Financial shake up (UK)

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Topic Author
MomentInTime
Posts: 6
Joined: Wed Oct 13, 2021 2:16 am

Financial shake up (UK)

Post by MomentInTime »

Good morning All,
I've just finished reading the Bogleheads book, and as I'm sure a great many others have done so I realised that things are a bit messy in my world of money. I have tried to dig deeper and research but it is a minefield out there but I see sense in trying to own the whole haystack rather than chase the tiny needle.
So I've sat down and come up with a financial plan.
I always had a spreadsheet of investments that tracked and predicted each year until 70 so that I could work out when we (Wife and I) could sensibly retire. I just realised there were way too many lines of text in it.
I also set all my returns on this spreadsheet I at 2.5% so I didnt get too excited about huge unrealistic returns in the future.
I am mid forties.

Current assets/liaibilities.

1) our (£120k outstanding) mortgage is fixed at 2.2% until 06/2029 - partly because I was contracting during the last ten years, and yes I could have probably paid it twice over if we were on a variable rate but I was raised to never gamble with your home. Therefore we moved from fix to fix.
I have been overpaying 100% of the monthly cost with a view to clearing this by 2026.

2) I have always paid into a company pension scheme and taken the matched contributions, but done nothing at all with those schemes.
- L&G1 - 100% equities - pot £65k
- L&G2 - Multi Asset - pot £15k
- SW1 - Multi Asset - pot £15k
- SW2 - Multi Asset - pot £15k

SW2 needs to remain open so that my current employer can pay their contributions

3) S&S ISA with Vanguard in a lifestyle 80 fund - £500pcm

Except for the house, I am fairly comfortable with risk, I am looking to retire in c. 18 years and so happy to leave the roller coaster running apart from any asset allocation changes that need to be made.
I use the first person a lot, but this plan includes for my wife as well, currently she has (no interest in money stuff!) a few work schemes floating around that I will tie together at the next round of statements, but at present the spreadsheet does not include her contribution so that will be a nice bonus as I think she has c.£50k over a few schemes.

Salary (stable job - good long term prospects) - £80k - obviously a higher rate payer but a simple company so no salary sacrifice or any tasty tax reducers other than they contribute monthly to the pension pot.

(Thanks if you've stayed the course so far!)

My Plan:

1) Reduce the mortgage overpayments to 30% overpayment each month. This will mean that I get to the end of the fix with c.£40k owing.
I dont want to remove the overpayments because in my mind the IRs are going north, and I dont want to exit the fix with a big balance and be hit with 5/6/10%
2) Open a Vanguard SIPP and transfer L&G1/L&G2/SW1 into it
Plus contribute the previous mortgage overpayment monthly c.£500
I am looking for a simple strategy so at the moment I am leaning towards:
Global Bond Index hedged acc - 35%
FTSE global all cap index acc - 65%

I need to keep SW2 open to receive the employer contributions, but I will look into their funds list and try to compliment my plan above.
3) continue the S&S ISA (L80 product) ad infinitum at £500pcm, if exit IR on mortgage is eye watering then I can use this to clear the balance.


We lead a good life, great work life balance, happy children so I dont want to go all "good life" and change the status quo.
I believe that we can get to retirement age with c.£500k in the pot, maybe £600k with Wife's as yet unknown contribution.
Both have full SP entitlement as checked on the gateway.

The plan will then be to take a mix of interest and drawdown to get to SPA.
We are looking at needing c.£27kpa in retirement.
My wife will most likely continue to work right up to SPA as she works part time and truly loves her job.
My wife will most likely NOT want to downsize the family home in the future so that the kids always have a safety net, so that will be the inheritance asset to leave the kids. On that basis I am thinking that our retirement pot has to last 30 years.

Im sorry if you made it this far, but am also very grateful for any critique.

Stay safe everyone
tubaleiter
Posts: 31
Joined: Tue Mar 09, 2021 12:58 pm

Re: Financial shake up (UK)

Post by tubaleiter »

Nothing jumps out as "don't do that!" bad idea/red flags - seems a sensible plan.

Overpaying mortgage is of course your call - instead of the 30% overpayment you could put that into one of your ISAs and more likely than not come out ahead, but it's the choice between a guaranteed 2.2% return on the mortgage overpayment vs an "on average" 7% or so in a global tracker. That one is entirely up to your risk appetite, for sure, and feels like you're making a reasonable balance by reducing but not eliminating the overpayment.

Minor tweak would be to check if Vanguard is definitely the best/cheapest broker for you: https://monevator.com/compare-uk-cheape ... e-brokers/

Based on your balances, maybe it is but you might be approaching the upper end where its marginally cheaper to go elsewhere. Not huge - talking at most a few hundred pounds a year extra fees at Vanguard once you hit the £250k limit on the fees. And if you're happy with their service and offerings, not a massive reason to change.

Also a judgment call as to whether that £500 is best put towards the ISA vs additional pension contributions (whether your employer pension or a SIPP). That 40% tax relief, even without salary sacrifice, is obviously big. But if your bigger challenge is getting from age X when you retire until you can access pensions, then you need something in your ISA to bridge that gap.

And your overall 65% equities 35% bonds asset allocation seems reasonable. Some would call it conservative, especially in the current low interest rate environment where we can't expect much in the way of returns from bonds (probably losing a bit to inflation), but if it helps you sleep at night, you're all good.

Really, all those points above are just things to think about, minor tweaks. Your overall plan is entirely reasonable - good luck!
Valuethinker
Posts: 43176
Joined: Fri May 11, 2007 11:07 am

Re: Financial shake up (UK)

Post by Valuethinker »

MomentInTime wrote: Wed Oct 13, 2021 3:37 am Good morning All,
I've just finished reading the Bogleheads book, and as I'm sure a great many others have done so I realised that things are a bit messy in my world of money. I have tried to dig deeper and research but it is a minefield out there but I see sense in trying to own the whole haystack rather than chase the tiny needle.
So I've sat down and come up with a financial plan.
I always had a spreadsheet of investments that tracked and predicted each year until 70 so that I could work out when we (Wife and I) could sensibly retire. I just realised there were way too many lines of text in it.
I also set all my returns on this spreadsheet I at 2.5% so I didnt get too excited about huge unrealistic returns in the future.
I am mid forties.

Current assets/liaibilities.

1) our (£120k outstanding) mortgage is fixed at 2.2% until 06/2029 - partly because I was contracting during the last ten years, and yes I could have probably paid it twice over if we were on a variable rate but I was raised to never gamble with your home. Therefore we moved from fix to fix.
I have been overpaying 100% of the monthly cost with a view to clearing this by 2026.

2) I have always paid into a company pension scheme and taken the matched contributions, but done nothing at all with those schemes.
- L&G1 - 100% equities - pot £65k
- L&G2 - Multi Asset - pot £15k
- SW1 - Multi Asset - pot £15k
- SW2 - Multi Asset - pot £15k

SW2 needs to remain open so that my current employer can pay their contributions

3) S&S ISA with Vanguard in a lifestyle 80 fund - £500pcm

Except for the house, I am fairly comfortable with risk, I am looking to retire in c. 18 years and so happy to leave the roller coaster running apart from any asset allocation changes that need to be made.
I use the first person a lot, but this plan includes for my wife as well, currently she has (no interest in money stuff!) a few work schemes floating around that I will tie together at the next round of statements, but at present the spreadsheet does not include her contribution so that will be a nice bonus as I think she has c.£50k over a few schemes.

Salary (stable job - good long term prospects) - £80k - obviously a higher rate payer but a simple company so no salary sacrifice or any tasty tax reducers other than they contribute monthly to the pension pot.

(Thanks if you've stayed the course so far!)

My Plan:

1) Reduce the mortgage overpayments to 30% overpayment each month. This will mean that I get to the end of the fix with c.£40k owing.
I dont want to remove the overpayments because in my mind the IRs are going north, and I dont want to exit the fix with a big balance and be hit with 5/6/10%
Are you paying any penalty for overpayments? In truth, money is so cheap now that I would tend to put all excess cash flow into ISAs (between the 2 of you, a £40k limit). However that is a more risky strategy. (I am assuming you have a repayment mortgage, not an interest only one?)

Given that there is no Salary Sacrifice.
2) Open a Vanguard SIPP and transfer L&G1/L&G2/SW1 into it
Plus contribute the previous mortgage overpayment monthly c.£500
That looks fine. But the choice mortgage v pension v ISA is a fine balance. I would tend towards ISA.

I don't think that, realistically, interest rates on mortgages are going to go shooting up. But 3% on renewal is certainly a risk. If we do go to 4% then something has gone seriously wrong with the British economy (overheating => inflation).

ISAs are post tax but offer:

- less vulnerability to future tax changes (almost certainly coming for pensions, although that *is* an argue for grabbing 40% tax credit whilst you can get it)
- liquidity - there's no complex rules about what you can withdraw & when you can withdraw it
- changes in future retirement age rules won't affect it - for example, the open options on a pension at 55 will be raised with future increases in retirement age to 67 (I believe that is stated govt policy)

That said, you could take a view tax benefits of pensions will be curtailed in future (almost certain - it's a huge tax expenditure for the Chancellor, something like £28bn pa) and so it's best to grab it now. A Tory Chancellor passed the largest tax increase on me I will likely ever face (the Life Time Annual allowance) so that isn't specific to which political party is in power-- it was a brilliant way to stage a major tax increase with barely a murmur from the usual suspects, (ie middle class voters), most people didn't realise how big it was. So pensions are not sacrosanct.
I am looking for a simple strategy so at the moment I am leaning towards:
Global Bond Index hedged acc - 35%
FTSE global all cap index acc - 65%

I need to keep SW2 open to receive the employer contributions, but I will look into their funds list and try to compliment my plan above.
Yes re SW2.

Nothing wrong with your investment strategy. Eminently conservative. People will see its merits when we live through the next bear market. Winter is (always) coming in investment. Recent sharp and quick recoveries have "taught" investors a lesson that may be inappropriate - the 2000-03 bear market lasted over 30 months (with lots of false rallies on the way before the market bottomed in March 2003).

You can look at a bond investment as tantamount to repaying debt. On that basis, repaying debt is the better strategy right now (bonds yield 1-2%, mainly). But there's the issue of liquidity - an investment portfolio can be converted into cash, a repaid debt cannot be (and if you lost your job, say, you couldn't even get a home equity loan).
3) continue the S&S ISA (L80 product) ad infinitum at £500pcm, if exit IR on mortgage is eye watering then I can use this to clear the balance.
Again that looks fine.
We lead a good life, great work life balance, happy children so I dont want to go all "good life" and change the status quo.
I believe that we can get to retirement age with c.£500k in the pot, maybe £600k with Wife's as yet unknown contribution.
Both have full SP entitlement as checked on the gateway.

The plan will then be to take a mix of interest and drawdown to get to SPA.
We are looking at needing c.£27kpa in retirement.
My wife will most likely continue to work right up to SPA as she works part time and truly loves her job.
My wife will most likely NOT want to downsize the family home in the future so that the kids always have a safety net, so that will be the inheritance asset to leave the kids. On that basis I am thinking that our retirement pot has to last 30 years.

Im sorry if you made it this far, but am also very grateful for any critique.

Stay safe everyone
Things are unpredictable, especially the future.

These are good plans. As long as you remember your home is an asset-- and you may spend it on retirement home care (I know rather too much about this subject, right now ;-)). It's the hardest thing to give up when you are old, but also the biggest asset for many people.
Topic Author
MomentInTime
Posts: 6
Joined: Wed Oct 13, 2021 2:16 am

Re: Financial shake up (UK)

Post by MomentInTime »

Thank you both for your time and responses, great appreciated.

Mortgage is capital repayment, with 10% of total outstanding capital repayable without penalty.
I want to put as much in to the SIPP as I can, taking advantage of the 40% relief while a) it is still available and b) while I am still a higher rate payer.
I have just opened the SIPP but gone for a 70/30 split, it can always be changed in the future or gradually reduced as I head towards retirement.
I want to keep paying into my ISA (which is currently L80) so that I have some liquidity should the worst happen.

I guess my short term goal was the ascertain all the funds I had been dragging around over the years and simplify my portfolio with someone smarter than me casting their eye over it for schoolboy error, which I have just done online, so thank you both again.
Valuethinker
Posts: 43176
Joined: Fri May 11, 2007 11:07 am

Re: Financial shake up (UK)

Post by Valuethinker »

MomentInTime wrote: Wed Oct 13, 2021 7:25 am Thank you both for your time and responses, great appreciated.

Mortgage is capital repayment, with 10% of total outstanding capital repayable without penalty.
I want to put as much in to the SIPP as I can, taking advantage of the 40% relief while a) it is still available and b) while I am still a higher rate payer.
I have just opened the SIPP but gone for a 70/30 split, it can always be changed in the future or gradually reduced as I head towards retirement.
I want to keep paying into my ISA (which is currently L80) so that I have some liquidity should the worst happen.

I guess my short term goal was the ascertain all the funds I had been dragging around over the years and simplify my portfolio with someone smarter than me casting their eye over it for schoolboy error, which I have just done online, so thank you both again.
My main thought would be to grab SIPP and ISA allowances while you can.

If a future Chancellor reduces the tax advantages (almost certain, but as w LTA that doesn't mean you/I necessarily guess how he/she goes about doing it) then you have done your best to take advantage whilst they still existed. Although LTA change was technically an "ex post" tax adjustment, normally Chancellors shy away from that (LTA was an ex ante change, and they protected those already over the limit, so technically it was not an ex post change).

That would mean accepting paying down your mortgage less quickly. And repayment of mortgage is a guaranteed return with an Internal Rate of Return (IRR or return on investment) equal to your mortgage interest rate. And it's a 100% certain return, whereas the other 100% certain return-- investing in the 10 year gilt say (UK govt bond)-- would pay a c 1.3% IRR (the Yield To Maturity of the bond, roughly).

However in the long run the return on your portfolio *might* exceed that of repayment of mortgage. Mortgage finance is the cheapest leverage you will ever have, and it cannot be "called" - ie the forced sale of a stock portfolio (with money borrowed on margin) because of a fall in the valuation. I would say in the short run (of the next few years) I think stock returns are likely to be quite low (but you can never predict the timing of the next bear market).

Because of the tax protected nature of these investments, it's not immediately clear which is the better course of action.
Topic Author
MomentInTime
Posts: 6
Joined: Wed Oct 13, 2021 2:16 am

Re: Financial shake up (UK)

Post by MomentInTime »

I could always commit to paying any pay rises, bonuses or windfalls straight off the mortgage.
It’s a tough call because potentially there’s a very real threat that the 2% mortgage rate could outshine the bond element of my portfolio….
We will only know after it’s come to fruition

In the meantime I’m getting 40% (after self assessment) on the SIPP so it’s a winner
jg12345
Posts: 158
Joined: Fri Dec 11, 2020 1:03 pm

Re: Financial shake up (UK)

Post by jg12345 »

Hi OP,

Two little notes:
1) have you factored in your HMRC pension in your retirement costs? if your expected expenditure are 27k pa after retirement, then what you need to get from various portfolios/investments/savings is equal to 27k minus HMRC pension pa, which is most definitely less than 27k.
2) some things you have likely considered, but I just want to make sure: in your planning analysis/spreadsheet remember to factor in inflation (those 27k will be less valuable in 10 years from now) and tax (e.g., SIPP is taxable income after 25% of it is taken)

Other than those two little things, and as everyone else mentioned, great job!
Valuethinker
Posts: 43176
Joined: Fri May 11, 2007 11:07 am

Re: Financial shake up (UK)

Post by Valuethinker »

jg12345 wrote: Wed Oct 13, 2021 4:26 pm Hi OP,

Two little notes:
1) have you factored in your HMRC pension in your retirement costs? if your expected expenditure are 27k pa after retirement, then what you need to get from various portfolios/investments/savings is equal to 27k minus HMRC pension pa, which is most definitely less than 27k.
2) some things you have likely considered, but I just want to make sure: in your planning analysis/spreadsheet remember to factor in inflation (those 27k will be less valuable in 10 years from now) and tax (e.g., SIPP is taxable income after 25% of it is taken)

Other than those two little things, and as everyone else mentioned, great job!
).
When you say "HMRC pension" do you mean your Basic State Pension?

https://www.gov.uk/state-pension

that is Department of Work and Pensions.

HMRC is a revenue department. Essentially the only one (although other departments levy fees etc). Their concern is with collecting taxes - policies set by HM Treasury.

Actual payment of benefits is DWP responsibility. Unless it has changed, it is all handled from a Newcastle service centre -- has been since at least the 1980s. Setting the level of benefits is HM Treasury and the Chancellor of the Exchequer (in consultation with the Cabinet, of course). Currently governed by a party manifest commitment called "The Triple Lock".**

An "HMRC pension" would be a pension that one earned for having worked for HMRC. That's not what you meant? Under Chancellor George Osborne, the basis of the Civil Service pension was changed to make it significantly less generous (particularly to those with high final career earnings)-- roughly speaking, a 40% cut in present value. However benefits accrued by civil servants to that point were protected-- membership was transferred over to the new pension scheme (for everyone).

2). re 27k yes that's a good point. Such an obvious one that (wrongly?) I just assumed that was taken as read.

It's easy for one or one's spouse to be retired for 35 years. At 2% inflation, the purchasing power of a pension fixed in nominal terms will be halved over that time. If it is 3% inflation, it is halved over 24 years, roughly. To add to that, care home fees definitely rise faster than inflation (because in the long run wages rise faster than inflation, and there's no corresponding increase in labour productivity in the care home sector; that would require for example steadily fewer carers per resident, etc).

** not actually true in the latest Chancellor's statement. Because Covid-19 reduced employment among the low paid by so much, the average pay rate rose by 8%-- the people still in work had higher incomes on average. The Triple Lock would have required that to be the level of increase of the State Pension. Which seemed unfair to many people because people in work are not getting anything like that pay increase. I am not actually sure what the Chancellor said on this and on future plans.
Topic Author
MomentInTime
Posts: 6
Joined: Wed Oct 13, 2021 2:16 am

Re: Financial shake up (UK)

Post by MomentInTime »

Inflation- the silent killer of wealth
Sadly yes I’ve factored that in
Also the state pension at present I think 67 but assume that 70 is on the cards

So my strategy is that I’ve opened my account, set up the transfers of the 3 wayward pensions and add to it in a monthly basis, that way I’m buying at lows, highs and everywhere in between.

I’ve got my ISA for a bit of flexibility and liquidity should I ever need it.

I guess the only real gamble I’m taking is on the kids’ inheritance should the govt ever decide to take the house away to square off any care fees - sorry kids!
Topic Author
MomentInTime
Posts: 6
Joined: Wed Oct 13, 2021 2:16 am

Re: Financial shake up (UK)

Post by MomentInTime »

I’d like to thank all the contributors above once again.
I have to say I feel pretty relaxed about things and that’s a good way to feel about retirement, it hit home to me when LBC yesterday afternoon did a segment on retirement and the number of people who had literally nothing in place was scary.
TedSwippet
Posts: 3910
Joined: Mon Jun 04, 2007 4:19 pm
Location: UK

Re: Financial shake up (UK)

Post by TedSwippet »

MomentInTime wrote: Thu Oct 14, 2021 11:41 am ... it hit home to me when LBC yesterday afternoon did a segment on retirement and the number of people who had literally nothing in place was scary.
Well, yes. But. Ask yourself who will be funding pension credits and other similar government support schemes for these people when they hit retirement age without having made any of their own retirement provisions. :-(
jg12345
Posts: 158
Joined: Fri Dec 11, 2020 1:03 pm

Re: Financial shake up (UK)

Post by jg12345 »

Valuethinker wrote: Wed Oct 13, 2021 4:44 pm.
When you say "HMRC pension" do you mean your Basic State Pension?
Apologies for the "HMRC pension", very poor writing. I meant the state pension, yes.
MomentInTime wrote: Thu Oct 14, 2021 11:36 am Inflation- the silent killer of wealth
Sadly yes I’ve factored that in
Also the state pension at present I think 67 but assume that 70 is on the cards
glad that you factored in both inflation and state pension in your retirement plan.
MomentInTime wrote: Thu Oct 14, 2021 11:41 am I’d like to thank all the contributors above once again.

I have to say I feel pretty relaxed about things and that’s a good way to feel about retirement, it hit home to me when LBC yesterday afternoon did a segment on retirement and the number of people who had literally nothing in place was scary.
congrats on all the work behind it, it's a very well deserved relaxed feeling!
Valuethinker
Posts: 43176
Joined: Fri May 11, 2007 11:07 am

Re: Financial shake up (UK)

Post by Valuethinker »

MomentInTime wrote: Thu Oct 14, 2021 11:41 am I’d like to thank all the contributors above once again.
I have to say I feel pretty relaxed about things and that’s a good way to feel about retirement, it hit home to me when LBC yesterday afternoon did a segment on retirement and the number of people who had literally nothing in place was scary.
The period when someone (usually a man) could expect a stable private pension after 30-40 years employment with one employer is actually a real rarity in history.

Through most of British history, you either didn't expect to live much after 60, and/or your children looked after you. Then the Liberal government in ?1904? brought about the Basic State Pension.

Company pension schemes, particularly the public sector ones - which included all the coal miners, railway workers & post office workers (ie what is now BT etc) were a postwar thing. Coming at the same time as a massive increase in expected life span in retirement. I deliberately picked those employers because they were all nationalised industries and they (were) the largest pension schemes in the country by size of assets under management and members. At the beginning of the 1980s there were something like 225k coal miners (there are less than 5k now -- might even be less than 2k).

So the situation now is not abnormal from a historical perspective:

- 60% of Brits own their own homes. That's a huge amount of wealth (4x GDP according to something I saw in the paper this week). That will be tapped -- although the market of products to do that is fairly inefficient.

- Brits will work longer. The main issue there is that for those in manual jobs, that's not usually possible-- just the physically taxing aspects of being a cleaner, carer, warehouse or manual labour etc. Rises in the State Pension Age are a direct discrimination against what we used to call "the working class" and as they have shorter life spans, it's double whammy (the years they lose are more valuable to them).

- British state pensions are very low compared to other developed countries such as USA & Europe. That was a policy established by Peter Lilley under Mrs Thatcher's government. Since 1997 UK governments have had to wrestle with the consequences of this and that's the origin of "the Triple Lock".

Of course there's now a required pension contribution. The problem is the 8% pa is nowhere near enough - the right number should be more like 15%. That could be funded - take away the Higher Rate Tax credit on pension contributions, and there's enough money there to significantly improve the pensions of the 50% of the population, say, who will have no independent savings for retirement (other than what the government mandates).

We could discuss the politics of that all day, here - it is forbidden and it's not productive because, AFAIK, none of us is working on govt policy in this area (and the big decisions will be political ones).
Valuethinker
Posts: 43176
Joined: Fri May 11, 2007 11:07 am

Re: Financial shake up (UK)

Post by Valuethinker »

MomentInTime wrote: Thu Oct 14, 2021 11:36 am Inflation- the silent killer of wealth
Sadly yes I’ve factored that in
Also the state pension at present I think 67 but assume that 70 is on the cards

So my strategy is that I’ve opened my account, set up the transfers of the 3 wayward pensions and add to it in a monthly basis, that way I’m buying at lows, highs and everywhere in between.

I’ve got my ISA for a bit of flexibility and liquidity should I ever need it.

I guess the only real gamble I’m taking is on the kids’ inheritance should the govt ever decide to take the house away to square off any care fees - sorry kids!
Re care homes. The quid pro quo of the National Insurance increase of +1.5% (employee and employer) is that no one will be required to contribute more than £86k to care home fees (this is England and Wales, under the Devolved Authority I believe Scotland has different arrangements, and I am not sure about Northern Ireland at all).

That number will almost certainly be indexed upwards by inflation - but I do not know what has been said on that.
seajay
Posts: 409
Joined: Sat May 01, 2021 3:26 pm

Re: Financial shake up (UK)

Post by seajay »

Valuethinker wrote: Fri Oct 15, 2021 4:48 am
MomentInTime wrote: Thu Oct 14, 2021 11:36 am Inflation- the silent killer of wealth
Sadly yes I’ve factored that in
Also the state pension at present I think 67 but assume that 70 is on the cards

So my strategy is that I’ve opened my account, set up the transfers of the 3 wayward pensions and add to it in a monthly basis, that way I’m buying at lows, highs and everywhere in between.

I’ve got my ISA for a bit of flexibility and liquidity should I ever need it.

I guess the only real gamble I’m taking is on the kids’ inheritance should the govt ever decide to take the house away to square off any care fees - sorry kids!
Re care homes. The quid pro quo of the National Insurance increase of +1.5% (employee and employer) is that no one will be required to contribute more than £86k to care home fees (this is England and Wales, under the Devolved Authority I believe Scotland has different arrangements, and I am not sure about Northern Ireland at all).

That number will almost certainly be indexed upwards by inflation - but I do not know what has been said on that.
Councils/care homes aren't in line to get their fair share, most of the additional capital will go to the NHS. The £86K figure excludes food/accommodation, so to me it looks like coucils/care homes will simply jig the books and see food/accommodation costs soar massively.
Valuethinker
Posts: 43176
Joined: Fri May 11, 2007 11:07 am

Re: Financial shake up (UK)

Post by Valuethinker »

seajay wrote: Sat Oct 16, 2021 4:58 pm
Valuethinker wrote: Fri Oct 15, 2021 4:48 am
MomentInTime wrote: Thu Oct 14, 2021 11:36 am Inflation- the silent killer of wealth
Sadly yes I’ve factored that in
Also the state pension at present I think 67 but assume that 70 is on the cards

So my strategy is that I’ve opened my account, set up the transfers of the 3 wayward pensions and add to it in a monthly basis, that way I’m buying at lows, highs and everywhere in between.

I’ve got my ISA for a bit of flexibility and liquidity should I ever need it.

I guess the only real gamble I’m taking is on the kids’ inheritance should the govt ever decide to take the house away to square off any care fees - sorry kids!
Re care homes. The quid pro quo of the National Insurance increase of +1.5% (employee and employer) is that no one will be required to contribute more than £86k to care home fees (this is England and Wales, under the Devolved Authority I believe Scotland has different arrangements, and I am not sure about Northern Ireland at all).

That number will almost certainly be indexed upwards by inflation - but I do not know what has been said on that.
Councils/care homes aren't in line to get their fair share, most of the additional capital will go to the NHS. The £86K figure excludes food/accommodation, so to me it looks like coucils/care homes will simply jig the books and see food/accommodation costs soar massively.
Thanks that is interesting.

But if £86k does not cover food & accommodation, what then does it cover?
seajay
Posts: 409
Joined: Sat May 01, 2021 3:26 pm

Re: Financial shake up (UK)

Post by seajay »

Valuethinker wrote: Sat Oct 16, 2021 5:29 pm
seajay wrote: Sat Oct 16, 2021 4:58 pm
Valuethinker wrote: Fri Oct 15, 2021 4:48 am
MomentInTime wrote: Thu Oct 14, 2021 11:36 am Inflation- the silent killer of wealth
Sadly yes I’ve factored that in
Also the state pension at present I think 67 but assume that 70 is on the cards

So my strategy is that I’ve opened my account, set up the transfers of the 3 wayward pensions and add to it in a monthly basis, that way I’m buying at lows, highs and everywhere in between.

I’ve got my ISA for a bit of flexibility and liquidity should I ever need it.

I guess the only real gamble I’m taking is on the kids’ inheritance should the govt ever decide to take the house away to square off any care fees - sorry kids!
Re care homes. The quid pro quo of the National Insurance increase of +1.5% (employee and employer) is that no one will be required to contribute more than £86k to care home fees (this is England and Wales, under the Devolved Authority I believe Scotland has different arrangements, and I am not sure about Northern Ireland at all).

That number will almost certainly be indexed upwards by inflation - but I do not know what has been said on that.
Councils/care homes aren't in line to get their fair share, most of the additional capital will go to the NHS. The £86K figure excludes food/accommodation, so to me it looks like coucils/care homes will simply jig the books and see food/accommodation costs soar massively.
Thanks that is interesting.

But if £86k does not cover food & accommodation, what then does it cover?
Care costs. Maybe in future the breakdown of care home fees might in a ward with perhaps 3 continual care staff caring for 10 individuals individually be billed something like £26K care costs, £54K buildings/food/administration/energy/cleaning/waste costs, total £80K/year bill. After 3+ years when you'd reached the £86K care costs limit and might expect to pay no more for care costs, the provider might still demand the £54K/year accommodation/food/admin/energy/cleaning/waste costs and/or may be inclined to say that due to circumstances they're no longer in a position to continue to care for the individual.

Hasn't sorted the social care issues, has increased taxes.
Topic Author
MomentInTime
Posts: 6
Joined: Wed Oct 13, 2021 2:16 am

Re: Financial shake up (UK)

Post by MomentInTime »

Decided that I have a few years to allow for any corrections in the market and changed my split to 80/20 global equities/global bonds.
Obviously as I approach retirement age I will need to look at what type of run the market is on and adapt to suit.
Thanks again for all the help and advice given above
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