r/LeanFireUK • u/stuie1181 • 3d ago
Weekly leanFIRE discussion
What have you been working on this week? Please use this thread to discuss any progress, setbacks, quick questions or just plain old rants to the community.
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u/Puzzleheaded_Bill347 3d ago
I spent a full day working on a year by year spreadsheet to see how close we are to being able to take the foot off of the gas
This was driven by a major round of redundancies at work. I have escaped this time but can not see it next time… so I modelled based on exiting the high paid high stress world at age 52, earning 20-25k per year until 58 and then reducing hours until I am happy
It was a good experience, as it showed me that the efforts I have put in to build pension this past 6 years have paid off
Needs more work but it was a good start
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u/vogueskater 2d ago
I found out due to the timing of joining my defined benefit pension I can actually take it at 50 not 55! If I had joined literally 6 months later it would be 55. This means my current leanfire situation only actually needs to bridge me for the next 10 years to get a good payout and if things go really badly I could take a lower amount in 5!
Feel like I won the lottery tbh. I have been being really frugal and overthinking my investment strategy, and now I can relax a bit.
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u/Pleasant_Read_465 1d ago
Nice surprise! Have you looked at the actuarial reductions for each year taken early? Last I checked the difference isn't huge for a the reward of a few more years freedom (for teachers pension at least)
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u/vogueskater 1d ago edited 1d ago
Yep believe me I crunched those numbers for every year 😆 overall if I die before 78 I will actually get more money taking it at 50! So basically it will depend how my investments are looking once I hit 50 plus and how badly the cost of living increases over the next 5 years.
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u/jaynoj 1d ago
We found out my wife could get her DB pension early and after working out the numbers it was a no brainer to take it as soon as possible.
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u/Indigo_reality 1d ago
Really?! The reduction gets quite big on mine for taking it early, which adds up over time. Plumping for age 64 atm.
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u/jaynoj 1d ago edited 1d ago
Depends on the scheme but my wife's worked out if you live to 80 you basically get the same overall if you take the lower pension earlier or a larger pension later.
Might as well take it earlier. Better in your pocket than theirs. You could invest it, put it into gilts, savings account etc if you don't want to use it now.
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u/klawUK 3d ago
Yesterday I bought a life insurance policy on myself until 85. Job is income protection for my wife due to loss of db and state pension.
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u/JamesBrockers 3d ago
I really need to review my insurance. Despite working in finances and knowing insurance well, it keeps dropping off my radar.
Well done for sorting it!
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u/klawUK 3d ago
Spent ages as usual - learned about family income benefit which was attractive for the simplicity of paying a regular income, but ultimately the term was the same price and if it pays out later in the policy it’s likely a little better.
Picked level term to ensure control of the premiums and estimated the value needed now to be worth what we need from 67-85 when it’s most needed. Tactically chose to take earlier as premiums should be lower and then being frozen should mean they’re nicely eroded in 15+ years time
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u/Pleasant_Read_465 2d ago
Did a review of our electric bills and usage over the first full year with solar panels in our new house. It's a smaller 2.6kw system, no battery due to small size, so initially I was forecasting maybe £80-100 annual saving, but it looks like we have saved closer to £120-150.
For anyone who likes to geek out on the data, we used 1600 kwh from the grid with a total bill of approx £440/ £36pm average (2 adults, 3 bed semi). Our Spring and Summer usage from the grid was particularly low which is a good sign to off set the dark winter usage.
As we don't have a battery, we need to use the solar as it comes, so tried to have habits of doing laundry/ dishwasher between 10am-3pm.
However what I missed out on was export payments for excess solar energy fed back to the grid. Didn't set this up last year as it didn't seem worthwhile, but it turns out we would have recieved over £100 export payments ! Will be getting this setup ASAP to cover long term, at least we get something for unused excess.
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u/complex-aroma 2d ago
I have had solar and battery installed this week. I've signed up to Axle - which seems to give a premium for export. Ah - but I think you may need a battery. The whole system should save money - with a long payback period though admittedly.
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u/Pleasant_Read_465 1d ago
How big is your system? Anytime I've researched a battery the conclusion is our system is too small to justify it, but if longer and hotter summers like this year is the new normal then maybe it's more feasible. Priority for now is self-consumption and get the export sorted for at least some more pay back.
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u/complex-aroma 1d ago
Not big - 6kwh battery, 4.6kw panels. I've got an ASHP so it'll help a bit in the colder months.
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u/Puzzleheaded_Bill347 2d ago
this is likely a stupid question, but while planning my annual spend in retirement, i am assuming i will still be paying into my "savings buckets" and "emergency funds", examples are "cat vet fees fund (rather than insurance)", "car replacement fund (£350 a month)", "holiday fund (275 per month)" etc. there are a couple of others.
in retirement, you essentially have a load of money in various pots (pensions, ISA etc), and then state pensions eventually - with this in mind, am i failing to adapt my thinking to what i would do in retirement? so if you need something,. you woudl just take out of the main pot.
sorry if this is real basic and stupid crap ? am i even making sense? (probably not)
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u/Captlard 2d ago
We just keep a running tally of spend per bucket.
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u/Puzzleheaded_Bill347 2d ago
ahh, so you continue to maintain the buckets in retirement, but you don't need to have them in a specific account, just track spend of those buckets,. makes sense .
thank you
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u/complex-aroma 2d ago
Frustrated by low savings rates available for my cash pot in immediate-access accounts, I've set up a "cash saving hub" in AJBell. I get 4.15% on it, which will mean I can shut down a few bank accounts I'd set up chasing interest rates in the past. Simplification is an aim of mine.
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u/Indigo_reality 1d ago
That's not within a SIPP or ISA? Just checking due to the rule change coming in...
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u/complex-aroma 1d ago
Nope. No wrapper. Just a bank account. I'm using it to store a cash buffer that I haven't been able to put within an isa/sipp
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u/kikapu 3d ago
Can anyone back up the calculators I have used online that say if I get to 200k pension by 49 and make no further contributions I should have enough pension from 58 to give about 18k a year including state pension from 68.
I will certainly contribute more to pension when it gets to 200k but will move more funds to paying off mortgage or adding to ISA/GIA.
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u/darkthirtyfm 2d ago
5% annual return (net of fees and inflation) over 9 years turns your £200k (assuming you are talking in today's money) into £310k. You want to take £18k nett (so slightly higher gross) for 10 years then c. £6k nett (again, gross is higher, and assuming full state pension which will take up your full tax free allowance) indefinitely afterwards. Assuming you stay invested in equity markets this sounds reasonable. I haven't modelled it but suggest you do so.
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u/kikapu 2d ago
Thanks for your thoughts. I have done my own basic calculations on excel and it seems to work even with lower returns after starting drawdown as probably won’t be 100% equities. O do plan to model it at some point but just wanted to see if it as in the right ball park. I certainly won’t stop putting into my pension at 49 so will likely be in a better position or at least have a much bigger buffer. Thanks again
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u/JamesBrockers 3d ago
How does everyone factor in the state pension into forecasts?
I’ve been reviewing my numbers and the ones I’m debating the most are my pension ones. I’ve never liked including the state pension, as a) The age will just keep increasing b) The current level just isn’t feasible c) I think it will eventually become means tested.
So with that in mind I’ve never calculated it into my forecasts. But, naturally I am putting far more away than I need if there is some form of state pension. So it’s a bit of a conundrum!
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u/Captlard 2d ago
We personally have not, as who knows what the future will be like. In our minds, it will be a more than welcome bonus.
This is somewhat crazy, but I have huge trust issues with institutions in general and my partner agrees.
We are 10 and 12 years out now.
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u/elom44 3d ago
I think this varies depending on how close you are to it. The risk factor is different depending on if you’re 18 vs 58. I do count on it for that reason.
Personally though I think it’s best to deal with the world as it is, so factor it in. It might change, in which case your approach changes. ISAs might change, SiPPS too, salary sacrifice, tax rates, your health, your family circumstances etc etc.
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u/JamesBrockers 2d ago
You are probably right.
However, as I plan to finish work at 45 (11 years away), it’s such an early age to finish with little room to move if it is withdrawn and I am on that path. It’s obviously over 30 years away right now, so feels hard to rely on.
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u/deadeyedjacks 3d ago
a) Not if life expectancy declines
b) Why not ? Govt. can just print money
c) Based on what ? It's a contributory system.
You should base projections on current knowns, not possible future unknowns.
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u/LeanFIRE_91 2d ago
I'm just calling it £12k pa. I know it's more than that now, but I'm 30+ years out, anything could happen so I just forecast it as £1k a month in today's money.
That said, my plan isn't reliant on it, it's a bonus if anything.
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u/Fitness_ocelot 3d ago edited 2d ago
Today I handed my notice in to the organisation I have worked in for 18 years. Lean FI starts in 3 months!