People in their 30's - future financial plans?

Approaching mid-30's. I've got a financial independence goal of being mortgage free on a house I'm happy to live in and having enough liquid assets to generate a monthly income of £1.2k per month in today's money. To that end I'm committing a total about 50% of my salary across four fronts: house, company pension, S&S ISA and cash in a rough 30/30/30/10 split. I'm not counting on the state pension being available to me and although I may well receive a fairly modest inheritance, I can't bring myself to use that in any financial planning. Should reach the target by 60 assuming modest career growth.

To be honest I only use the above target and do future planning to enforce financial discipline in the present day. I think (hope) we are still too early in life to be able to map the rest of it out on a spreadsheet. Who knows what opportunities are on the horizon. The most important thing for me to is to keep working on increasing my earning power, ensuring my skills are up to date and that my career is progressing steadily if not spectacularly. That way I should be well placed to take advantage of 'big money' opportunities which typically present themselves to people in my industry in their late 30's, 40's and beyond. A really good job or two could be transformative for my financial future.

Last year I decided to set financial targets for just 2017 so that they felt real and achievable. I’d probably do the same again for 2018 as retirement is so far off

adonis10 wrote: »

That is an impressive pot at aged 29. How long have you paid into that to accumulate such a sum?

Decent salary. That is starting from 22 (so 7 years ago now), and contributing between 20-25% every year over that time.

Obviously I have been lucky that the last 7 years, the markets have essentially gone up and up.

mark5 wrote: »

They probably started right at the bottom of the market after the crash so have had a great run since early 2009. Will they see the same gains over the next 8 years?

Yep thats right. I don't anticipate the same sort of return over the next decade though.

I am in my early thirties and here is my plan to secure my own financial future.

My salary is bit below average plus bonus. I have no intention of having any commitments at all so that two things (woman & kids) are the ones I don't have to worry about, I got a workplace pension with me and my employer paying minimum auto-enrolment contribution. Since the employer didn't really do workplace pension back when I started working, I went to an adviser and got the private pension set up. Originally, I put 30% into the pension pot for first few years and since my income was low, I got higher WTC than I would otherwise:D Otherwise, I would not be able to afford to contribute that high. After almost seven years. I managed to have a combined pension pots worth £55k and I am still paying about 17% gross into them (if I had an employer that will contribute a lot more, my pension pot would be much more healthier but oh well). I do try to keep it topped up to 25% of my total earnings when I can depending on Xmas bonuses. It is really encouraging on how well it grew, it worked out as the annualised growth of 8.34% since 2010.

To help to tide me over for the gap between my retirement and SPA, I am saving about 20% of net salary into ISAs (S&S and Lifetime). I also try to maintain an emergency fund although ever since I bought my flat few years back, it is declining to about six months' expenses and trying to do my best to keep it at that level.

My main concern is overpaying my mortgage (paying 30% of my net salary into it) as much as I can (down to £49k atm). My hope is that once I paid the mortgage off in a decade or so, it will free up more income for me to throw into other saving vehicles if needed.

I just have to hope that all my hard efforts would be enough.

adonis10 wrote: »

Re the pensions, when you changed jobs did you not transfer what was in your current scheme to the new one and simply start again with the new employer's scheme? If so, what happens to the old one? Presumably whatever has been paid in simply sits there and fluctuates depending on the performance of the fund it is invested in. Was this a financial decision, ie. you preferred the fund that the contributions were invested in therefore did not want to transfer to the new scheme?

In short it was due to the way pensions used to be and to avoid losing guarantees that the old pensions had.

In long ...

My first two pensions were in a with profit fund from Norwich Union. One was a regular payment one, and the other a lump sum one I could pay into depending on how much overtime I got. When I got a job with a defined benefit schem it wasn't possible to transfer it. So they sat there and did not flutuate due to being with profit schemes. Such schemes were popular at the time but are not generally considered bad. However, some of them had guarantees that could be good. Mine guarantee an annuity rate of 10.6%, so the funds are not very large they will pay a decent amount if I don't try to vary them. Such guarantees are what brought down Equitable Life who sold too many such policies.

My next two pensions were a defined benefit one with an associated AVC one. I would lose the defined benefit security if I transferred it, The AVC one hasn't done particularly well but because it is linkled with the DB one I can use it for the TFLS.

The next scheme was a defined contribution one with a defined benfit underpin on part of it. The underpin is only 1/80th of my salary, adjusted for inflation for each year, but will almost certainly be enough to be paid. I haven't transferred as then I would lose the underpin.

Then I was in a straight DC scheme with my employer matching up to 5% of my salary. After a while they decided to out source the pension matching up to 6% as compensation. I transfered the first DC scheme into the new one. There was a discount on the fees whilst I remained an employee, which ended. So I transferred the lot into a SIPP to give me the possibility of drawdown.