For some of you reading this blog, my mini splurge the other day probably doesn’t seem like such a big deal. Some of my friends can drop that amount of cash several times a week online and at the shops and not worry. The reason why I was kicking myself up the butt so much is that I deviated from a path that Martin and I had committed to travelling – and not for the first time - putting us at risk of not making our target for Martin’s retirement fund at the end of the year.
Last October, Martin and I committed to putting away £60,000 in the next seven years. He could then give up work and use that money as income if we needed it, although there is a hope that I can cover all the bills with my wage and leave that money there to grow. This means we have to stash £8,570 a year, rising by about 2.5% every year from the second year onwards to take account of inflation. We opened up a SIPP and set up a basic monthly direct debit for £350 that would come out of our current account and which HMRC would top up with £87.50. This would give us £5,250 a year. That just left another £3,320 to find – or once HMRC has given us the tax relief - £2,656. So far this year, we have managed to add another £957.44 that was topped up with £191 in tax relief.
That now leaves us with another £1206 to find before October, which HMRC will top up by 20%, and we then hit our target.
I had planned to do this slowly and surely, a bit every month, but with overspending on garden-related stuff, trips out and splurges, it means I have to find a lot of that money as a lump sum in the next three months. I know where this money is going to come from and I’m not happy with it. I’m currently undertaking a freelance research project for someone and had earmarked all of that money to go into my meagre pension. I set up my first pension in 2010 and managed to pay in for three years before redundancy froze that one. I’ve been paying into another pension with my current employers for the last six months. At the age of 42, I have less than four years of payments into a pension, which is not good if I want to retire early to be with Martin.
I only took on the freelance work so I could add a lump sum to it, and now because I haven’t kept better control of the finances since April I have to use this to fund the outstanding amount for Martin’s retirement.
BUT the silver lining is that we do have the money coming in to do this, and that I do have longer to make up for it before retirement than he does, but still it rankles a bit.
Never mind, I will do better next year