Am I saving too much?

[Pensionpot123]

Hi all,
I'm always a bit concerned that I don't splash out - I am very frugal....am I too frugal?

Household income ~£100k in West Scotland. Wife and I are mid 30's.
One DC - 6 months.
Value of house - £600k, mortgage £200k with £50k savings. Plan to pay mortgage off in 10 years.

At the moment our pension is looking to be approx £76k/yr combined exc. state pension.
Long term plan would be to downsize on retirement to house maximum half the value of current home (if nothing changes, profit £300k from sale).

Should I be spending more? Am I leaving myself too much for later life?

At the moment we -
Don't eat out
Go on 2 good holidays a year (Florida, cruise, New York etc)
Don't do hotel breaks
Get a takeaway every ~3 months
Change car every 2-3 years to a new-ish budget car (Ibiza, Fabia, Clio etc)
Keep all other outgoings to a real minimum

Any opinions or serious advice about pension is welcome!
Realise there may be people who earn a huge amount more or have a much bigger pension pot.

I disagree with not eating out but it’s one of life’s great pleasure for me so that’s just personal. Are you sure about the amount you will be getting for your pension? I’m not going to post specifics online our pensions are decent but not 76k PA and we are spreadsheet weirdos that know everything about our income and outgoings. Because it’s not adding up on a 100k salary. Are you in defined benefit or defined contribution pension scheme?

You’re really going to struggle with 76k/year pension and 300k lump sum…I’d recommend saving more.

I worked in industry beforehand making ok-ish money (~£40k), in Scotland when you work in industry you can get up the teacher scale faster.

Not mid 30’s they’re not! And this comes from an ex HT in Scotland. You’re talking absolute bollocks.

I don’t know many teachers who earn £50k, especially in their 30’s…

I do in London due to the pay scale, but they haven’t got anything like 450k in savings & equity!

And you should also have a quality of life, so if you don't care about eating out then no problem but if it's something you enjoy and can afford, then you should do it - at least sometimes. On the flip side most people only 'live for the moment' and have more material possessions than they need or can afford. I have many friends who but their children loads of presents and such expensive items, yet won't be able to help them with real things that natter later in life such as uni fees or a house deposit. There's a happy balance.

If you feel that you have too much, then could always give some to a good cause.

I worked in industry beforehand making ok-ish money (~£40k), in Scotland when you work in industry you can get up the teacher scale faster.

So how did you put 35k a year into paying off mortgage?

It only takes 5 years to get to the top of scale so you could be 26/27 earning 48k.

You paid off an entire year’s teaching salary on your mortgage 🤣 keep it coming this is absolute nonsense.

I don't think it's necessary to spend any more than makes you happy. Your DC is very young, and if you're planning on having any more then they will eat into savings all too quickly!

We're in a different situation with jobs but similar in that our income is far larger than our expenditure. We splurge on the things that we value but are frugal elsewhere or just don't incur expenditure because we don't do certain things that many other people do (eg don't drink or have gym membership). We expect to clear our mortgage within 10 years just because there is not much else we want to spend money on.

I'd say that it's a good idea to look into investing rather than savings so that money isn't eaten away by inflation, and look into any tax efficiencies. We expect to have significant money to pass on to our dcs (and future generations) when they are older. If you have surplus wealth you can look into how your dcs and gdcs could benefit from the money, in the most tax efficient way.

I'm intrigued as to how you will amass a £2m pension pot - wow. For a start you won't need a pension of £76k a year when you're 70-odd with no mortgage. Unless you're planning on living the high life in your 70s instead of now? We live a fairly frugal life out of choice but also saving for school fees. It sounds like you should live a little but then if you're happy, who cares?

Ok, I'm not sure you're telling the truth or you're massively out of touch. A probation teacher is on £32k, every year after that you go up a scale and do 5 years after probation you're on £48,516. That means someone who leaves uni at 22 is on £48,516 by 27.

Unless you're going to make a valuable contribution then I'll move on 👍.

I agree... Each to their own but it amazes me that just about every child in my class has a brand new iPhone, airpods etc.

My DC will be getting a cardboard box 😂

But you haven’t had a public sector pension that long if you worked in industry first?

I’m well aware, however you’re not being totally honest are you? And remember these are full time salary equivalents, teachers only get paid 40 days holiday…

That's exactly what I was looking for - thank you!
We want to enjoy retired life...but didn't know is £76k enough, just about right, or far too much.
You reckon it'll be way too much?
Thank you! Thought the discussion would be like this rather than everyone saying I'm a liar about a salary that is open for the public to check 🤦‍♂️

Are you drinking lots this holidays and getting your numbers mixed up?

Are you kidding? I literally get paid £48,516/12 every single month.
You are ridiculous.

*We want to enjoy retired life...but didn't know is £76k enough, just about right, or far too much.
You reckon it'll be way too much? *

Is the amount you pay into your teachers pension optional? In England it isn’t.

I'm not sure about total pension pot - there is a calculator for teachers pension, input your start date, your retirement date (65 years old for me) and it tells you.
To put into context, I double checked contributions (see attached) 9.2 + 23% - 32.2% each year so £15.6k per year and for me, if I retire at 65 I'll have been teaching for 35 years so rough, approx figure of £546k x2 for wife and I = £1.1m

Do you think the calculator is wrong by suggesting this would give £76k?

This maths doesn’t work out in my mind. We’re earning £110k in our household. Mortgage is £1,100 a month and we can afford one holiday a year and a couple of weekends away/theatre trips, drive old cars and rarely eat out. Biggest expense is dc clubs - dance classes.

while we live a nice life, a £2000 mortgage would make it tighter and affording 2 nice holidays would not be viable. Not sure how many dc the op has but still can’t quite see how they’ve paid off so much of their £600k home. I feel info is missing.

Teacher salaries are not advertised as pro rata. It is what is said.

I would live now, seriously. Read some of the threads on here. People in their 70s have low outgoings once mortgage is paid off. They don't need 76k.

Enjoy life now. Not eating out would be a deal breaker. But I have a 10 year old car so it is horses for courses.

Of course we don't know what the future holds and we all hope to be happy in our 70s and healthy. May not be. Live now.

I think you can afford to be less frugal.

Not the point of the thread but wish England teacher salaries were as good

It's not... But, the commutation you take is optional I believe.
If I planned to sell house and for rough figures say bank £300k plus £76k/year and this is too much then could potentially change this around... Put more into life just now and less into mortgage

Are you kidding? I literally get paid £48,516/12 every single month.

Which is less than 35k a year after pension contributions which is why I'm confused how you have been overpaying your mortgage by 35k for years.