An average mid-life assessment

[Eamonnn]

I see lots of threads with figures far beyond my grasp, not so many in my neck of the woods.

I’d appreciate a brief scan of my situation, and advice if there are any red flags or anything that stands out as a concern? I’ve tried to paint a clear picture…

42, +partner, +2 young kids in school
£450-500k house, 50% LTV at 1.3% for 3 more years
£50k notional salary, no bonus
£9k salary sacrifice into workplace pension
3% employer contribution
Current pot £22k
Previous employer DC pot £88k
Previous employer DB paying £3k/year or option to transfer out £55k elsewhere
(Fees unknown)
Expected retirement age 60+, desired retirement tomorrow
No debts beyond mortgage
Savings £10-15k majority at 2.75%
Average family living a pretty average life, no foreign holidays or big expenses etc, but nobody goes without
Monthly income tends to equal monthly expenditure
Mother, father, MIL, FIL all mid-70s

I view potential inheritance as exactly that - they’re urged to spend their money enjoying their lives, and it may all go on care anyway, but if not then we might benefit (max £500k). What’s the right way to plan (?) for this, or do you ignore it and consider it only if it happens?

Perhaps I’m destined for another average 40 years, which is absolutely fine, but if there’s anything I’m doing wrong or anything I can do to enhance things then all comments are welcome.

Cheers, Eamonnn

[Sheepshanks]

You didn't mention partner's income so if you're supporting all that on £50K less £9K salary sacrifce then that's pretty good going, but doesn't seem to offer scope to do much else.

[covmutley]

Sheepshanks said:

You didn't mention partner's income so if you're supporting all that on £50K less £9K salary sacrifce then that's pretty good going, but doesn't seem to offer scope to do much else.

Yes. And how have you saved 15k if outgoings equal expenditure? Perhaps you had more cashbefore kids! I can relate to that!!

Overall,you look in good shape for a comfortable life and retirement I'd say. That 88k pot seems good, probably better than most your age? . 20 years of compound interest will work some magic.

[softtop]

Sheepshanks said:

You didn't mention partner's income so if you're supporting all that on £50K less £9K salary sacrifce then that's pretty good going, but doesn't seem to offer scope to do much else.

I thought the same, are you managing to save anything and if so, cash or stocks and shares ISA?

[Eamonnn]

Partner earns £15k and will get a teacher pension to some extent.

Savings were from child-free life and are the rainy day fund for emergency house repairs or to cover redundancy/illness etc.

Any savings from one month (minimal) are contra’d by an over-spend the month after. Been like that for 5+ years.

[vindaloo79]

You look all set to me!

That defined benefit transfer out value is pretty stingy but I guess that it’s easier to generate yields now than in recent times. £3k per annum seems worth holding on to.

[deggles]

Personally I'd be thinking about what the mortgage payment is going to be in three years time at, say, 4%.

Maybe trim the pension contribution a bit and make sure you have a few hundred a month surplus that can go into accessible savings/ISA/whatever for now, or be available for any increased costs. Pension tax relief is great but you have to balance that with locking away money till retirement that you might need in the short-medium term.

[Nemophilist]

Are you overpaying your mortgage at all or have scope to?
That will make a difference come remortgage time

Is there scope that your salary may increase in your current role or path?

How long until kids will be going to uni? (If they want to) will you be planning on helping them?

[vulture1]

By PH standards
Average
By the whole country average i'd say you are doing very well.
All imo.

[Simpo Two]

Eamonnn said:

Savings £10-15k majority at 2.75%

IMHO you have very low savings, and no investments other than pensions, which whilst all jolly nice have strings attached.

[MaxFromage]

Nemophilist said:

Are you overpaying your mortgage at all or have scope to?
That will make a difference come remortgage time

There's no point overpaying the mortgage to save 1.3%, when he or his partner could receive 4%+ on the money saved elsewhere. Then come remortgage time, he can reduce down accordingly.

[covmutley]

Simpo Two said:

Eamonnn said:

Savings £10-15k majority at 2.75%

IMHO you have very low savings, and no investments other than pensions, which whilst all jolly nice have strings attached.

I suspect at least 90% of brits would disagree with that. 80% have less than £500 saved.

I'm also not sure why you would save more than £15k? More than sufficient rainy day fund. As for investment wise, pension is better, as he's saving 20% tax from the off.

[GT03ROB]

Eamonnn said:

I see lots of threads with figures far beyond my grasp, not so many in my neck of the woods.

I’d appreciate a brief scan of my situation, and advice if there are any red flags or anything that stands out as a concern? I’ve tried to paint a clear picture…

42, +partner, +2 young kids in school
£450-500k house, 50% LTV at 1.3% for 3 more years
£50k notional salary, no bonus
£9k salary sacrifice into workplace pension
3% employer contribution
Current pot £22k
Previous employer DC pot £88k
Previous employer DB paying £3k/year or option to transfer out £55k elsewhere
(Fees unknown)
Expected retirement age 60+, desired retirement tomorrow
No debts beyond mortgage
Savings £10-15k majority at 2.75%
Average family living a pretty average life, no foreign holidays or big expenses etc, but nobody goes without
Monthly income tends to equal monthly expenditure
Mother, father, MIL, FIL all mid-70s

I view potential inheritance as exactly that - they’re urged to spend their money enjoying their lives, and it may all go on care anyway, but if not then we might benefit (max £500k). What’s the right way to plan (?) for this, or do you ignore it and consider it only if it happens?

Perhaps I’m destined for another average 40 years, which is absolutely fine, but if there’s anything I’m doing wrong or anything I can do to enhance things then all comments are welcome.

Cheers, Eamonnn

I'd say you are in a decent place.

• no debt other than mortgage
• good pension contributions
• good chunk of equity in house
• saving may be a little low (allow 3-6 months worth of bills), but you still have some.
• spending in line with income.

Inheritances ignore until it happens. It could be next year or in 20 years. It could be what you think or next to nothing. Aside from which I think there is something not right about thinking about or planning for it.

[MaxFromage]

covmutley said:

I suspect at least 90% of brits would disagree with that. 80% have less than £500 saved.

I'm also not sure why you would save more than £15k? More than sufficient rainy day fund. As for investment wise, pension is better, as he's saving 20% tax from the off.

That's less than 4 month's net combined wages. Unless insured, I wouldn't say that's more than sufficient for his circumstances.

[Ryan_T]

MaxFromage said:

That's less than 4 month's net combined wages. Unless insured, I wouldn't say that's more than sufficient for his circumstances.

Agree, throw in a badly timed house / car repair or other unexpected cost. I’d want double that considering it doesn’t look like they can trim their expenditure to suit if the worst happens.

[Eamonnn]

Thanks, I appreciate all the responses everyone’s taken the time to post, there are some really useful observations that definitely need further thought.

I agree in part with the comments re inheritance and I hope I didn’t come across as insensitive or cold-hearted. I’d forego all inheritance to have family forever, but they talk about it openly and often which is why I mentioned it.

Thanks again

[Scootersp]

Sounds like you've got your head screwed on and are (you and the family) largely content?

I know some one (wife!) that would be almost suicidal if they couldn't have a holiday abroad a year, and depressed if it was just one!!

You could drift to being slightly more 'today' and increase savings over pension, and then you've got the future mortgage rates rise increase covered, or you could do a family holiday etc.

If the inheritance disappears via care fees etc then you'll still be mortgage free and could relocate at a push? It's all dependant on your individual life goals/desires and what's most important.

[mike9009]

GT03ROB said:

Eamonnn said:

I see lots of threads with figures far beyond my grasp, not so many in my neck of the woods.

I’d appreciate a brief scan of my situation, and advice if there are any red flags or anything that stands out as a concern? I’ve tried to paint a clear picture…

42, +partner, +2 young kids in school
£450-500k house, 50% LTV at 1.3% for 3 more years
£50k notional salary, no bonus
£9k salary sacrifice into workplace pension
3% employer contribution
Current pot £22k
Previous employer DC pot £88k
Previous employer DB paying £3k/year or option to transfer out £55k elsewhere
(Fees unknown)
Expected retirement age 60+, desired retirement tomorrow
No debts beyond mortgage
Savings £10-15k majority at 2.75%
Average family living a pretty average life, no foreign holidays or big expenses etc, but nobody goes without
Monthly income tends to equal monthly expenditure
Mother, father, MIL, FIL all mid-70s

I view potential inheritance as exactly that - they’re urged to spend their money enjoying their lives, and it may all go on care anyway, but if not then we might benefit (max £500k). What’s the right way to plan (?) for this, or do you ignore it and consider it only if it happens?

Perhaps I’m destined for another average 40 years, which is absolutely fine, but if there’s anything I’m doing wrong or anything I can do to enhance things then all comments are welcome.

Cheers, Eamonnn

I'd say you are in a decent place.

• no debt other than mortgage
• good pension contributions
• good chunk of equity in house
• saving may be a little low (allow 3-6 months worth of bills), but you still have some.
• spending in line with income.

Inheritances ignore until it happens. It could be next year or in 20 years. It could be what you think or next to nothing. Aside from which I think there is something not right about thinking about or planning for it.

I agree it seems well balanced for the future where there are a lot of 'what - ifs' . Don't fixate too much on the future, enjoy your time with the kids, it is far more important and rewarding whilst they are young.

[anonymous-user]

vulture1 said:

By PH standards
Average
By the whole country average i'd say you are doing very well.
All imo.

No, he’s just failed PH, where everyone owns 1.5m houses

Refreshing honest to hear from somebody who’s not full of st.

I’d look at retirement ages, you’ll not be able to collect state pension until 67 or slightly later, so you’ll need savings or live more frugally until then. Other than that, all good.

Oh, and don’t plan so far ahead that you might never get there. Live a little too!

Edited by anonymous-user on Friday 27th January 16:25

[rossub]

vulture1 said:

By PH standards
Average
By the whole country average i'd say you are doing very well.
All imo.

Yup… £4-500k house up here is top 10%