People in their 30's - future financial plans?

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  • Fred_carno
    Fred_carno Posts: 1 Newbie
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    Just sneaked into the 40 something bracket but here goes anyway.

    Me : 42 salary of approximately £55k pa and have a DB pension that will pay circa £35k per annum and a lump sum of £175k at 62. Intend to take this at 57 with a 2.5% reduction for every year taken early. Have worked shifts for the past 20 years and intend to pack in as soon as I can get my hands on my pension.

    OH : 40 salary of 50k pa, has a deferred DB pension worth 20k pa at 62. Wife also intends to take the pension early and may carry on working part time or charity work. Currently contributes 11% into DC pension with employer contributing 11%.

    We have 240k equity in our home (325k) intend to buy something bigger in the next couple of years and pay this off when we draw our pensions, with a view to eventually downsizing and buying a place abroad. We've another 70k in shares / ISA / savings. We have no kids and have looked into transferring 1 of the pensions into a drawdown as it would allow us a great deal more flexibility in retirement and we've not much need for spousal pension provision. The CETV valuations were £800k and £500k respectively.

    We consider ourselves to have been fortunate to have good careers with good employers,good to see so many people on this thread that have a really good financial plan going fowards. Wish I could drum some of this kind of thinking into friends and family because a lot of them have little to nothing in place and just seem to be in the mindset of burying their heads in the sand or waiting for an inheritance.
  • somethingcorporate
    somethingcorporate Posts: 9,449 Forumite
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    Fred_carno wrote: »
    Just sneaked into the 40 something bracket but here goes anyway.

    Me : 42

    Just??? :rotfl:
    Thinking critically since 1996....
  • somethingcorporate
    somethingcorporate Posts: 9,449 Forumite
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    PensionPost wrote: »
    Me - 33 - Accountant, on £80k + bonus which in the last few years have been £30k-£50k range, with 10% ee pension contributions

    Do you work in accounting?

    What industry do you work in that pays north of 50% OTB to an accountant?

    (asking for a friend :rotfl:)
    Thinking critically since 1996....
  • PensionPost
    PensionPost Posts: 3 Newbie
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    somethingcorporate wrote: »
    Do you work in accounting?

    What industry do you work in that pays north of 50% OTB to an accountant?

    (asking for a friend :rotfl:)


    Construction.


    Up to 40% cash annual bonus and up to 20% LTIP share bonus. Last few years have been good on both counts.
  • somethingcorporate
    somethingcorporate Posts: 9,449 Forumite
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    PensionPost wrote: »
    Construction.


    Up to 40% cash annual bonus and up to 20% LTIP share bonus. Last few years have been good on both counts.

    Thanks, that's interesting to know.

    South East?
    Thinking critically since 1996....
  • adonis10
    adonis10 Posts: 1,810 Forumite
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    I am also considering paying into a SIPP as I have excess cash at the end of the month and am not able to increase my workplace pension contributions until June 2018. Would it be worth it for £100 per month? I won't miss the cash and it will be a nice extra bit of pension in 25-30 years time. My question is how does a SIPP compare to a S&S ISA, other than when the money can be accessed?
  • Mutton_Geoff
    Mutton_Geoff Posts: 3,820 Forumite
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    This is a helpful read for the under 40's -


    http://www.morningstar.co.uk/uk/news/148494/how-to-invest-in-your-20s-and-30s-get-over-the-present-bias.aspx
    Signature on holiday for two weeks
  • bigadaj
    bigadaj Posts: 11,531 Forumite
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    adonis10 wrote: »
    I am also considering paying into a SIPP as I have excess cash at the end of the month and am not able to increase my workplace pension contributions until June 2018. Would it be worth it for £100 per month? I won't miss the cash and it will be a nice extra bit of pension in 25-30 years time. My question is how does a SIPP compare to a S&S ISA, other than when the money can be accessed?

    The investments you can hold in each are effectively identical.

    You get tax relief in the sipp on the way in, but can access the isa tax free in the way out, growth in either is tax exempt.

    You obviously get 25% of the pension tax free, remainder taxed as income when you access it. Any withdrawals form the isa are tax free.

    A mixture of both would be best in the ideal world I'd say.
  • adonis10
    adonis10 Posts: 1,810 Forumite
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    bigadaj wrote: »
    The investments you can hold in each are effectively identical.

    You get tax relief in the sipp on the way in, but can access the isa tax free in the way out, growth in either is tax exempt.

    You obviously get 25% of the pension tax free, remainder taxed as income when you access it. Any withdrawals form the isa are tax free.

    A mixture of both would be best in the ideal world I'd say.

    Thanks for the reply, makes sense.


    Currently I have 7k in a S&S isa, and have 13k of my allowance remaining this year - currently adding £400/month so another £2k worth of regular payments this tax year. I am tempted to use some cash savings to up it further but am weary about doing so at the moment as am on a return of 8.5% at present so cannot realistically expect that to continue so feel I should wait for my funds to drop a little before going in too heavily. Currently I am invested 8% in VG LS 100 and 92% in LS 80.


    Given that the investment options are largely similar, perhaps I am better off researching other funds to invest in before making a decision about opening a SIPP?


    Also, what about a LISA - another option which could trump both or, if its rules are changed in the coming years, could be a waste of time and money..


    Perhaps I need to speak to an IFA.
  • AlanP_2
    AlanP_2 Posts: 3,253 Forumite
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    I would suggest anybody UNDER 40 opens a LISA, even if only with a notional amount, whilst it is on offer to them as it is "time/age limited".

    Who knows how useful it may be in the future?

    Access to a pension could be put back to 61/62 or whatever at some stage by a future government, especially if access is tied to State Pension Age - 10 years as has been mooted.

    If that happened a LISA attracting 25% gov't top up (so equivalent to a pension for a BR taxpayer), accessible at Age 60 would come into it's own.

    If you don't already own a property then you have the option of using it for that as well obviously.

    Flexibility & Options are what you want - speaking as someone approaching the "take the money" stage of life.
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