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  • FIRST POST
    • Cruixer
    • By Cruixer 9th Nov 18, 11:01 PM
    • 24Posts
    • 6Thanks
    Cruixer
    What now?!?
    • #1
    • 9th Nov 18, 11:01 PM
    What now?!? 9th Nov 18 at 11:01 PM
    I'll admit to feeling a little guilt about discussing something as though its a problem when so many people are struggling just to get by, or to get on the property ladder etc, but here goes.

    Its not as though I was born into wealth and my first job was an unskilled factory worker, but a combination of continually upgrading my education, reasonably frugal living, the ability to do almost all home maintenance myself, and a period of renting out instead of selling houses when I moved area because it was a bad time to sell have led me, or more accurately us, to where I am now. In the last couple of years we sold our respective previous homes which were rented out, so that we could pay off the mortgage on our current home.

    I am 46, we are both earning around 50k, have around 60k in the bank left over from our recent sales, still have one of my previous homes rented out overseas with the rent covering the mortgage which I think will be paid off in around 10 years. We are in the house that we expect to stay in until we are of an age that we need something smaller. My wife has a company car, I got rid of my car a few years back and don't really want another, with a 4 year old we don't go out much so our expenses are minimal.

    Its all come together financially in the last year and I am definitely not complaining, but I have found myself a little confused about what comes next. At what point do you consider yourself financially independent? Should I change my lifestyle and start spending more money, or should I give up my job, or go part time and have more free time? With the mortgage gone I am not really sure what my financial goals should be now!

    Interested in peoples thoughts.
Page 1
    • BoGoF
    • By BoGoF 9th Nov 18, 11:06 PM
    • 3,608 Posts
    • 2,966 Thanks
    BoGoF
    • #2
    • 9th Nov 18, 11:06 PM
    • #2
    • 9th Nov 18, 11:06 PM
    Give up your job at 46 with 60k in the bank.....are you serious?

    What's your pension position?
    • Dazed and confused
    • By Dazed and confused 9th Nov 18, 11:32 PM
    • 3,192 Posts
    • 1,591 Thanks
    Dazed and confused
    • #3
    • 9th Nov 18, 11:32 PM
    • #3
    • 9th Nov 18, 11:32 PM
    still have one of my previous homes rented out overseas with the rent covering the mortgage which I think will be paid off in around 10 years.
    You might need some of the 60k to pay the extra tax you are likely to have to pay now mortgage loan interest is being phased out as a tax deductible expense.
    • kidmugsy
    • By kidmugsy 10th Nov 18, 12:04 AM
    • 12,046 Posts
    • 8,498 Thanks
    kidmugsy
    • #4
    • 10th Nov 18, 12:04 AM
    • #4
    • 10th Nov 18, 12:04 AM
    What's your pension position?
    Originally posted by BoGoF
    Plus your wife's. And if your wife is under 40 has she got a LISA?

    Have you got your insurances all in place? I don't mean trivial things like warranties and vet's bills, but life insurance and permanent health insurance.
    Last edited by kidmugsy; 10-11-2018 at 12:07 AM.
    Free the dunston one next time too.
    • jennyjj
    • By jennyjj 10th Nov 18, 12:05 AM
    • 316 Posts
    • 401 Thanks
    jennyjj
    • #5
    • 10th Nov 18, 12:05 AM
    • #5
    • 10th Nov 18, 12:05 AM
    Ok. Things look pretty good, but what you describe is a few years away from a life of riley. When you have liquid assets that will support your current lifestyle for a few decades, you'l be a bit closer.
    Watch out that second home doesn't mutate into a liability.
    • Cruixer
    • By Cruixer 10th Nov 18, 8:40 AM
    • 24 Posts
    • 6 Thanks
    Cruixer
    • #6
    • 10th Nov 18, 8:40 AM
    • #6
    • 10th Nov 18, 8:40 AM
    Thanks for all the comments.

    I should have been clearer. I didn't really mean give up my job now, or certainly not both of us giving up our jobs, but we did consider one of us reducing hours to be able to spend more time with the little one. I was thinking more about what the financial goal should be, because I am in uncharted territory now, having been focussed for decades on paying off the mortgage


    So I was seeing the second home as an investment rather than a liability, although I suppose any investment could become a liability. Currently the rent is high enough to offset any issues, its in a commuting area on the edge of Dublin. Would I be better to work towards selling this and putting the money into something else, if so what else?


    Wife is also too old for a LISA. Life insurance is tied into work for both of us, and to be honest I am not sure why I need health insurance with the NHS, although maybe I am being overly hopeful of its future!



    I guess what I am saying is, now that I have finished putting everything into the mortgage I am not sure what my financial strategy should be. I suspect we could live entirely off part of one salary, so what should I do with the rest of the money. Even the best bank interest rates seem to run below inflation. Should I be thinking about ISA's, but the cash ones also seem to have very low interest rates, so is it stocks and shares ISA's?
    • BoGoF
    • By BoGoF 10th Nov 18, 9:35 AM
    • 3,608 Posts
    • 2,966 Thanks
    BoGoF
    • #7
    • 10th Nov 18, 9:35 AM
    • #7
    • 10th Nov 18, 9:35 AM
    You still haven't said what pension provision you have. Paying off the mortgage may give you a warm glow but it doesn't provide an income in retirement.
    • Spreadsheetman
    • By Spreadsheetman 10th Nov 18, 10:02 AM
    • 155 Posts
    • 165 Thanks
    Spreadsheetman
    • #8
    • 10th Nov 18, 10:02 AM
    • #8
    • 10th Nov 18, 10:02 AM
    You still haven't said what pension provision you have. Paying off the mortgage may give you a warm glow but it doesn't provide an income in retirement.
    Originally posted by BoGoF
    This. What is your plan?
    • kidmugsy
    • By kidmugsy 10th Nov 18, 10:11 AM
    • 12,046 Posts
    • 8,498 Thanks
    kidmugsy
    • #9
    • 10th Nov 18, 10:11 AM
    • #9
    • 10th Nov 18, 10:11 AM
    I am not sure why I need health insurance with the NHS
    Originally posted by Cruixer
    Aaaargh! PHI is insurance to replace your earnings if you become too ill to work.
    Free the dunston one next time too.
    • Spreadsheetman
    • By Spreadsheetman 10th Nov 18, 10:25 AM
    • 155 Posts
    • 165 Thanks
    Spreadsheetman
    Aaaargh! PHI is insurance to replace your earnings if you become too ill to work.
    Originally posted by kidmugsy
    Yes, that is a very significant risk for people planning to work to SP age. I used to have PHI, but stopped it once my early retirement plans had progressed to the point they made it unnecessary.
    • Kynthia
    • By Kynthia 10th Nov 18, 10:41 AM
    • 5,343 Posts
    • 7,446 Thanks
    Kynthia
    Both my OH and I work 4 days a week so that we can spend more time with our children. That could be something to consider and would still leave you with good incomes.

    Life insurance and PHI would be a good idea. Maximise your pension provisions and if you have DB work pensions consider a private pension/SIPP to give you the freedom to retire earlier than state pension age or have lump sums for large expenses during your younger years of retirement.
    Don't listen to me, I'm no expert!
    • crv1963
    • By crv1963 10th Nov 18, 10:50 AM
    • 535 Posts
    • 1,151 Thanks
    crv1963
    As said previously- pension planning, with a 4 year old expense still to come as they get older the presents get smaller in packaging but no less expensive in my experience!

    Look at maybe both working reduced days? Pensions and then look at retiring before SPA? Do you want to do what you do now for the next 22 years?
    CRV1963- Light bulb moment Sept 15- Planning the great escape- aka retirement!
    • sandsy
    • By sandsy 10th Nov 18, 10:52 AM
    • 1,400 Posts
    • 856 Thanks
    sandsy
    Your financial goal now should be reviewing your retirement provision. What pensions, past and present, do you both have? Do you have any idea when you'd like to retire and how you'd like to spend that time?
    • Cruixer
    • By Cruixer 10th Nov 18, 12:02 PM
    • 24 Posts
    • 6 Thanks
    Cruixer
    Ok, so I am clearly annoying one of two people with my ignorance. This is because up until now I have not paid any attention to investments or pensions because I have always believed the first priority was to pay off the mortgage.



    I did mention that my pension was tied to work. It has recently been changed to tie it to the state pension age, so I don't have an option of reporting early from this. I have been a passive participant to now but I need to learn more about it and probably maximise my contributions. I also have life insurance through work. I'm not a big fan of insurances to be honest, not really convinced of the value of this, although I am sure many world disagree with me.



    I suppose part of the problem is that I don't know what I want to do or when I want to retire, and what I would do if I did retire. I would like to have a time off now to do everything I want to do in the house and garden and if I could take a sabbatical from work I'd definitely do that, but it's not really an option just now.


    I think the short term is probably about maximising pension contributions, and filling up the isa allowance before the end of the tax year. I have most of the money in the Marcus account now, but think I probably need to start inserting that into longer term investment. In the medium term I need to think about a longer term plan.
    • BoGoF
    • By BoGoF 10th Nov 18, 12:46 PM
    • 3,608 Posts
    • 2,966 Thanks
    BoGoF
    As a higher rate taxpayer (based on the few facts available) your priority should have been mitigating any higher rate tax liability before overpaying any mortgage.

    The problem you seem to have is you have no end goal at present. Until you sit down and work that out then it is difficult to give advice.

    Do you get pension forecasts from work?
    • BoGoF
    • By BoGoF 10th Nov 18, 12:47 PM
    • 3,608 Posts
    • 2,966 Thanks
    BoGoF
    Meant to add, having that money in Marcus is devaluing that money due to inflation.
    • Kynthia
    • By Kynthia 10th Nov 18, 12:58 PM
    • 5,343 Posts
    • 7,446 Thanks
    Kynthia
    You need to plan what would happen if one or both of you died as well as your future retirement. Plus understand what it is you already have so then you know what you need.

    Do you both work for the NHS with DB pensions? Have you looked at what each of you will have to live on if the other dies, as my DB pension only pays my spouse a third, is that enough. If either of you died now how much would it pay out as death in service and is that enough to meet the family's needs. If you die before retirement age you spouse will get a pension to help with living costs but if you both die leaving your child the person raising them doesn't get that pension there's just the child pension until adulthood, is that enough? If one of you became too sick to work and maybe needed care what would your income be and would that be enough?

    It's just lots of scenario planning now. I'm in a good place financially, both work part time, and have taken out life insurance on top of our death in service amounts to ensure there's more than enough for the surviving partner to focus on the children. I've just started a SIPP and a S&S ISA to maximise savings and allow earlier retirement than SPA. I need to now consider PHI as we can afford to protect ourselves should we become sick long term. It takes time to learn all tgese things but just keep reading this forum and you'll learn lots.
    Last edited by Kynthia; 10-11-2018 at 1:08 PM.
    Don't listen to me, I'm no expert!
    • Happier Me
    • By Happier Me 10th Nov 18, 1:08 PM
    • 449 Posts
    • 1,008 Thanks
    Happier Me
    I think your next step is to get up to speed with both yours and your wife's pension arrangements. Do you have DB or DC schemes or a mix of both? What are the value of any DC schemes and how much do you and your employers contribute? If you have DB schemes, how much will they pay out and when and what is the actuarial reduction if you access these early?

    I would also have a read of The Number thread on here. In order to plan for retirement... understand you pension savings gap... you need to know how much retirement income you want as a couple and when you want to retire.

    When you know your number and you how much you have/are on track to have in pension savings you can start to work out how much extra you need to save for retirement to fill any gaps.

    This is all about finding a balance that works for your family. You're in a similar situation to me (I'm a little younger, mortgage free, we earn closer to 40k each), no rental property but have some guaranteed passive income... I work less than four days a week for work life balance, hubby is still full time through choice, we know our retirement income number - 30k after tax, ideally from 55, though I'm considering increasing this to 35k per annum... and I know the gaps I have to address in our pension savings. I know we can afford to address these gaps, whilst having a bit of a life and it sounds like you're in a position to achieve something similar.
    • crv1963
    • By crv1963 10th Nov 18, 1:11 PM
    • 535 Posts
    • 1,151 Thanks
    crv1963
    Ok, so I am clearly annoying one of two people with my ignorance. This is because up until now I have not paid any attention to investments or pensions because I have always believed the first priority was to pay off the mortgage.



    I did mention that my pension was tied to work. It has recently been changed to tie it to the state pension age, so I don't have an option of reporting early from this. I have been a passive participant to now but I need to learn more about it and probably maximise my contributions. I also have life insurance through work. I'm not a big fan of insurances to be honest, not really convinced of the value of this, although I am sure many world disagree with me.



    I suppose part of the problem is that I don't know what I want to do or when I want to retire, and what I would do if I did retire. I would like to have a time off now to do everything I want to do in the house and garden and if I could take a sabbatical from work I'd definitely do that, but it's not really an option just now.


    I think the short term is probably about maximising pension contributions, and filling up the isa allowance before the end of the tax year. I have most of the money in the Marcus account now, but think I probably need to start inserting that into longer term investment. In the medium term I need to think about a longer term plan.
    Originally posted by Cruixer
    I don't get the impression you've annoyed anyone.

    Not knowing what you want is not a crime either. You know what you'd do if you had time off now though so there's a start. We looked at what we do for a living and what we'd rather be doing. Maybe sit down with your other half and talk about what you would like retirement to look like? Saving is good but if you don't have a purpose for it then it's just as easy to turn the savings tap off.

    Maybe it is a good idea to aim for retirement before SPA? 57 or 58? Leave the works pension until the Scheme RA? Save for the difference between going at 57 or 58 and when the pensions start? Have a look at a few threads on here and elsewhere, if you want to retire at SPA great for you. Many strive to go earlier, goals are clearly personal I want to go before or at 60, Mrs CRV at 57. One of my sons goal is 45.

    Work out a few things- how much retirement income do you need?
    How on target are your savings? Then work backwards, factor in expenses like cars and holidays not just living expenses. Do you or your spouse want to travel? Do either want to change career?

    Look at your child, do you want to have more children? Time and memories are gifts for our children, we spent weekends doing stuff, getting experiences together, did all the football/ rugby/ school club stuff, often just being taxi and supporter. Holidays with grand parents etc.

    Don't limit yourself, no one earns 50k without a degree of stress, I didn't think I was stressed at all, loved my job until health intervened, heart attack at 53- fully recovered now but I have changed my priorities, personal and professional and yes my driver for going by age 60.

    Your 60k is a good back up fund, have 12 months expenditure as an emergency fund, then look at building a pension fund/ savings that can allow you to retire earlier- just because you can doesn't mean you have to. Knowing you can go changes your approach to work- I could give 3 months notice and take my work pension and it allows me to have the freedom to enjoy my new job even more. I don't go because "we" are not ready as in I don't want to retire without us both going. Choice is maybe what you should have as your savings goal?
    CRV1963- Light bulb moment Sept 15- Planning the great escape- aka retirement!
    • sebastianshaw
    • By sebastianshaw 10th Nov 18, 1:17 PM
    • 4 Posts
    • 1 Thanks
    sebastianshaw
    Set the new goal and work for your dream - that's my response
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