Big long sums with lots of pencil sharpening – Day 12

 Hi everyone,

I thought I would carry on where I left off yesterday. I have been thinking of retirement and how I will afford it. I’ve also spent the day pondering why I hadn’t done anything about it earlier! My years of at home mothering were about affording shoes, lighting, food and certainly not about fencing lessons when I’m elderly. I’ll just have to forgive myself for what I didn’t do before and congratulate myself for actually doing something to prepare for the future.

I’m 45, which means I’ve lived longer than I’ve got left to live. My parents are 72 and have recently become ‘old’. Mum’s knees are gone and she hobbles about, she’s had surgery and then in true sod’s law style, the other one has given up too! Dad can’t hear a nuclear bomb going off unless he has his hearing aids in, they are getting forgetful and both of them are ‘slowing down’. They both worked past 65 and I’m sure that’s one of the reasons, or the biggest part of the reason that they are emotionally, physically and spiritually knackered. The grindstone literally wore them away. Mum still has to do some work, the joke being is that she cares for the elderly!

I do not want the future if it’s going to be like that! I want it to be like the denture fixative advert, where the glamorous, but grey haired couple are smooching romantically at the water’s edge munching on apples with their dentures going no where! I want to do yoga, be the loud one at the WI, show flowers at the local show and enjoy life. I’m going to have to retire early to do that and not wait until I’m too soddin’ tired from working until I’m 65.  Due to my contemplative mood, I’ve had a day of numbers.

 I’ve been onto my pension provider website and have discovered that if I work for twenty years, then I will have a pension of approximately twelve thousand a year, and reading DB’s pension statement and projections, he will have a similar pension. If we both get a state pension of five thousand pounds each a year, then we should, by today’s standards, be OK. However, those are the financial projections that most would be retirees work under, but, we don’t know what the future holds.

Then my day became about a whole variety of equations, probability and number sequences. I have a good amount of options that I can and must consider whilst I: have a job and I’m well enough to do it. I can stay where I am and after I have paid off debts, pay off a huge mortgage by snowballing my monthly debt payments into my mortgage. I would then pay off my mortgage in ten years (after debt repayments) and be mortgage free at 57 and able to retire slightly early. I would then have a ‘pot’ of money in a huge house that I could then sell and live off until I have my pension to live on at 65. We could have yet another financial collapse and my ‘fund’ could dwindle to the point of worthlessness. It might work but nothing is guaranteed.

I could also sell the big house, downsize to a much smaller house, pay off the much smaller mortgage and buy an extra two and a half thousand pounds of pension at £290 a month for ten years, which is beneficial if I live to be at least 85!!!  I then could live very creatively and frugally whilst I had the energy and ‘youth’ and find myself a part time job that would give me just enough to live on but time to really live.

Paying extra money to my pension is a fantastic return, if I live long enough to enjoy it. Effectively, I would put £34.8K in and get £50K out over a 20 year period from saving extra into the fund now. What ever we decide might work or might not. My dad’s ‘company pension’ seemed a wonderful amount of money when he was younger and had it to look forward to, when he actually got it, it didn’t seem all that much.

Parts of being older are cheaper. No need for commuting costs, work clothes, the mortgage is paid and you have more time to make or grow what you need. It’s also becoming increasingly expensive. Hearing aids are over £1000 each, disability adaptations are expensive and personal care can eat almost all of your income. When we think of retirement, we imagine gardening, leisure time and freedom. I can see my parents needing care any day soon and they won’t have enough money to pay for it and then the choices of where they live and who looks after them will not be of their deciding.

I said yesterday that you can’t have money at both ends of your life. If you spend it whilst you are young, you can’t have it when you are retired or the other way round. I’m not worried about my finances when I retire, I can’t, it’s not in my hands as I can’t see into the future. I can do what I can to ensure I have a paid for home, that I don’t have any debts and I’m as financially astute and prepared as I can be. One thing is for sure though, if we want to retire at all, then we have to be mindful of preparing for that now. Most of you who read my blog, are of a similar age to myself. You, like me, pay towards your pension every month, and think or as in my case, hope it will be enough. Now that I’ve learnt to budget carefully, to save judiciously for dental or car costs. I’m imploring anyone out there who’s not yet convinced that you have to make a real change to your life. I’m not a nag by nature but I’ve said this before. It is no longer the time to be the frugal voyeur but to live carefully, sustainably and frugally as the future has to be paid for somehow.

I hope I haven’t driven anyone away with my pondering today, I will as ever be back tomorrow. Oh, it’s day 12 and I still haven’t been shopping!

Until then,

Froogs xxxxxx


35 thoughts on “Big long sums with lots of pencil sharpening – Day 12

  1. Yup! It's a lot to think about. I don't want us to spend our 'retired' years with hubby and me watching over our shoulders each time we go down the stairs in case the other one trips us up because they need the life insurance money to live on!
    Jane x


  2. Retirement: You really need less clothing, but you will want to get out and play more. When you are working, that becomes a huge part of your social life; in retirement, you have to get out and find it.
    So, less clothing, more outside activity.
    You don't become doddering when you hit your 60's. Trust me on that. I think this is the best decade of my life.
    Think about a part-time job you might want to do when you retire. Just realize that you will have hours and hours to fill, and a little part-time job will keep you in play money, get you out of the house, and give you some relief from the hubs.
    Retirement is awesome. It's the time of your life to get creative and do whatever you want. The challenge is making it as wonderful as you can.
    PS. I'm retired for 4 years, started an online dyeing business 3.5 years ago, and am thoroughly enjoying myself. Yep, the body ain't what the body was. So? Who cares.
    Off my soapbox. Just trying to encourage you. It's a great time of life.


  3. Im not sure how old you are but you look very young and vibrant in your beautiful picture on this post. Im only 22 but I read your blog daily as the time is coming for when I leave home and have to face the big wide world of not having everything given to me. its a scary thought and your blog is helping me get ideas of how to save every penny!


  4. I have found your post on retiring really interesting. I am retiring early this summer at the grand old age of 55. I won't get any state pension until I'm 66 or older if things continue as they are at the moment. I'm taking out the maximum lump sum so that the mortgage can be paid off, and several repairs done around the house, This will leave me of a pension of approx £7800 but would have been approx £9800 if we didn't take the larger lump sum [ but more tax would be paid on this amount]
    If I continued to the usual retirement age for teachers then I'd get approx £13,000 but that would mean continuing for another 5 years in a job that has increasingly got more and more stressful.
    My husband isn't in teaching but also has a stressful job. The intention is that he will work until 66 [ 14yrs time ]. My job will therefore be keeping the home going, cooking , gardening and taking all the domestic pressures off him.
    My health isn't brilliant but I believe a lot of it is due to work. Our hope is to achieve a better work/ life balance for both of us


  5. Hey Froogs,
    Your last few posts have hurt this hobbit's tiny brain, but you really opened my eyes and made me think it's time to carefully go over my finances with an eye on the future. Oh and yes I guess I fit nicely into your average readership age 45 years young, doesn't time fly?


  6. Thank you for todays post, I have just read it and had a bit of a de ja vu moment. I went through the similar questions to myself a couple of years ago. I don't have any pension at all, the only thing I will get is my OAP at 65 or even 70(it was 60) whatever the powers that be decide on at the time. We decided to pay off the mortgage and debts and try and live off half my DH's pay and save the rest. We knew when he retired that his private pension would be half pay and we soon learnt to manage. When he was offered early retirement (55) he took it and we pulled our belts a bit tighter. Its three and a half years now and we still say we made the right decision, the quality of life is so much better and I feel really lucky. I know everyones circumstance are different but I'm sure you will choose the right option for yourself.

    Well done on the no-spend, 12 days is amazing, I'm full of admiration for you. Going to make your pasties tomorrow and hope they will look as delicious as yours.

    Enjoy your day x


  7. And Hi Ruth, I certainly want to enjoy my 60's, unlike my parents who both worked until they were 65 in Dad's case and full time until 70 in mum's case. My mum and dad will not have enough money to pay for care and will have to sell up and leave their home to pay for it. I want enough money to choose where I live and not have that determined by what I can afford. Everything gets more and more expensive, yet their income stays the same and in fact reduces as it doesn't keep up. Mum has had to work until she is too tired and arthritic to enjoy her retirement, she can't afford a car and can't walk far to the bus and is becoming trapped in her own home. That's not living, that's an existence. Not all people live beyond 70ish and both my grandparents died in their early 70s. I want to retire as early as I can to enjoy my health before I lose it. I also started an ISA today!!!


  8. Your topic is timely. . . My husband just turned 47, but he is eligible to retire next year after 20 years of service in law enforcement. He will not be able to collect a pension until he turns 50. He can stay on the job for more years if he wants to, mandatory retirement is 60, but with the economy being what it is, and talk of freezing federal salaries for another 3-5 years, he just informed me last night that he is seriously thinking of retireing next year and getting a private sector job.

    Don't know what the future holds,but I consider us lucky that we do have the assurance of a pension for the rest of our lives. He is so close to retirement, whatever the government decides to do in the future, I have faith that his pension payments will be grandfathered in. I do empathize with those who do not have the guarantee of a government pension, or a little bit of other retirement savings put aside.

    That is not to say that we feel assured of our future. With the economy going the way it has been, the future looks bleak for everyone. We all need to pay off debts and save, conserve, reuse, and do whatever else needs to be done!


  9. Froogs- it all depends when you started teaching. If you started before 2007 the retirement age is 60 but if you started after 2007 it is 65. I am however taking early retirement which you can take from the age of 55 [ it used to be 50]. This means your pension is reduced. When I retire in the summer I will have been teaching over 21 yrs.
    I want to have time to spend enjoying my life before I get too old. I have so much I want to do, that I still think I will find that I haven't enough time.
    Because of the restrictions with time off when teaching it will mean we can go to festivals over long weekends and not worry about getting back Sunday nights.
    I do intend to do a little private tuition to supplement my income


  10. i have just started thinking about this, I am almost 34, have been teachign only 8 years a a fewof these part time, so my pension is virtually worthless, so I will have to get a private pension, if when I can afford to.


  11. You're thinking the same thing I am, FQ…I'm less than 5 years away from when I can retire from my job, and I'm looking at ways I can save, save, save (garden, chickens, etc.) and ways I can cut back/downsize/do without. I'm looking forward to seeing more of your ideas 🙂 hugs!


  12. As you say, nothing is guaranteed. You can only do what you think is right at the time. My Dad worked for 40 years ( he was bright but was forced to leave grammar school at 14 to go and work down the pit), went to work in the Middle East to pay off the mortgage when he was in his 40s and saved for his and my Mum's future. Unfortunately, he didn't get to enjoy his retirement, in fact he didn't even get to retire. He died at 55 of a massive heart attack.His death changed my life in more ways than I could ever have imagined.Life is so short and so fragile – brought home to me again when I was diagnosed with a heart condition at 44 when I was in the final year of my teacher training. I got my degree but not my QTS- my final teaching placement and the money I could have earned as a teacher were less of a draw than a stressfree life. Luckily, we have never had a large income so being frugal is second nature, but we are moving house next week so will be mortgaged until J is 65- spare money will be thrown at the mortgage, but not at the expense of 'living'.My dad put things off until tomorrow but for him and my mum tomorrow never came.


  13. Hi FQ
    Lots to think about with this post, the one thing that I think is unfair is that all the people who have paid religously into their pension pots will not be able to draw any oap benefits due to the amount that they receive from their private pensions and yet those who have refused to work will receive the state pensions and then benfits on top – it doesn't seem fair. My husband only receives a small private pension and he will receive the state pension when he retires from work in 3 years time, our income then will drop by one third, I have no choice but to continue working till I retire at the age of 66 and then my private pension will just be enough to stop us from receiving any oap benefits as our income will drop to just above benefit level – this will mean a very poor old age even though we've worked hard and paid into the system.
    Sorry for the moan – Best Wishes and well done with the challenge


  14. Government recently announced that by (I think) 2015 everyone of state pension age will receive £155pw – that's over £8K pa, no matter their personal entitlement, and have also said that the amount will be reviewed before 2015 and annually thereafter so things will be better for you than for folk already retired as the new amount will only apply to those who newly retire.


  15. Retiring in the UK – the tax position changes once you are 65 and you get a higher personal allowance, so you keep more of your money. There is no National Insurance to pay once you are not working, so again you keep more of your money. Later on, if you need care, there are attendance allowances at basic rate (and higher rate if you need more care). Also, don't forget Pension Credit for those on a low income with few savings. And Council Tax paid too for low income pensioners.
    And Winter Fuel Allowance for all, and free tv licence at 75. Bus passes too, if those continue.
    If you go away every now and again, you can get deals midweek and out of season, through vouchers and coupons. On coaches and trains, there are over 55's deals.
    All a help!
    Good luck – all these calculations make the brain ache!


  16. Hi Froogs
    I am 49 already and I think I can take another 11 years of work. My pension, if I hung on until 65, would be fantastic but I am definitely prepared to make the move to 60 and lose all that extra. Work life balance is going to be life life balance i hope. Too many people dont get to enjoy their old age but it is my ambition to do so. Mum and Dad are in their 80s and going well so hopefully they gave me the same genes.


  17. My darling parents saved religiously for retirement – dad died age 60 and 8 days, mum age 64. They never got to travel or to the bungalow with the garden they'd always dreamed of.
    We had been living over our means, but now within, and with careful planning, as Man Wonderful is at retirement age while I have 20 years yet to go. As long as we have love and fun each day we can manage on what we have, and will live in a shed if we have to. FM x


  18. Froogs, we are both teachers, hubby is 53 and hoping to retire on reduced pension at 56 (30yrs pension). I'm almost 43 and have been teaching 18 yrs so far, some part-time and I'm hoping to retire early at 55yrs also on a reduced pension as hubby will then be 65 yrs old. We are hoping to pay off the rest of the mortgage when hubby retires in 3 years time and will just live within our means and probably downsize when I finally retire as our girls will be 27 and 23 by then. Life is too short and we want to be healthy enough to enjoy the latter part together.
    When you go on the TPS website type in your figures in the actuarially reduced pension section and you will be able to see how much you would get at 55years. Of course this may change again after Hutton's report as the Government seem to be making up their own rules as they go along!


  19. What a wonderful post! My husband and I are already retired and every point you brought up should be thought about by everyone. Even though I am an American, the same thing is going on here. Retirement moving further and further away. Health benefits are being reduced and many, many people are underwater on their home mortgage. They can't sell even if they need or want too. The future we worried about is here. Your blog is showing us all the way. You are the light in the dark. Keep it up. Your posts aren't depressing, they are interesting. And the comments are first rate too.


  20. Wow….lots to think about in these comments. But I think what comes over loud and clear is that time is most definitely more important and more valuable than money. As long as we have enough to survive reasonably comfortably, we shouldn't put things off and just plan for the future.

    I had a friend who lived each day to the full, paid off all her bills as and when they arrived and never planned for a retirement, she had the right idea, she died suddenly aged just 46, but she had lived life to the full and enjoyed herself, that was and is my only consolation.

    Time with our loved ones is precious and is to be treasured. In my opinion you should never put money before this. A long frugal, but happy retirement is surely preferable to a short extravagant one.

    Sue xx


  21. That's a beautiful photograph. You could always be a model!

    I took 'early' retirement, ie voluntary redundancy just before I was 65 when I would have had to leave with nothing (I never took pension option there as I was not going to stay that long) Instead, I got to stay at home all night being paid for it, for 3 months, as I worked a night shift. A no brainer that was.

    I 'downsized' my salary from being 56 when I was made redundant from a well paid job, then did it again. You do get used to it but it hurts when you find old pay slips and see how much you were getting towards the latter years!


  22. your right, you cant have money at both ends of your life. Having grown up with parents that spent everycent they earned, and didnt plan I decided to be different. We paided our morgage off about 18 months ago and now we are busy putting away a nest egg for our future. Because of this we still live the frugal way we always have and dont have much to splash around. But at least when hubby retires we will be able to do some of the things we always wanted too.


  23. Hubby and I are both 50. He retired a few weeks shy of 48 by “buying time” in his pension. I quit work awhile so we could travel a few years; now I hope to stay home. We'll have to get more and more creative as the years go by if his pension doesn't keep up with inflation. Rather than wait 'til that time, I practice frugality now and look to blogs like yours for fresh ideas and support in this lifestyle. Thx for sharing–love today's pic of you, FQ!


  24. FQ, your last 2 posts really hit home. I definitely did squander money in the early part of my working life and also in the middle!

    Got me thinking about what use designer handbags and shoes will be when I'm old and trying to heat my home to stave off hyperthermia.

    Time to find that pencil and do a few sums of my own. Thanks FQ, a timely reminder and a much needed one too.


  25. I feel relieved to be mortgage free at 53, but it does nto make life any less uncertain as we now have to make sure we pay into retirement funds, maintain insurances and abandon many dreams. The recent earthquake has also put two of my sons out of work and reduced my partner from 3/4 time work to 1/4 and I will be supporting them all for a while…
    Your blog is all true. Some bad financial decisions earlier in my first marriage means I am only worth a fraction of what I could have had saved – but frugal lifestyle means we can manage and plan.
    Speaking of which – check out this!—two-sizes-45l-or-68l-1758-p.asp

    I want one… or perhaps I need to make a “Haybox”…?


  26. It is a lot to think about and sometimes I dont want to think about it, as i start worrying and having sleepless nights. We too have spent the money now and in years past and will have less when we retire. I know my Dad feels that his private pension is not worth, given what he gets compared to what he paid every month. He now says that he wished he had paid that money towards the mortgage each month to have paid it up earlier x


  27. At 36 I have no pension at all.
    I also don't see the point myself, so many have failed already or are in shortfall and I would not invest any money myself unless I new the economy had recovered from the mess it is in.

    I fear it isn't going to. My choice is to jump out of the money market altogether. If I can become truly self sufficient then money doesn't matter at all. There are faults and problems with my viewpoint but no more or less than with any other.

    I intend to save as much money as possible before making the big leap and this would be used to help out in the problem times.

    As far as retirement goes in the real world. I have nearly thirty years at current guidelines, I am most likely not going to be able to retire this side of 70 anyway as legislation will change and my family tend to be quite long lived so even with the best of intentions I probably couldn't afford to retire early if I started throwing everything into a pension now.

    That is me though, I hope you get everything you want out of this as you have worked so hard to get where you are.


  28. Thank you for this really excellent post. You make a very important point – whatever way you cut it, there is only so much money to go round and you can have it or spend it, but not both! I aim to retire early (56) at the end of next year. I have been saving hard, since I do not get my state pension until 66 though I also have a private pension pot I have been paying into for about 20 years which I can start to use at 60. So I will need to manage until then on my savings and some help from my husband (who is past retirement age but works part-time self-employed). But I shall be happy to trade my salary for some time to enjoy life and get out from under the tyranny of the alarm clock!


  29. I've been thinking of this a lot! I'm 40, just started saving 4 yrs ago and had a child who will cost me more and more as the years go on.
    I hope to have time set aside this weekend to do a new budget and start some serious action.


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