
    I agree with that - we spent years self-employed and being your own boss is great!
    • atush
    • By atush 10th May 18, 11:59 AM
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    atush
    Our biggest headache at the moment is working out how much extra we would need when I retire to potentially allow my wife to retire earlier than 55 as she will not be able to drawdown her work pension until 55 so would have to survive off my pension and any house equity which we could do but need to make sure we are not depleting it too fast and come up short later in life.
    You dont have to live on house equity at this tage, you could fill your S&S isa allowances. And use that in any retirement before pensions pay out.

    If there is a really big age gap, I would say the older one (health permitting) should work a few years longer, and the younger one to whack as much into pensions and S&S isas as possible. That way they might be able to retire at 53/54 perhaps.
    • Noobie2011
    • By Noobie2011 10th May 18, 12:00 PM
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    Noobie2011
    I agree with that - we spent years self-employed and being your own boss is great!
    Originally posted by Mojisola
    I knkw and I am sure a lot more risk is involved as ylu are 100% reliant on yourself for income but Inwoukd bet the rewards far outweigh that.

    In anything I have done to earn money outside work I have put far greater effort, passion and desire in
    • Noobie2011
    • By Noobie2011 10th May 18, 12:02 PM
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    Noobie2011
    You dont have to live on house equity at this tage, you could fill your S&S isa allowances. And use that in any retirement before pensions pay out.

    If there is a really big age gap, I would say the older one (health permitting) should work a few years longer, and the younger one to whack as much into pensions and S&S isas as possible. That way they might be able to retire at 53/54 perhaps.
    Originally posted by atush
    I do agree and think it comes down to personal choice money permitting of course and we may have different views come 10 years time but just making sure we have plans in place that can fufill either
    • Cottage Economy
    • By Cottage Economy 10th May 18, 1:09 PM
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    Cottage Economy
    Asked at work about front-loading my pension in the same way as you can with ISAs, with a view to perhaps getting a few extra sheckles from it being invested in the market longer with little effort on my part.

    The answer was not what I was hoping for but something else to consider.

    "You can increase your contributions in any particular month. If you paid over 3 months, you would be effectively paying 32% for one month. However, [employer] will only match up to 5% in any particular month.
    As the pension scheme is a salary sacrifice one, you will miss out on tax and NI reductions if you were to lump several months into one, so I would advise against doing this. It would also be impossible to calculate this way as salary sacrifice calculations are somewhat complex.

    Any pension contributions via salary sacrifice cannot take you below the National Minimum Wage, which would mean you would need to be left with a gross pay of £XXX per month.

    So in a nutshell, you could temporarily increase % but [employer] will only match up to 5%, and then you would need to leave the scheme and re-join again the next year. An alternative could be to pay 11% for 6 months and 5% for 6 months, therefore maintaining the full contribution from [employer]."


    So, is it better to get more in sooner to squeeze a few extra pounds out at a later date?
    Last edited by Cottage Economy; 10-05-2018 at 1:13 PM.
    'Save £12k in 2018' £3500/£6,000 (58%)


    "...success in personal finance isn't about mastering the technicalities. It is about mastering yourself."
    • LHW99
    • By LHW99 10th May 18, 4:04 PM
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    LHW99
    Wow! That's high! At the moment we have a 60/40 split in DH's SIPP.
    It is, and I am slowly scaling back from 100% equity, but we have been investing in shares / funds for getting on for 40 years, so have seen a few ups 7 downs. Everyone needs to select the level they can sleep at nights with, and this level would only suit a small percentage of investors I guess.
    • MallyGirl
    • By MallyGirl 10th May 18, 4:25 PM
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    MallyGirl
    Asked at work about front-loading my pension in the same way as you can with ISAs, with a view to perhaps getting a few extra sheckles from it being invested in the market longer with little effort on my part.

    The answer was not what I was hoping for but something else to consider.

    "You can increase your contributions in any particular month. If you paid over 3 months, you would be effectively paying 32% for one month. However, [employer] will only match up to 5% in any particular month.
    As the pension scheme is a salary sacrifice one, you will miss out on tax and NI reductions if you were to lump several months into one, so I would advise against doing this. It would also be impossible to calculate this way as salary sacrifice calculations are somewhat complex.

    Any pension contributions via salary sacrifice cannot take you below the National Minimum Wage, which would mean you would need to be left with a gross pay of £XXX per month.

    So in a nutshell, you could temporarily increase % but [employer] will only match up to 5%, and then you would need to leave the scheme and re-join again the next year. An alternative could be to pay 11% for 6 months and 5% for 6 months, therefore maintaining the full contribution from [employer]."


    So, is it better to get more in sooner to squeeze a few extra pounds out at a later date?
    Originally posted by Cottage Economy
    I pay enough into my pension via salary sacrifice to keep me in basic rate tax - that works out to be quite a lot in contributions. I also don't spread it completely evenly as NI is calculated differently to income tax. Income tax is an annual thing so it gets adjusted at the end of the year if you haven't paid the right amount. NI works on a pay period - possibly even weekly and then rolled up to the month, not totally sure on that. A few times a year I sal sac down to national minimum wage which means I only pay a few quid NI instead of nearly £400. It is not re-evaluated at the end of the year so that is money straight in my pocket.
    • kidmugsy
    • By kidmugsy 10th May 18, 5:21 PM
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    kidmugsy
    DH 57, me 45. We don't have children so are not bothered about leaving an inheritance.

    I will still be working when DH retires and if I retire at the normal 60/65 he will have spent the greater part of his retirement alone. He may not even be in the best of health by then. I have to retire early, 55 ideally.
    Originally posted by Cottage Economy
    That seems a reasonable ambition to me.

    ... instead of getting 50% of DH's FS/DB pension when he dies, I get a reduced sum, about 2.5% for every year between us over 10 years, so 5% less.
    Originally posted by Cottage Economy
    Is your husband's DB scheme one from which he could transfer out to a DC scheme? Has he asked for a calculation of his Cash Equivalent Transfer value?

    Drawdown pots can be inherited, annuities cannot. To maximise my income in retirement, it will have to be drawdown for both DH's SIPP and my personal pension.
    Originally posted by Cottage Economy
    That seems right.

    We have a single storey long Victorian brick barn on the smallholding. We could convert that and move in, splitting the holding down the middle and selling off the main house, rather than sell up to a small place when we can't cope with a bigger house any more. That could release some cash.
    Originally posted by Cottage Economy
    Shouldn't investigation of this idea be where you spend a large part of your energies at the moment? Could you compare it with converting the barn and letting it for a few years until you need it for yourselves?

    Would front-loading my occupational pension contributions at the start of the financial year with an employer match help build a bigger pension pot?
    Originally posted by Cottage Economy
    Small beer.

    Should I take on the mortgage alone and extend the term when my sole income can cover it (approximately 3-4 years time)? This would reduce the monthly payment, and the difference used to build a bigger pension pot ready for my retirement. Taking the tax-free lump sum at the start of drawing DH's pension would bring it down and then I can do the same when I start drawing my pension.
    Originally posted by Cottage Economy
    I don't know whether mortgage providers would object to your name being the only one on the mortgage. But it may not matter: you may find it possible to get a mortgage for the pair of you that runs until the youngest of you is 85. Or 95. See a mortgage broker.
    https://www.theguardian.com/money/2016/apr/16/mortgage-new-offer-age-95
    Free the dunston one next time too.
    • Cottage Economy
    • By Cottage Economy 10th May 18, 5:36 PM
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    Cottage Economy
    I pay enough into my pension via salary sacrifice to keep me in basic rate tax - that works out to be quite a lot in contributions. I also don't spread it completely evenly as NI is calculated differently to income tax. Income tax is an annual thing so it gets adjusted at the end of the year if you haven't paid the right amount. NI works on a pay period - possibly even weekly and then rolled up to the month, not totally sure on that. A few times a year I sal sac down to national minimum wage which means I only pay a few quid NI instead of nearly £400. It is not re-evaluated at the end of the year so that is money straight in my pocket.
    Originally posted by MallyGirl
    So you pay something every month and get X% from your employer, then every now and then you do a huge contribution and take yourself right down to minimum wage and bring yourself under the higher tax bracket?

    I have a terrible tendency to get analysis paralysis so I contacted my firm back and asked them to increase my contributions from my current 8% to 11% immediately, otherwise I will sit on this for another year wasting time. In November I will take it down to 5%, or, hopefully, find I can manage happily without the extra in my pay packet and leave it be. Who knows, this could become an annual thing
    'Save £12k in 2018' £3500/£6,000 (58%)


    "...success in personal finance isn't about mastering the technicalities. It is about mastering yourself."
    • MallyGirl
    • By MallyGirl 10th May 18, 5:41 PM
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    MallyGirl
    So you pay something every month and get X% from your employer, then every now and then you do a huge contribution and take yourself right down to minimum wage and bring yourself under the higher tax bracket?
    Originally posted by Cottage Economy
    yep. Default is 5% from me gets 10% from employer. Last year I opted for additional 80% from me for 3 months, against the usual 25% additional that I do. This year I will do something similar.
    • Cottage Economy
    • By Cottage Economy 10th May 18, 6:09 PM
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    • 4,053 Thanks
    Cottage Economy
    That seems a reasonable ambition to me.
    Originally posted by kidmugsy
    Yes, I would agree but I only have 10 years to do it and that bit doesn't feel do-able. I currently can't see how I can accumulate what I need to last the stretch.

    Is your husband's DB scheme one from which he could transfer out to a DC scheme? Has he asked for a calculation of his Cash Equivalent Transfer value?
    Originally posted by kidmugsy
    It's Royal Mail and I'm not sure about doing that given the benefits he would be giving up. Also, there is a new scheme coming in that has a guaranteed minimum lump sum benefit attached to it. It has been mooted that for postman nearing retirement this would be more than the sum they could feasibly build up via their contributions so we're hanging on to find out a bit more. Whatever the CETV is, I cannot see it being extraordinary levels of magnitude over the standard 20x. Royal Mail is too tightfisted for that.

    Shouldn't investigation of this idea be where you spend a large part of your energies at the moment? Could you compare it with converting the barn and letting it for a few years until you need it for yourselves?
    Originally posted by kidmugsy
    There are a few things standing in my way, specifically 10+ classic cars in various states of restoration We bought the place so I could have my animals and he could have the barn to finally restore some of the cars we have been accumulating under sheets everywhere. The barn is off limits for development for the next 10 years.

    Small beer.
    Originally posted by kidmugsy
    Many small beers, accumulated consistently across time, make for a happier outcome On a more serious note, I can't help but feel that my lack of financial acumen will hamper us in the future. I don't know what I don't know and that could be making a few percent difference which, over 10-20 years if investing, adds up to a lot for two basic rate tax-payers. I hoping this thread helps me 'sharpen the saw' and find that few extra percent.

    I don't know whether mortgage providers would object to your name being the only one on the mortgage.
    Originally posted by kidmugsy
    I don't know either but while we need to fix our mortgage deal every 2-3 years (we're only 2 years into a 19 year stretch), they want to take DH's income into account and that may make him retiring and dropping income difficult. It may also affect my ability to save greater amounts for retirement.

    There are only so many big things we can do before we start to erode our quality of life.

    I work from home in a job with no stress, hardly any meetings and little responsibility. I have complete autonomy as to how I do my job and touch base with my boss once a month. DH and I have discussed me going after a promotion and pay rise, but that will take me out of home, into a car and travelling to see clients as well as managing a team. I settle for doing a little bit of freelance work on the side but not so much I end up working long evenings and weekends or end up in a different tax bracket. DH has been offered promotions before but he is like me and doesn't want the stress. Managers are often moved around different offices at RM so he may end having to commute to an office many miles away from the one he currently works at, which is currently only 7/8 minute drive.

    We could - and are - going to screw down our expenses further and up our savings rate. We'll also sell off a couple of the least loved classic cars this year, which will be used to upgrade the house and add to savings.
    Last edited by Cottage Economy; 10-05-2018 at 6:14 PM.
    'Save £12k in 2018' £3500/£6,000 (58%)


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