New Year’s (Money) Resolution – new year, this blog
Pension kick up the backside…
I’m in my forties. I wouldn’t ordinarily announce this but it’s relevant as it’s about mid-way to my retirement.
About a month ago, I had a shock. I reviewed my pension to see if I should increase my contributions. I clicked on the retirement calculator, and it didn’t add up. No matter if I increased my contributions by 2%, or 4%, or whatever other increasingly unrealistic figure I picked (funny how what sounds like a measly 2% of salary isn’t quite so paltry when converted into extra pounds per month coming out of your pay), my projected pot of money would not buy a big enough income at retirement.
Anywhere near enough.
Also the more I looked at it, the worse it got.
The calculator makes lots of assumptions which look a little wobbly. For example, my employer pays into my pension. The calculator assumes I will be working there until retirement, also that I’ll be getting my employer’s contributions all this time.
It also assumes I retire at age 60. I must have picked this, as good an age as any. But my husband is older than me, so if I don’t want to still be working while he’s taking it nice and easy, then maybe I need to at least consider the possibility I might want to retire earlier, which will be before my state pension kicks in.
The point of all this is that for the first time ever, the abstract concept of retirement became real. There’s an actual concrete date by which I need to have built up a pot of money, because I don’t much fancy working until I drop, and I’d like to have enough put by to do a few fun things too.
I don’t feel ‘middle-aged’ being a forty-something, but it is my ‘midlife’, which means my potential for building up money in the years between now and my retirement is more limited than for a twenty five or thirty year old.
This got me thinking and worrying about what options I have right now, the result being that I have decided to spend a year thinking properly about money and what I can do to make things better. It’s that time of year when we think about what we want to change in our lives, so here I am with my New Year’s Resolution!
I’m going to focus on my finances – how I can save money, how I can get more money, and how I can feel happier about my future money.
Apparently one of the ways of helping you stick at your goal is to track your progress, and another is to tell someone about your resolution – so here I am aiming to document my efforts each week in this blog.
For January, I plan to get the ball rolling by spending as little as possible and working out exactly where I stand with my finances:
- Spend on only the essentials – I’m not sure at the moment how this fits into wanting to hit the January sales, but I plan to cut back as much as possible to see what difference it makes. I’m thinking coffee shop coffee, value supermarket brands, and maybe being a social hermit. I’m also taking inspiration from Alcohol Concern’s ‘Dry January’ campaign, to cut alcohol for a month…though for me I only plan not to spend money on alcohol. I can still finish off that left-over bottle of wine from Xmas. It might be a cop-out, but I’ll still drink less than usual which will be a health benefit, and I’m more interested in the money angle anyway. Their website says the average person spends about £75 per month on alcohol, £886 a year. That’s more than I spend, but any saving counts.
- Do an audit of my finances – working out by exactly how much I over-spent at Xmas and what I’m actually starting the year with.
I’ll review these two aims in February and see where I go from there….