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It can be good to talk about retirement with friends, but it can be a bit of an awkward discussion. How much are your pensions worth? What age can you go? What about your other half? What will your income be? You’d like to give your thoughts, and receive some back, but without some basic information, this can be hard to do.

I was thinking about this at the weekend as I chatted to a mate in the pub who’s considering retirement as soon as possible from a job he hates. He’s passed the landmark 55 birthday, so knows what lump sum he can take today. I’ve no idea what kind of sums we’re talking about, but he mused, “You know, I’m thinking about buying a decent motorbike, and building an extension to the garage for it.”

“How much will that set you back?” I wondered.

“Well, maybe ten grand for the bike and six or seven for the garage”.

I tried to disguise the spluttering into my beer. “Yeah, well, if that’s what you’re comfortable spending that amount of money on”, I said, eyeing the sleet hitting the pub window and imagining tinkering with the bike as your hands turn blue.

“It’d give me a hobby, a project, something to do”, he said, and I could certainly see the point of that. After all, I’m looking for retirement projects too.

“”Quite a lot of cash to spend on a hobby”, I ventured, trying to calculate how many months earlier he could retire if he didn’t blow the money on that project.

“Some folk would spend that on holidays in a year and all they’ll have is memories”, he mused. “The bike will last me the rest of my lifetime, if I look after it.”

So there’s the funny thing. I think I would consider spending seventeen grand on holidays if I had the money to spare. That would be up near the top of my things to do with that kind of spare cash.  In fact, with a bit of budgeting, seventeen thousand pounds could take you on holiday for a year – and think of all the experiences you’d have, the places you’d see, the people you’d meet, the stories to tell. That would be a worthy spend, in my book, so I told him as much.

He looked at me aghast. “Are you mental?”, he asked. “No way would I squander that kind of money on a bloody holiday, even if it did last a year.”

Different strokes for different folks, of course but, while we’re talking in cliches, no man is an island. My mate had a motorbike before, but gave it up after a few scares and resultant pressure from his family. I’d happily traipse off around the world for a year, I dream, but the reality is I’d be going myself if I did it. So would I consider doing so? “No”, is the simple answer. My family and friends are more important to me than far flung places at this time of life.

This is where I start to think that money in retirement isn’t maybe as important as I sometimes think it is. True, it can give you options, but how realistic are they, all things – including loves ones – considered? In fact, especially when considering loved ones. Or at least I’ve come to believe that this is a truth for me. I feel happy and content when my family are happy and content and, if I live my life doing only what only appeals to me, then I’d consider it selfish. Which I like to think I’m not.

There can be compromises in all of this and I’d have to admit that money probably facilitates those, given that “it can give you options”. Sometimes just knowing that you could do something, or buy something, takes the pressure off the need to have it. Plus, like me and Oscar Wilde, you might suspect that the worst thing in the world is not getting what you want, and the second worst thing is getting it. With such I thoughts I give myself mental succour, shoulder the sky, and drink my ale.

 

Being a long term fan, and implementer, of personal goals, I tend to look on New Year’s Eve in the same way as heavy drinkers do: it’s “amateur night”. Resultantly, I like the reminder, but I tend not to sit down and right out objectives for the year ahead, so I’ve pretty much none to review from January 2017.

This year, however, knowing the power of the discipline, and turning 55 in November, there’s a dangerous goal that I could write at the start of this year, namely, “This year, in November, 2018, I will retire from work for good”. That’s because I can access my pensions in that month and that income can replace the current wage I receive from employment.

Eek! Should I do it? Should I commit? As some of you may know, I went this route before and ended up kicking off this blog by writing a post about the Top Ten Downsides of Early Retirement as I realised retirement wasn’t quite working out what I expected it to be. Since then I’ve reflected that maybe it was because I didn’t mentally commit to the idea and couldn’t quite believe it myself. Never work again? That wasn’t me, was it? I’d worked for almost thirty years and enjoyed most of them. What would I do now?

Despite philosophical kickings from Ermine about getting my head into the right place, I couldn’t do it – I felt I wanted to work, even if I didn’t need to (something I was always questioning anyway when it came to the financial side of the equation) and, eventually, back to work I went.

I haven’t regretted the decision, although I have regretted that I realised a goal only to discover that I hadn’t really prepared for it. Not that this seems realisation seems to have changed my behaviour to date – no new “hobbies” started, no new social structures created, the garden lies untouched, I will never stand in on lead guitar for Kirk Hammett in Metallica, no book written, no classic motorbike repaired and rebuilt, no marathons run, no flying lessons taken. I’m almost proud of all the things I haven’t achieved.

One of the truest things I think I read about retirement stated that if you weren’t doing something before retirement, then you won’t be doing it afterward either. Clearly that applied to me, so the idea was, and is, to start doing some new things today, while still at work, and then I can find out what I might like to do with my time when I have plenty more of it.

New Year Resolutions provide the ideal time to start this stuff, but I can’t answer the major question I ask myself over making them: Why? I’m happy right now with my life as it is. What’s missing that I can’t actually take steps to resolve if I really want to? I mean, I could go and build a train set like Rod Stewart to occupy my quiet hours, but I don’t have many quiet hours. Perhaps this is because I’m still working, but then I could reframe that to state that one of my major hobbies is my work – after all, I’m choosing to do it. What’s a hobby if it’s not something that interests you, entertains you, keeps you occupied, keeps you socially connected, teaches you new skills and pleasantly fills boring Tuesday afternoons when otherwise you really would be bored?

And I get paid for it. (Let’s hear it for working, maybe that’s my New Year Resolution!)

I probably will make some pledges to myself that I will follow through on, but I suspect they will pertain to things that I already am doing. I’ll tweak some of the things I’m already working on. Some of them might be connected to my work too, because I know how useful it can be to set yourself goals in this area. I know I’ll continue to ask myself that retirement question too, however, and I hope that the irritation I feel in asking it will help me to decide what to do.

 

You have to laugh. At least, as an investor, you have to. A full year of Brexit and Trump which, in the minds of many economists and intelligentsia, should have trashed the Western economy, and what do the markets do? They thrive like never before. We have the UK FTSE 250 up by 14% and the US by 20%. I wonder what would have happened if we’d voted for Hillary and Remain?

Still, the dogs will have their day at some point, and it’s all bound to come tumbling down in a market “correction”. Reading the papers this week, most City commentators – no doubt sipping their second Bolly of the morning – don’t see this as happening in 2018. All systems are go, the world is looking good, Big Tech has more growth in there yet and China, well, who really cares? They weren’t great in 2017 and look what we did!

All this makes me scratch my head in frustration. I like to think that at least I know that I know nothing when it comes to investing, so I’ll stick to my largely passive, Index based strategy. But which Index? Should I stay in the UK? (I’m actually out of the US, because I sold up in anticipation of Trumpian havoc, underlining the fact that I know nothing.) Should I rebalance into Emerging Markets? China? The Pacific Rim? Latin America? Am I too late for Japan?

At the moment, I’m spread across many of these markets, but not in a big way. These days, almost the majority of my investments sit in dividend paying international funds such as the Fidelity Global Dividend and the L&G International Index. My intention is to stick with them and not tinker around, but is that a wise move?

One of the things that surprised me when I reviewed my allocations was that 15% of my portfolio is in an Investec Global Gold fund, which I started back in mid 2015. I must have been twitchy as an investor at that time too, hedging my shares against the lure of the precious metal. Let’s face it though, as an investor I’m ALWAYS twitchy, always thinking that every silver lining has a cloud. At the end of a year where my investing and pension portfolios are both returning more than 15% growth, my overall thought seems to be “We’re doomed!” The party has to end at some point and how should I best guard against a crushing hangover?  

Another irritation from the year is the investing equivalent of penis envy. Is my growth as big as the next bloke’s? Of the financial commentators I do read, I like the straightforward and easy to understand style of Ian Cowie in The Sunday Times. He has a portfolio of single shares that he calls his “Forever Fund” and, seemingly, it’s up 24% this year. That knocks my performance – restricted by conservative pitches into gold and bloody bonds – into a cocked hat. While I know I’m not comparing apples with apples, it doesn’t seem to help. He’s done better than me and, if my portfolio had grown by 24% I’d have made…..oh, I can’t even bare to calculate it.

So, as I say, in the face of this imminent financial catastrophe that, in my head, is coming, I have to laugh. Sometimes I feel I should be a lot more irrational, convert everything into cash and stuff it under a digital mattress. Unfortunately the suspicion that one day I will be uncovered as Unlucky Alf would then mean that inflation would take off to 10% and I’d be ruined that way. There doesn’t seem to be much alternative than to keep reading the tea leaves as best I can, taking an interest in the financial pages (and blogs of course) and tell myself that, whatever happens, “I’m in it for the long term”. I know, “in the long term” that we’re all dead, but I think I’m happy with that because, coincidentally, that will be the day it seems I will stop worrying about my financial performance.

I read in the weekend papers about the “Santa Rally”. No, this was nothing about Jeremy Clarkson on “The Grand Tour” (which I will always call “Top Gear”) but financial journalists commenting on the fact that December is generally a good month for share prices, although none were sure why that might be. But who knows anything about the markets? I sold out my American Index funds in the belief that the markets would wobble badly if Trump got in and, because I’d had a good run up until that point. I felt I should “take some profits”. Of course Trump did get in, and what did the Dow Jones do? It has only jumped subsequently by 36%.

I console myself with the fact that I sold the US Index and bought Global Dividend funds with the proceeds which, when I look at their portfolio mix, are over 50% weighted in American companies. So I’ll probably have benefited there, but I won’t give myself any credit over it. I know I’ve no real idea which markets and funds are likely to prosper and I only checked the Global Index portfolio spread after I’d bought it.

“Santa Rallies”, “Sell in May and go away” – I’m sure there is some backing to these mantras in the same way that “A stopped clock is right twice a day”. True, but at what time will the clock stop?

I’m not buying anything in December, but I probably will have a look at how my investments have progressed this year. This is because it’s probably looking not too bad – the “Trump Bump” has pulled most things along with it, including the UK market. Seriously though, if you’d have a crystal ball that told you with certainty that both Trump and Brexit would happen in 2017, would your first response have been, “Fantastic, the stock markets will take off after that!”? Somehow I doubt it. I now guffaw when I hear commentators recite that old cliche, “The markets hate uncertainty”. No they bloody well don’t, they absolutely thrive on it from what I’ve seen this year.

What will happen in 2018 then? Well, what goes up must come down, but even if there is a correction, it has seemingly only ever taken the markets 69 days to recover losses from such adverse events in the past. That’s even happened after the dot com collapse and the financial meltdown of 2008. I’m going to make a real effort to remember this adage in case 2018 sees a downturn, and maybe I’ll refer back to my dairy of 2007 and 2008 when queues formed at Northern Rock and Lehman Brothers imploded. I’ve read through my entries from those months before and was I panicking? Was I even slightly bothered? If I was then I wasn’t writing it down. Like everyone else, I rode it out and I’d probably do the same next time ’round. 

So, when I think back over 2017 I reflect that it’s been a pretty major historical year that’ll be recalled as a watershed on a lot of fronts. Uncertainty abounded, but the markets strode on regardless. Keeping an open mind and remaining flexible when it comes to finances seems to me to be the best advice I can give myself in the light of what has gone on. Anytime I try to be smart, such as making the call on Trump being elected and believing that Britain may well Vote Leave, I failed to foresee the consequences that would have helped my investments. I guessed the right results and then guessed the wrong market response.

Hindsight is 20/20 vision, of course, and it’s that historical data that pushes information on December “Santa Rallies” and “69 days” of recovery. They’re interesting statistics, but they still tell you nothing about what will happen either in January or Day 70, except that those days will come too. Just like Trump and Brexit, what choice do we have but to live through them and roll with the punches if, it transpires, that’s actually what they turn out to be?

It seems that an American journalist has caused a bit of a Twitter storm for publicising the following advice:

According to Jean Chatzky, a financial journalist, by the time you are 30 you should have at least the equivalent of your annual income saved for retirement. By 40 it should be three times your annual income; by 50, six times; by 60, eight times and by retirement 10 times. How do you do that? You save 15% of your income every year (most of it into the stock market) from the age of 25 onwards.

I can’t say I saw anything out of the ordinary in what was stated, but then I do read stuff about FIRE so perhaps I need to admit that I’m not part of the mainstream when it comes to finances.

Circulating stuff on Twitter is one sure fire way of hitting a young audience. Or, perhaps more accurately, I should state that by doing so you’ll miss an older demographic who are still slavishly watching the BBC or Sky News and reading the papers. So, as the tweet picked up steam on line, the youth reacted in utter horror at the seeming impossibility of saving a penny, never mind 15% of their income.

I have to admit that I don’t remember saving much in my teenage years or my twenties when it seemed there was so much stuff to buy and so little cash to buy it with: hifi separates on which to play my budding album collection, driving lessons in the hope that I could borrow my dad’s car (an old Fiat 126, the only car in the family), beer, Chinese takeaways, clothes from Burton’s menswear and so on. There weren’t iphones and laptops and ridiculously priced coffees, but we had our temptations.

What there was though, in the Eighties, was a growing sense of the importance of money and the desire to get some and make it work for you. Other people seemed to be doing it, which was why they were driving around London in Porches while sporting blue striped shirts with red braces. It also seemed that certain tradesmen were beginning to do quite well for themselves and that we needed to Tell Sid about the British Gas shares that were coming to market. In the Thatcher years I do think we became much more money orientated, but it was with a sense that there was a positive edge to it. You could get some and you could use it to get some more.

I turned 30 in 1993 and had just married, and that’s when I remember thinking about trying to save and invest for the future. I doubt I was thinking about retirement at the that point but, having pretty much spent everything I earnt up until then, I wanted some sort of financial cushion to support my family going forward. I’d realised how pernicious debt could be with credit cards that just never were cleared and I resolved to pay them down – once I did, the money I’d been spending to do that would be “put to work” in buying investments and shares.

Sometimes, however, I do wish I had had access to the information in the 1990’s that I have now. What if I’d been reading Early Retirement Extreme and Mr Money Moustache when I turned 30 instead of 50? What if I’d had access to the information about UK investing that I’ve found on Monevator and been applying it for twenty years? What if I’d had the forums on Money Saving Expert at my fingertips to give me further advice on tax, pensions, ISA’s, ETF’s and the rest as I required it?

So, on the one hand, I sympathise with the youth of today looking at the financial mountain they have to climb, but I also kind of think that  it was always thus. The young will never have any money, they never do. But, what they do have on a scale way beyond anything I had, is access to information and knowledge that will help them when they decide the time is right. “When the student is ready, a teacher will appear”, is a saying that’s always appealed to me because it often seems to be true. The teacher appears when you seek them out and, given the internet, the ability to find that guru, or gurus, has increased exponentially since the days when Norman Tebbit told us to get on our bikes.  

 

Well, Black Friday passed me by. I did scan a lot of ads and websites in the hope that I’d see something that grabbed me, but it didn’t happen. It’s easy to get wound up about our consumer society, but I’m happy enough to see it robustly function for other people while I hold onto my money with a death grip.

I think we’re all aware how much shopping has changed in the last ten years with the move to on-line but, let’s be honest, when it comes to retailing, we Brits have been pretty good at it. We are a nation of shopkeepers and we keep the people coming back for more.

I worked for years with the major UK supermarkets and, for a long time, most of them were widely acknowledged to be “world class” businesses. Whether it was transforming their “Own Label” propositions, pioneering “Category Management” and building incredibly robust and efficient supply chains, UK retailers were – and still are – admired throughout the world.

As a supplier, the fastest way out of the major supermarkets was to consistently fall over on supply. The retailers don’t really sit on stock these days and expect product to turn up “on time, in full”, 365 days a year. After all, what’s the point of shops if nothing is on the shelves? Retailers expected stock to ordered one day and turn up the next, 100% correct versus what had been ordered, and booked into their major distribution hubs at a specific time.  These days, as a shopper, you almost expect to turn up to a Tesco’s on Christmas Eve and find fresh turkey on the shelves, sprouts spilling into the aisles, goose fat in which to roast your tatties and 56 varieties of gravy to bathe them all in. And that’s in any Tesco, Asda, JS, Morrisons (and so on) in any town throughout the UK the night before Christmas. The fact that the goods are there for you doesn’t happen by accident.

Meanwhile Amazon have applied this principle directly to household consumers. Again, the supply comes from the super-hub distribution depots built to service this demand. Most of us are vaguely aware of these mega box distribution centres that you sometimes glimpse from the motorway and probably wonder what goes on in there? I’ve been round a few in my time and they are awesome installations, but I won’t pretend that I really know how they do what they do on a daily basis. I just know that they’re incredibly effective at it. (As, incidentally, are the majority of suppliers and manufacturers who are supplying into these boxes on a daily basis.)

The future of retailing may be up for question but the future of shopping isn’t. We may all be sitting at home ordering our stuff instead of heading for the high street or mall to do it, but “do it” we most assuredly will. And those goods will need to be stored and despatched from centralised points, whether it be by driverless van or Amazon drone.

The future of shopping will be all about supply. It’s actually always been that way. So I was very interested to read of a new investment fund being launched in December, namely the “Aberdeen Standard European Logistics Income” trust.  This was highlighted and explained by Ian Cowie in this CIty Wire article which, as soon as I read it, I had a gut feel that it was a good bet. Generally speaking, I don’t really buy into actively managed funds due to the charges levied and sink most of my investments into Index trackers. Occasionally though, I make an exception, and it’s usually when something I read suddenly rings true with my own experience of the world.  Nobody knows what the future holds of course, and no doubt I could quickly think of an alternative distribution future that has a focus on micro-hubs, but I haven’t read much, if anything, about that. Investing is about taking calculated risks, even when picking trackers, and sometimes I think that a gut feel based on experience is almost as worthy as an in-depth analysis of a business or an economy. Gambling is a calculated risk too and, although we might hate to admit it, that’s what we’re doing with any investment.

As I’ve been sitting on some cash recently, I put a chunk of it in this direction. “Buy what you know”, they say, and I think I know that shopping isn’t going to die out anytime soon, even if the shops do. 

I’m tight. I always have been. On my wedding day, my brother stood up as best man and kept the guests entertained for ten solid minutes by cracking jokes about how tight I was. “Jim was up a ladder the other day cleaning a gutter when he felt 50p fall out his pocket. He caught it before it hit the ground”. Yes, yes, yes, how they laughed, while I wondered why I couldn’t remember it. After all, it sounded like something I’d do. And what had I spent that fifty pence on?

As I’ve probably mentioned before on this blog, I actually receive a bigger thrill from not spending money and from making little incremental savings than I do from making ridiculously big purchases. I do have one or two exceptions to this rule – I really don’t mind spending serious money on holidays and I’m a bit of an Apple fanboy, despite how shallow and pathetic I feel the latter admission to be. Still, they’re the exceptions to my rules.

Resultantly, I was a bit shocked the other day to sit down and calculate out how much our household seemed to be spending on “unbudgeted” items over the last year.

For someone who is proudly aware that every penny is a prisoner, I seem to have been allowing quite a few of them “escape” recently. I’ve been vaguely aware that I’ve been letting some of my standards slip – for example, these days when we head out for a Saturday night dinner with friends, I take the bill out of our “savings”, whereas for years this would have come out of our own personal monthly spend budgets. I don’t know why I made that change, but I do know that it has made a difference. When you can spend £150 a month socialising and allow yourself effectively not to “notice”, well, that’s just not good enough!

We also seem to have been buying “frivolous” stuff for the house, like new wooden flooring in a couple of rooms when, in my view, we had perfectly good and serviceable carpets. My car has cost quite a bit this year too, perhaps because it is five years old with over six figures on the odometer. Repairs, services and anything else has to come out the savings too, because for thirty years I was given “company cars” and never had to budget for them. That’s a habit I’ll probably have to break now to get back in control. (I won’t bore you with the fretting I’ve done over the past few weeks about whether or not I should trade my car in for a newer version. Suffice to say I’ve decided not to. For the moment.)

Looking at my “unplanned spend” caused me to think about our “planned”, or budgeted spend too. Our Virgin Media bill is frankly ridiculous as we’re paying the top package. I really have to do something about that. Then there’s those charities I’m giving to merely to salve my guilty middle class conscience. What have they done for me lately? And then there’s other “stupid’ stuff, like insurance – life insurance when my mortgage is all but cleared, annual holiday insurance. mobile ‘phone insurance, multi-car insurance, dental treatment insurance – I feel I’m single handedly keeping that damn industry afloat.

On the plus side, I’m still doing the weekly shop at Lidl, I’ve slashed personal spending on the Kindle due to rediscovering the local library and I’ve managed to cut the cat down to two pouches of food a day from three. These things add up, and tell me that I haven’t quite reached Kardashian levels of needless consumer consumption yet. On the other hand, reviewing my credit card spend for the year has underlined the fact that my “emergency fund” needs to be watched more closely going forward. When you stick to the rule of having an equivalent of three month’s salary available to you in cash to cover life’s unexpected spend, it’s all too easy to class that second bottle of wine in Pizza Express as a genuine “emergency” purchase. And my monthly budget needs a good talking to while I’m at it. These days, I might not be as agile as I once was when it comes to descending ladders at speed, but there’s no harm in keeping the training up.

Is anyone else feeling a bit dizzy as the markets seem to continue to climb ever upwards? For someone like myself, passively investing for years, 100% in equities across my pensions and ISA’s and forever looking forwards to a five or even ten year horizon, these should be heady times. I should be enjoying the ride, but at my back sits dark anxiety. Why? Because I’m nearing the finishing line.

In a few days I will turn 54 and the final year countdown begins toward cashing in the first slug of one of my DC pensions. This is so that I can take my 25% tax free cash from the pot before the government raids this perk as, I feel, they inevitably will at some point. This pension has, frankly, rocketed in the past 18 months. It’s not totally passive, as I have one or two managed funds within it, but I watch it growing well beyond the goal I’d set for it to achieve about three years ago, and increasingly fret about the markets undergoing a massive reversal.

I’ve lived through such things before – I invested over the dotcom boom and the 2008 crisis – stifling a yawn as the markets collapsed. For me, at that point, this was great news. My regular monthly contributions just gained me more units in the funds I was buying, and I never thought twice about converting to cash, buying gold or looking for value in property. “What goes up must come down”’ I told myself, and stuck to my “pound cost averaging” and my long term view.

I’m not so blase now, I can tell you, and hardly a day goes by without me telling myself that the sensible thing to do right now would be to convert all those equity funds into cash or something more stable than shares. Or at least some of it. Then I could set my 25% lump sum in stone. Okay, I might lose out on some growth, but at least I won’t lose out versus my projected lump sum. After I’ve collected, I can switch the remainder of the pension back into equities while I live off the sum that I’ve cashed – which will last me five years, I reckon, so I’m back to a “safe” investing horizon on the remaining funds.

As I write, I ask myself what’s stopping me doing so? I think a lot of it is that I’m frightened of change – I’ve not really altered the way I invest for over twenty years, and it’s served me very well so far. It ain’t broke, so why fix it? And I don’t really “need” that lump sum either. If the markets do collapse in the next 12 months, well, I can ride it out again. As a passive investor at heart, I’ve set my allocations, I’m following a strategy and therefore the best advice I can give myself is to “do nothing”. Stop worrying and go and do something more useful instead.

But this only gives rise to the next question: “If not now, when?” At what point am I going to relax and cash in some of my chips? I set a goal to cash that pension at 55 and I almost feel obliged to achieve it. If nothing else it might force me to look at other aspects of life that involve a bit more spending than saving because time is finite. Reaching pensionable age is a milestone that’s hard to ignore, much as you might want to tell yourself you’ve years and years left to gather the rosebuds. You haven’t.

Please forgive this “Woe is me” navel gazing. I know I’m lucky to have such problems. I can only justify submitting a post like this because I never knew that choosing to sell would be a hundred times harder than choosing to buy. It’s like in the same way that I found choosing to retire to be a lot harder (for me) than choosing to go back to work. And that was why i started to write this blog in the first place.

I chanced across a TV documentary last night about retirement entitled “Work ‘Til You Drop” which, unsurprisingly, piqued my interest. I’d admit, I’m pretty bored with my own views on the subject and often think I’m stuck in a privileged bubble where my biggest worry is protecting my wealth instead of accumulating more. I’m well aware that not everyone is in such a position and that within the FIRE community we’re all at least looking at the same hymn sheet if not actually singing from it.

The programme covered quite a bit of ground, I felt, and tried to give a positive spin on some alternatives to hanging up your boots and trying to live on the State pension. There was an old bloke still working in Asda at the rather incredible age of 92 – an outlier for the majority of human beings, I’d have thought, and not too relevant to the lives of most pensioners. The cynic in me thought that Asda probably role him out as their flag waver every time they’re asked about their policy toward employing older workers while conveniently not mentioning that he’s given the responsible job of collecting trolleys and stacking shelves. When I saw a similar clip of B&Q I did ask myself if this is the best we can do with the aged – checkout person or shelf-stacker?  

The programme showed two other notable alternatives – a female entrepreneur who’d started a cosmetic business at 65 and an unemployed hairdresser in her fifties who just couldn’t get back into the workplace and was living on £73 a week social security. My sympathy sat firmly with the latter – this, I felt, was an absolute reality for the majority of people. Yes, yes, yes, I know we’re all movers and shakers in the FIRE community, all self-starters and self-sufficient, but unemployment in your fifties without a means of income is a terrifying and almost hopeless prospect for most unskilled or semi-skilled people. Even for skilled people, losing your job in your fifties is a different world from experiencing the same in your forties. Anyone who isn’t worried about this prospect is either in denial that it will happen to them or is luxuriating in the knowledge that they’re financially cushioned if it does.

Clearly the best course is to prepare for the troublesome employment years that begin at fifty and ends, potentially, when the State pension kicks in. Writing that, it strikes me that not a lot is written on that subject when it’s such a scary reality for so many people. Thinking about it, it happened to both my parents, but they both had workplace pensions that they were able to draw upon at 60, and thus only had about five years to cover with the “pin money” jobs they managed to find. (Plus they picked up their state pensions many years before today’s trigger point of 67 years.) I can only guess that most people have to assume that somehow they’ll survive if they lose their job in their fifties and can’t find another – worse things happen at sea and life goes on. Yes, it does and it does, but is that the best you can hope for?

I used to worry about losing my job in my fifties quite a bit, and it was quite a driver behind the saving and investing that I did in my thirties and forties. In my line of work – sales and marketing – being over fifty isn’t a massive selling point and I was well aware of it. When it actually happened to me I was financially prepared for it, and I cannot imagine the horror of the situation if I’d not been.

I also thought I’d be prepared in other ways to get back into the workplace – my skills, experience, attitude and application – but it just wasn’t that easy, which is why I sympathised with the unemployed hairdresser in the programme more than the entrepreneur. In my experience, behind many entrepreneurs there often sits a boatload of cash that can cushion the early days and be put at risk. I certainly thought of risking some of my retirement pot to start out on my own, but ye Gods, it seemed a much bigger risk in reality than it did when it sat in my dreams! In the end, I never had to test myself on whether or not I really did have that entrepreneurial streak that I always imagined was there and, on the whole, I think I’m quite glad about that.

I really hope, as the programme inferred, that the workplace is changing when it comes to employing more elderly people and, if I’m honest, I hope I continue to be one of them! One thing does seem to be certain though, there’s going to be plenty of applicants for those jobs if and when they come around.

Here I am, fifty four years on the planet, over fifteen of them studying, over thirty of them working in corporate business and I still can’t work out my tax code’s relation to my pay. I can get it close but, for some reason, when I apply my code to my gross salary, I can’t get it exactly match what I see as my net pay in my pay packet. This drives me rather bonkers. Is it me or is it them, the tax boffins, and how we calculate percentages? Or is it because they’ve made it so complicated to someone who, I admit, has been intimidated by numbers since Primary Six in school, when I was aged about ten years old, and a male teacher went ballistic at me for failing to grasp the “simple” arithmetic involved with fractions?

I mean, if my gross salary is £50,000 and my tax code is 1,300L (say), then – simply – I should be taxed on £37,000, shouldn’t I? As I understand it, my tax code of 1,300 equates to a sum of £13,000 that I can earn tax free. Ah, but I take a company car allowance, plus the company private health scheme. And I also contribute to a company pension. Oh, and I shouldn’t forget my National Insurance contribution either.

Of course, the pension contribution is on the positive side because that’s a taxable allowance. I get tax relief on that. Just don’t ask me where.

I was chatting to one of the finance guys at work the other day on company cars – because I was thinking of taking one with all my petrol paid – and was trying to work out what was the better deal in my wage packet, after tax. As stated above, I currently use my own car and am paid an allowance (taxable) for that.

“Oh by the way”, he said, “Are you claiming the difference between your business mileage contribution paid by the company (13p a mile) and what the taxman allows?”

“What?” I asked, perplexed.

“HMRC allows you 45p a mile for miles done on company business. So the difference, 32p, multiplied by your annual mileage – you’ll get tax relief on that.”

Really? That’s nice of the taxman to tell me, which he didn’t. This is similar to pension relief if you are a higher rate taxpayer. You’re entitled to it, but the government isn’t shouting about it. For years I failed to claim that additional twenty percent through simple ignorance. It literally cost me thousands and today, according to my mate who’s an IFA, this nets the government millions. There are plenty of people making the same mistake as I did, not claiming their full tax relief on their pension contributions. Although it’s not a “mistake” as such, just a massive and costly gap in your knowledge

What else am I missing here? What other gaps do I have? What about charity donations? I donate to charities by direct debit every month and suspect I might be due tax relief on this, but I’ve never bothered to look into it. So I can add “laziness” to “ignorance”. At least I suppose this is a “known unknown”, but what about my “unknown unknowns”!

Never look a gift horse in the mouth though, unless it’s the taxman giving you the horse – in that case, check the numbers! I am good at submitting monthly expenses backed by receipts, so my annual mileage was easy to calculate. Next I logged on to my self-assessment account, made the relevant entry (not easy to find) and entered the cost differential on my calculated business mileage. Nice one!

To be fair to HMRC, the tax rebate was in my bank account less than a week later, along with the e-mail telling me my tax code had changed as a result of my efforts. Which leads me back to the start of this blog post – my code had changed, so what would my next net wage packet be?

Needless to say, until it turns up, I’ve nothing but a rough idea, give or take fifty quid. Which, I tell myself for the thousandth time, just isn’t good enough! And, thinking about it, that was what the teacher in Primary Six used to shout at me when I couldn’t calculate four fifths of eighty three. From today’s perspective, I think I blame him more than I blame the taxman when it comes to the numbers.