Steel Kitten: wealth-building

Showing posts with label wealth-building. Show all posts
Showing posts with label wealth-building. Show all posts


My week of annual leave passed by all too quickly and work looms tomorrow. 

Still, I managed to get done a lot of the things I wanted too, including a trip on Thursday to David Austin's rose gardens and plant centre over near Wolverhampton. Beautiful roses and now was definitely the right time to visit, as almost every rose was in bloom. I have a ridiculous amount of photos of my favourites to pore over for ideas.




The one above is stunning - a ground cover rose called Raubritter.


This one was a lovely mauve colour with yellow centres called Blue for You. Very strong fruity scent.



And this one - Old Pink Moss - was a very close match to the rose that I found in the churchyard when scattering my mother's ashes. Again, very strong scent.

I was incredibly restrained and came away with only one rose - Blue for You.



I do intend to buy Old Pink Moss at some point. Raubritter is also a contender just for its sheer exuberance. It is ridiculously prolific - it immediately cheers me up just looking at it. David Austin does have incredibly healthy good quality roses. I've got some in the garden already. This is Gertrude Jekyll out by the back door. 






-oOo-

 
I was in Lidl's on Friday and I happened upon one of these - the £1.50 fruit and veg box. 




I'd heard about these mythical creatures on various frugal blogs but never actually seen one in the flesh. That's because I was looking in the wrong place. My local Lidl keeps them by the tills, not in the fresh produce section where I had been looking. I decided to road test one. 




Absolutely gob-smacked at the sheer amount of stuff here, especially the amount of fruit. There were  another two large potatoes that aren't in the picture because I put them to the side out of shot when unpacking. This will last us most of the week. I already had a cauliflower in the fridge so today I'm going to use all of it up by doing a large dish of cauliflower in white sauce. I'll freeze half and the rest will be for dinner tonight to go with a lamb casserole I made yesterday. I've also got a vegetable lasagne to do for the freezer to use up some aging veg so I might lose the aubergine in there, perhaps slice it up and use it to replace some of the pasta sheets. 

-oOo-

After my last post Maria asked me about the gluten free cake recipe I used. 


It’s a basic mix that I used for non-gluten free Victoria Sponge cakes but I swopped in Doves Farm self-raising flour and made up only about a quarter of what I normally do, so only 2-3oz of butter, sugar and flour, 1 egg, bit of baking powder and vanilla essence, 1oz of flour for ground almonds and the fruit sliced on top. I gleaned from the internet that the key to gluten free baking is to make it a bit wetter than you think you should so I thought in this case the fruit would add the needed liquid as it cooked down. However, it seemed to make a very damp cake and while very tasty it was thin and fell apart easily. I decided to go back and do it again, this time doubling the amount of mixture to make it sturdier. In effect I was making one layer of what would have been a Victoria sponge.


I should add I also had a plan B, which I believe is essential to successful cooking. If it didn’t work I could dump it in a bowl with some cream and make it look like a deliberate effort at a dessert. 


Good that I had that plan because it didn't work 😁


Well, it sort of worked. The fruit disappeared into the depths of the cake. I see now why sponge flans were invented. 




Still tasted lovely but I may not worry about trying to perfect this. I think this is a case of how fruit behaves in a sponge unless the sponge is baked first and you add the fruit later (i.e. a flan). 


-oOo-


I was heavily focused on financial stuff this weekend. I've worked out that to retire at 55 (in seven years) I need to have a minimum of £350,000 and we're already a good part of the way there, which is encouraging. I used Guiide and Firecalc for the basic calculations, which showed me that £350000 will give me a 91% chance of retiring without running out of money. For a 98% chance of never running out of money I need £400,000. Up until last month I couldn't see how it was possible to build this because we needed the money we had saved to cover the shortfall between Martin's former salary and current pension income. However, a combination of my recent pay increase, Martin no longer having work expenses and our reduced spending has shown me that actually it is possible. This month we are on track to pay all of the bills without touching any of our savings. Every month that the savings stay the same or increase brings my retirement that little bit closer. 


I've not included everything in the figures. Inheritances are excluded, even those we have been told we should get later this year, as to me that is an added bonus. Until that money lands in our bank account it isn't real. I have also ignored the house equity, keeping that 'in reserve'. The plan is that sooner or later Martin and I are going to downsize - perhaps 7-10 years - at which point the remainder of the mortgage will be paid off and we will have some extra cash in the bank for our retirement. If it all goes wrong over the next few years, if the markets take a heavy downturn and take years to recover, if I become ill and can't work or lose my job and can't find another, then there is always that to fall back on.


Martin and I are 10 percenters. That is, we are among the 10% of couples who have an age gap of more than 10 years. This never bothered us when we met 14 years ago, but the 12 year age gap is sure bothering me now I have to do retirement planning!

I've spent the last few months trying to get a handle on it. Along the way, I've managed to identify a number of important things to take into account as 10 percenters. I have not yet come up with a concrete strategy to work - to apart from spend less, save and invest more - so that is going to take some time over the next few months

The plan has to be based on my predicted lifespan

For couples of approximately the same age, retirement planning usually spans 30 years. Our has to span 40+. My life expectancy is 84, nearly 40 years away, and with advances in medical science I estimate that I will need to plan to live until I am at least 95. Seriously. The NHS calculate that UK women have a life expectancy of ~84 today but by 2030 - just 12 years away - that will rise to ~ 87. Yikes!

I have to retire early

Most couples make plans to retire together, perhaps do some travelling, but generally kick back and enjoy some time together. I will still be working when Martin retires and if I retire at the normal 65 he will have spent the greater part of his retirement alone and may not be in the best of health by then. Having a job working from home will help, as we can see each other every day, but going on holiday for long periods of time may not be possible while I'm still working. This means if we want to spend quality time together while DH is still fit and active, I have to retire early, 55 ideally, so we have to save and invest a lot more money 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. This means holding (allocating) higher percentages of stocks and shares (equities) than would ordinarily be recommended. 

For a man of DH's age, it is usually recommended to hold no more than 40% in equities and 60% in bonds. For me it is the other way round, in fact, I could go higher with an 80/20 equities/bonds allocation as I am only in my 40s and therefore have a longer timespan to invest in. Some financial planners suggest it is important that investing is based on the age of the younger of the couple, not the older or their conservative approach will cause 'fiscal drag'.

We may have to delay taking the state pension

In the UK, for every nine weeks you delay taking the state pension you get a 1% increase, which equates to 5.8% 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 Martin 12 years older than me, we may need to find the money for care costs, however, I may still need living expenses so we need to plan to ensure that we don't exhaust our accounts making sure he is cared for, leaving nothing for me. 

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

Yes, that's right. Being 12 years younger means that DH's firm consider me a 'trophy wife' and, therefore, instead of getting 50% of Martin's final salary occupational pension when he dies, I get a reduced sum. That amounts to 2.5% less for every year between us over 10 years, so 5% less. 

We will have to use drawdown options, never annuity

All defined contribution pensions offer you a choice when you are ready to take them; you can either use the sum of the pension pot to buy an insurance policy that pays you a fixed amount for the rest of your life (annuity) or you can choose to drawdown a certain amount of money from the pot every year (3-5% a year perhaps) Drawdown pots can be inherited, annuities cannot. To maximise our income in retirement, it will have to be drawdown all the way so I we can inherit each other's full pension pots.

I'm going to need software to work it out

This is pretty complicated stuff, requiring Excel skills beyond my abilities, so I've recently bought a monthly subscription to a site called RetireEasy. You plug in all of your numbers for  household income, pensions, savings, etc., make estimates based on how much you think they will grow over time (very tricky!), and it obligingly spits out a snapshot that tells you whether what you think you have will be enough. See that big dip at 55 in the picture above? That's the age I set for me to retire. It's telling me we won't have enough to live on after we've paid the mortgage (our mortgage ends when I'm 62 and DH 64). I either have to retire later, we have to live on less or put more money in. I have a tendency to be pessimistic in my estimates so it will probably not be as bad as that but there is no harm preparing for the worst and hoping for the best.

One thing that RetireEasy doesn't have is a monthly breakdown of income, so on the side I am filling in the gaps. I may find as my knowledge grows and I want to test different possible outcomes in our retirement that RetireEasy is too basic, but for now it has been very helpful. 



It might seem a little early for a 45-year old to be blogging about retirement, however, this 45-year old has a husband who is 12 years older than her.  When there's a big age gap and one spouse is running up to the big 6-0, retirement planning is not easy to manage.

Up until 2015/16, we had a clear plan.
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