15 November 2017

How might my spending change in retirement?

One of the hardest things in retirement planning is trying to figure out what your number is. That is, how much will you need to live on in retirement. The best place to start figuring this out is to look at your current spending. If you aren't tracking it, start now.

I don't have a budget as such, but I do use YNAB so I can look back and see what I spent each month. I have my spending pretty much under control nowadays, so I am very aware if I am having a 'spendy' moment and am able to reign myself in very quickly. Currently I have all of my four children living with me, so some expenses are inflated, but this will change over the next five years or so.

I know exactly how much I spend now, but how might my expenses look during retirement?


Rent/Mortgage

I currently rent a four bedroom house from the local housing association. I have lived in this property since 2004. Due to the lengthy tenancy, my rent only increases by a minimal amount every year, and thus the amount I pay is around half what I would pay for a similar property if I rented from a private landlord. Even when all the children have left home, I would be mad to give this house up until I felt it was the time to jump ship.

I am saving for a house deposit, which I hope to use to buy a small property in France to retire to in 2028 when I turn 55. The plan is to purchase during the next couple of years, with a mortgage, and then use as a holiday home, while renovating and when I can finally access my pension, use the 25% tax free lump sum to clear the mortgage.

Cost now: £600 per month
Cost in retirement: £0

Utilities/Fuel

As there are five of us living in our home, despite being fairly frugal with our utilities, I still pay a fair amount toward this part of my budget. All utilities come to a total of £110.62 per month. During retirement, I expect this cost to drop significantly. My plans include a log burning stove and some form of solar system set up. As I will be living somewhere significantly warmer than the UK, plus only cooking and heating for a couple in a much smaller house, I expect to see at least a 50% drop in this area.

Cost now: £110 per month
Cost in retirement: £55 per month

Council Tax

One of the biggest bills UK residents face is the council tax. I pay around £130 per month. After researching the French equivalent it appears that unless you have your exact income and value of property, it is far too complicated to estimate, so I shall, for ease, assume it to be the same as now until I find out differently.

Cost now: £130 per month
Cost in retirement: £130 per month

Food

My current grocery spend hovers around the £400 per month mark. I expect this cost to gradually reduce over the next few years as the children leave home. I do expect to be able to buy a few nicer groceries occasionally, however, my heart lies with Lidl, so I don't see myself overspending in this category.

Cost now: £400 per month
Cost in retirement: £100 per month

Misc Costs that will reduce during retirement

I can think of loads of things that will reduce when I am not in full-time employment and not running a five person household; work clothes, normal clothes, petrol costs, food at work, convenience items, kids allowances to name just a few. Unfortunately with so many changes to come, it is almost impossible to gauge the extent of these savings this far out. I am expecting that I will own a small car in France and not the mammoth motorhome which I currently zip about in which should reduce some costs, annual habitation check for one! I also expect to pay no National Insurance, tax or pension payments.

Misc costs that will stay the same during retirement

I don't expect many changes to my regular expenses like mobile phone bill and internet service. I don't have a TV and have no plans to change that. I store all information and paperwork in the cloud, so have a monthly subscription to Evernote, which I expect to continue and of course Netflix. I expect to pay roughly the same for gifts, as I do now.

Misc Costs that will increase during retirement

As I will already be in Europe, I will be taking advantage of the train services that run all across the continent to access travel to other countries, while using cheap accommodation to see all the places I want to visit. I never have been a posh hotel type of person, and I don't expect I will change now. I like cheap travel, I love the thrill of getting a bargain but I do expect to travel much more when I retire, at least for the first ten years or so, thus an increase in this category will be very likely.

With just over ten years until I reach 55, there is a lot that could, and will change. By tracking my expenses now, I can plan for the future and course adjust as the situation changes.




10 November 2017

Retirement Fund Update - October 2017



So I am better able to track my progress toward FIRE, I have decided to post an update of my retirement fund each month.

This fund is the sum total of my SIPP, Work Pension, Friendly Society Tax Exempt Savings and my S&S Isa, none of which I will be drawing from until my planned retirement. The target for these funds is £300,000, which is based on a retirement income of £12k per annum. I am saving separately for a house deposit and although that money is not part of my retirement fund, it will be instrumental in providing me eventually with a paid off house and therefore reducing the amount I need in retirement to £12,000 per year.

The aim is to keep throwing as much as I can into my retirement fund, with the biggest portion going to my SIPP, to take advantage of the tax relief. I am planning on being a non-tax payer in retirement.

Going forward, I will be tracking the totals of the above accounts, which hopefully will rise with growth and dividend reinvestment. I have input the last two months figures into google spreadsheets and come up with the handy little graph below:



The long journey to financial freedom starts here!


Although it doesn't exactly look very exciting right now, I am hoping that as the months go by, it will give an accurate picture of my journey towards financial freedom.

07 November 2017

October update and November goals

Autumn is well and truly upon us and being my favourite season of all, I have enjoyed getting out and about during October. Our trip to St Malo was wonderful and the weather in Brittany was very kind to us, I thoroughly enjoyed indulging in french food and making the most of our break away. I also spent a weekend in the van on my favourite local site, just myself and the dog during the first weekend of November. One of only a handful of campers on a very large site in the woods, at times it felt as if I was totally alone. Not for everyone I'd be the first to admit, however for me it was a blissful and totally relaxing experience, and as the heavens opened on the first night, it gave me the perfect opportunity to test out how water-tight the new skylights were. Result? Not a drop, which means I can now make a plan to start work on patching up the ceiling from the previous leak over the winter months.

Frivolous travel aside, how did my finances do this month?

Spending

As I knew I would be paying out for two weekends away, I reigned in all unnecessary spending to balance the books. The result was a pretty low spend month in total.

How much did I save in October?

Regular Saver - 500
ISA - 500
Property Moose - 50
Cash ISA - 100
P2P - 300

Total - 1450

Having said last month that I would not be saving anymore into my P2P lending, I did an abrupt 360 and changed my mind. There is no payment to my pension this month. It's taken a while to sort everything out with my new SIPP and get the new monthly payment direct debit set up, so my first payment will be going out in November.

Savings rate

For simplicity, I calculate my savings rate as a percentage of my net take home pay plus interest on bank accounts, royalties from kindle, bank bonuses (from switching to TSB this year), found money, cashback from Quidco, child benefit/tax credits, and income from any other source throughout the month. I do not add back in any pension contributions from my wages or tax relief, nor do I include growth on investments, dividends or P2P interest. I also ignore all matched betting winnings as I am still building my bank roll, I will start to include this once my total profit has reached £1000.

Savings rate as % of take home pay - 45.07%

This is the second month in a row that I have achieved a record breaking savings rate. Although my total savings were the same as last month, my income was less, so my savings rate was higher.

Matched betting income was again slow this month, due to working as much as I could and also being away part of the month and only concentrating on guaranteed profits. Not sure where I am going with this to be honest, I am finding it boring, and although it is free money, it is not passive and I can find better uses of my time.

Goals for the coming month

November will be a month of Fiscal Fasting for me. It is something I have done for a few years. During the month I try not to spend on anything unnecessary, and at the same time using up as much as I can from the fridge, freezer and cupboards to clear some space before Christmas and save some money. I have no plans for going out during the month, no trips away planned, but I do have lots of projects and stuff at home that wont cost a bean.

Reading - plenty of books on the shelf to get through
Sewing - I have made a start on the new cushions for the van, but still plenty to do
Baking - lots of ingredients to use to make goodies for the kids lunchboxes
Painting - need to finish painting the walls in the van and the hallway could do with a spruce up
Planning - need to work out the weekends I want to camp next year, plus some financial stuff too
Walking - need to hit that 10k steps a day to keep healthy during the long winter months
Gardening - not my favourite, but the lawns will need a final cut before the winter
Netflix - self explanatory. lots of good stuff on at this time of year
Christmas-ing - I will be making a list and checking it twice...

Thanks for reading!