People in their 30's - future financial plans?

Terron · 2 October 2017 at 9:50PM

ComicGeek wrote: »

Always hard to get a balance between saving for pensions/future and enjoying the present. My parents drilled the 1st one into me, but seeing my M-I-L pass away at only 50 without doing anything on her bucket list has made me refocus on both present and future, particularly now I'm in my late 30s.

I have been lucky enough to have achieved many of my bucket list items. After the first gulf war tourism to Egypt was badly hit and the price of holidays there were cut and it was still quiet when I got there. I flew on Concorde the month before it stopped flying. I have visited Pompei several times, Unfortunately going into space looks out of reach

somethingcorporate · 3 October 2017 at 10:48AM

I am 33 (gulp) and my wife is 32. We have decent incomes (combined in excess of £125k pa). My wife is 4 days per week and I am 4.5 days.

We have £225k in pensions, £140k in equity (on our £350k forever house) and a bit in cash. We have been putting 33% into our pensions for the last couple of years but have dropped it off to 25% to put some more into our holiday fund as cash has been squeezed with daughter starting private school and some obscene spending on holidays/house over the last few years.

We would like to retire at 55 but don't think we will be able to and maintain our current lifestyle and if the little one goes all the way through private school and then university (estimated at an eyewatering £250k!).

We have upped our pension contribution every time we have had a pay rise over the last 5-6 years and it has quickly added up and plan to continue to do this as our salary continues to rise (if it does). Like everyone we struggle to strike the balance between wanting to live for today whilst provisioning for the future.

We are lucky we have been able to do both but have increasingly had pressure on our finances so are going through some rigorous budgeting to get some modest debts cleared (£7k kitchen and £5k on a CC) and we will start to put more and more cash aside for schooling, holidays and the future.

OP, thanks for starting the thread. I am a frequent visitor to the pensions board but find it is rarely discussing mid-career positions & is more often than not queries about DB pensions.

Lokolo · 3 October 2017 at 10:53AM

somethingcorporate wrote: »

We have £225k in pensions, £140k in equity (on our £350k forever house) and a bit in cash. We have been putting 33% into our pensions for the last couple of years but have dropped it off to 25% to put some more into our holiday fund as cash has been squeezed with daughter starting private school and some obscene spending on holidays/house over the last few years.

My question to you is about the lifetime allowance. I was planning on increasing pension contributions as much as I can afford around 40-45% contribution rate, but if I did this I would more than likely end up going over lifetime allowance. Especially with 30 years of possible growth.

Have you considered this and what your longterm plan is to avoid it?

adonis10 · 3 October 2017 at 11:03AM

kidmugsy wrote: »

You are already contributing 29% of pay into a pension. That's probably more than enough. I'd even consider contributing onlyup to the amount that maximises employer contribution unless you're doing it by salary sacrifice. You can always contribute more in future if the tax relief increases for standard rate taxpayers or if you become a higher rate taxpayer.

Meantime consider LISAs if you'd be happy not to withdraw the capital until you are 60.

True, but I am well behind - 15k by age 34 really is not a good place to be, pension wise!

The amount that maximises e'er contribution is 8% but I just felt I could add more. It is all by salary sacrifice so I am benefiting from the tax and NI savings so it makes sense.

I am still considering a LISA but the feeling I get that is that they are not as lucrative as they look on first sight.

Tom_Brine · 3 October 2017 at 11:10AM

33 years old here

Currently earning £44k a year with a maximum cap of £47K to reach.

A DC pension pot of £35,000 (I only started really saving when 28 and on a lot less money). Paying in 8% (6% max with 2% AVC's) and employer pays in 12%. Additional one years worth of a DB pension. Additional tiny DB pension from part time work through University.

Also own house worth 160K with 94K left outstanding on the mortgage. Paying £798 a month repayment at an interest rate of 2.54%. Rental income from renting out rooms more than covers the mortgage and bills.

I have 9500 in my companies (National Grids) Sharesave scheme which matures in 2021 with 4026 shares (£30,000 worth) which I will be able to buy at £7.45 per unit

I have 230 shares in national grid and purchase an extra £150 per month pre tax through a SIP scheme.

I have 273 shares in the Scottish Mortgage Investment trust in an ISA with Cavendish Online and purchase £125 worth of extra shares in the trust every month.

Early days for me but hoping i'm covering off lots of bases in order to diversify. I'm looking to sell my house next year and buy with my partner. She has 60K from a house sale and I will have similar from selling my property. Idea is to buy a forever home with £120k deposit then attack the mortgage. Will miss the income from the house and probably be financially worse off as a result but you only live once and all that.

somethingcorporate · 3 October 2017 at 11:10AM

Lokolo wrote: »

My question to you is about the lifetime allowance. I was planning on increasing pension contributions as much as I can afford around 40-45% contribution rate, but if I did this I would more than likely end up going over lifetime allowance. Especially with 30 years of possible growth.

Have you considered this and what your longterm plan is to avoid it?

I do not think we will be anywhere near it given there is two of us earning roughly the same and we each get the allowance.

I have £125k in mine, my wife has £100k in hers and we are both contributing circa £15k a year. Over the next 22 years (assuming we retire at 55) we won't be close to the LTA - according the HL it will be in the region of £6-700k each.

somethingcorporate · 3 October 2017 at 11:13AM

Tom_Brine wrote: »

33 years old here

Currently earning £44k a year with a maximum cap of £47K to reach.

A DC pension pot of £35,000 (I only started really saving when 28 and on a lot less money). Paying in 8% (6% max with 2% AVC's) and employer pays in 12%. Additional one years worth of a DB pension. Additional tiny DB pension from part time work through University.

Also own house worth 160K with 94K left outstanding on the mortgage. Paying £798 a month repayment at an interest rate of 2.54%. Rental income from renting out rooms more than covers the mortgage and bills.

I have 9500 in my companies (National Grids) Sharesave scheme which matures in 2021 with 4026 shares (£30,000 worth) which I will be able to buy at £7.45 per unit

I have 230 shares in national grid and purchase an extra £150 per month pre tax through a SIP scheme.

I have 273 shares in the Scottish Mortgage Investment trust in an ISA with Cavendish Online and purchase £125 worth of extra shares in the trust every month.

Early days for me but hoping i'm covering off lots of bases in order to diversify. I'm looking to sell my house next year and buy with my partner. She has 60K from a house sale and I will have similar from selling my property. Idea is to buy a forever home with £120k deposit then attack the mortgage. Will miss the income from the house and probably be financially worse off as a result but you only live once and all that.

Good plan.

You'll be heavily exposed to a single stock - I am 15,000 shares deep into my company (over the last few and next 5 years) and the share price has dropped 40%+ in the last 18 months. Just make sure you do not hold on too long and diversify to minimise your risk here. On the plus side, the cheaper they are the more I pick up each month.

Hutchch0920 · 3 October 2017 at 2:21PM

somethingcorporate wrote: »

I am 33 (gulp) and my wife is 32. We have decent incomes (combined in excess of £125k pa). My wife is 4 days per week and I am 4.5 days.

We have £225k in pensions, £140k in equity (on our £350k forever house) and a bit in cash. We have been putting 33% into our pensions for the last couple of years but have dropped it off to 25% to put some more into our holiday fund as cash has been squeezed with daughter starting private school and some obscene spending on holidays/house over the last few years.

This is an incredible position to be in, I am starting to wonder where I've gone wrong and how I can put myself on a better trajectory for the future. May I ask what sectors you work in?

somethingcorporate · 3 October 2017 at 3:08PM

Hutchch0920 wrote: »

This is an incredible position to be in, I am starting to wonder where I've gone wrong and how I can put myself on a better trajectory for the future. May I ask what sectors you work in?

Thank you

My advice would be to do things little by little. If you get a payrise of 2% a year putting 1% into your pension will really add up over the years, especially as a HRT payer.

I am a finance manager (middle management) in a FTSE100 and my wife is a solicitor working in a large accounting firm. We've both been very lucky (and worked hard) throughout our lives to be in such a great position.

Terron · 3 October 2017 at 4:05PM

Tom_Brine wrote: »

I have 9500 in my companies (National Grids) Sharesave scheme which matures in 2021 with 4026 shares (£30,000 worth) which I will be able to buy at £7.45 per unit

I did quite well from my company share scheme though it was a bit of a rollercoaster. Just before the dotcom crash the shares were worth $42, but they lost 80% of their value. Recovery was slow but that meant I was getting more shares for my money. Eventually the scheme stopped, but I kept them until after I lost my job when they were just over $40. I spread the sales over 3 years to avoid CGT.

People in their 30's - future financial plans?

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