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    • adonis10
    • By adonis10 2nd Oct 17, 11:54 AM
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    adonis10
    People in their 30's - future financial plans?
    • #1
    • 2nd Oct 17, 11:54 AM
    People in their 30's - future financial plans? 2nd Oct 17 at 11:54 AM
    Having read a couple of interesting threads this morning ('over 50's how did you accumulate wealth' and 'a couple of questions for those retired') it made me want to get opinions of people in a similar situation to myself. Obviously, we face different financial challenges (worse pensions, less chance of profiting so much from property, automation killing jobs and industries etc.) and so I am keen to understand what people in their 30's* are planning on doing to secure their financial future.


    Personally, I feel that I am well behind what I need to secure a relatively comfortable future, especially given the uncertainty around the state pension which will most likely not exist in 30 years time. Many older people seem to have multiple pensions to call upon but how is this possible? Is it tax efficient? Where is the best place to start?


    My circumstances:
    - Salary is a modest 32k. OH's salary circa 35k.
    - Good workplace pension (e'er contributes 16%, I contribute 13%), OH's is a teacher's pension so I think she is sorted!
    - Relatively low mortgage (144k on a 350k property, which is joint with partner) @2.14% fixed until July 2021.
    - Circa 60k in cash and investments. Relative to my income, I think my cash position is ok (but who knows what will happen work wise so I want to keep this and add to it as much as possible) so I need to think about investment growth now and potentially a private pension, however I do think that this is 2nd choice to maximising S&S ISA contributions.
    - Future inheritance will be circa 300-400k based on what is known now, however this could change dramatically with future unknowns (potential care costs etc.) so I am not factoring this into my plans.


    Really keen to hear the thoughts/plans of others.


    *this thread is not discriminating against those outside of their 30's but I've tried to target those in a similar boat to me as naturally one's plans will usually be different depending on which decade of life they are in.



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    Last edited by MSE Andrea; 18-10-2017 at 1:22 PM.
Page 1
    • Terron
    • By Terron 2nd Oct 17, 12:34 PM
    • 82 Posts
    • 89 Thanks
    Terron
    • #2
    • 2nd Oct 17, 12:34 PM
    • #2
    • 2nd Oct 17, 12:34 PM
    What do you think would happen to a political party that proposed abolishing the state pension? There is almost no chance that that will happen. It's amount and how old you need be to get it are were the uncertainty lies.

    When I was 30 I bought my first home for £64,500. I sold it 3 years later for £39,500. I lost £500 on my second home. Only on my third did I make anything. House prices go up and down. In the long term more up than down, but a lot depends on where you live.

    Automation has been killing jobs and industries since before I was born.

    In my first job the pension scheme was only open to managers. I took out a private one and got lucky. Other people who took out similar schemes at the same time lost out when Equitable Life folded. Then I had 5.5 years of a defined benefit pension, which was good. AFter that I ws in schemes where my employer would match my contribution up to 5 or 6%. I was never in one where my employer would pay in more than me.

    The problems of those in their 30s aren't that new.

    I have six pension schemes. That is due to my changes of job, and changes to pensions schemes over time. I have actually paid into seven but it was advantageous to move the sixth into the seventh,
    • adonis10
    • By adonis10 2nd Oct 17, 12:45 PM
    • 1,455 Posts
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    adonis10
    • #3
    • 2nd Oct 17, 12:45 PM
    • #3
    • 2nd Oct 17, 12:45 PM
    What do you think would happen to a political party that proposed abolishing the state pension? There is almost no chance that that will happen. It's amount and how old you need be to get it are were the uncertainty lies.
    Originally posted by Terron
    Yeah, I agree. My comment really didn't mean the abolition of it, rather the amount that will be received in x years time will be tantamount to nothing rendering it almost worthless. Was a slightly lazy way of putting it, and also without evidence!

    When I was 30 I bought my first home for £64,500. I sold it 3 years later for £39,500. I lost £500 on my second home. Only on my third did I make anything. House prices go up and down. In the long term more up than down, but a lot depends on where you live.

    Automation has been killing jobs and industries since before I was born.

    In my first job the pension scheme was only open to managers. I took out a private one and got lucky. Other people who took out similar schemes at the same time lost out when Equitable Life folded. Then I had 5.5 years of a defined benefit pension, which was good. AFter that I ws in schemes where my employer would match my contribution up to 5 or 6%. I was never in one where my employer would pay in more than me.

    The problems of those in their 30s aren't that new.

    I have six pension schemes. That is due to my changes of job, and changes to pensions schemes over time. I have actually paid into seven but it was advantageous to move the sixth into the seventh,
    Originally posted by Terron

    Interesting thoughts, thanks for that.


    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?
    • Schoolworker
    • By Schoolworker 2nd Oct 17, 12:52 PM
    • 161 Posts
    • 366 Thanks
    Schoolworker
    • #4
    • 2nd Oct 17, 12:52 PM
    • #4
    • 2nd Oct 17, 12:52 PM
    I'm in my 40's and have a small work pension and a small private pension which is affordable at the moment. I hope to make one off payments when able to increase this slightly but concentrating on family life at the moment and just increased our mortgage. I have to work until 69 I think but no doubt this will go up again .

    When I was 21i took out a private persion and it was a waste of money. 14mths later moved jobs with a private pension so unable to pay into both at that time and what I had paid in for the 14mths or so was taken up with fees. I hope we are still able to survive on my small pension which may increase if and when I go back to full time employment and hubbies pension. Time will tell.
    • RuleTheWorld
    • By RuleTheWorld 2nd Oct 17, 1:28 PM
    • 126 Posts
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    RuleTheWorld
    • #5
    • 2nd Oct 17, 1:28 PM
    • #5
    • 2nd Oct 17, 1:28 PM
    Age 33

    My view is currently to try and put quite a lot into pension to hopefully benefit from reducing this later on. More time to grow = less contributions required over time.

    Expecting our first child this year so for instance I won't feel too bad to minimise the pension contributions for a period.

    As I benefit from Higher rate tax relief and salary sacrifice at source it is very appealing to make the additional monthly contributions.

    We feel quite happy with our mortgage situation (very big but due to be paid off before age 50) and cash savings to not be making overpayments or monthly cash savings BUT it is important to review these sorts of decision at least once a year if not more often.
    • Lokolo
    • By Lokolo 2nd Oct 17, 1:58 PM
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    Lokolo
    • #6
    • 2nd Oct 17, 1:58 PM
    • #6
    • 2nd Oct 17, 1:58 PM
    I am 30 in a years time. I won't be going into detail into exact salary as people know me on here.

    - Current property is 280k mortgage on £425k value
    - 20% contribution (9% employer, 11% employee). Current value is just less than £100k.
    - 40% tax rate payer
    - Not married but likely to have children within the next 12-24 months
    - £15k in savings but likely to reduce over the next 24 months (depending on the answer to my question)

    My plan is to up my private pension to around 25% over the next 12 months. I may also take equity out of my property and purchase a BTL (in myself and partners name but with her owning 99% for tax reason as she will likely be a no/low tax payer longterm), but this would mean getting a remortgage of £340k, which will be expensive if partner is not working. Would be a longterm fix and would be overpaying as much as possible to get it down.

    I am not planning on there being a state pension when I retire. Or if there is, it will be means tested.

    Only thing haven't planned out is the partners longterm plans. Her pension is currently only £100 but she is contributing £20 a month (1% matched based on requirements of law, going up in April). The BTL is the current plan to resolve this, but that is a bit of eggs in basket type situation.
    • Alexland
    • By Alexland 2nd Oct 17, 2:13 PM
    • 451 Posts
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    Alexland
    • #7
    • 2nd Oct 17, 2:13 PM
    • #7
    • 2nd Oct 17, 2:13 PM
    Myself and wife average age of 34 own about 80% of family home and stuffing pensions, LISAs, JISA and ISAs ruthlessly trying to use most of the annual allowances. Expect to have a net asset position (after deducting the mortgage) of over £1m in next 2-4 years maybe longer if markets crash. Plan to retire just after 60.

    Plus likely to inherit something eventually so holding back on paying back mortgage so I have somewhere to deposit the money.

    Alex
    Last edited by Alexland; 02-10-2017 at 2:24 PM.
    • MallyGirl
    • By MallyGirl 2nd Oct 17, 2:17 PM
    • 1,968 Posts
    • 6,678 Thanks
    MallyGirl
    • #8
    • 2nd Oct 17, 2:17 PM
    • #8
    • 2nd Oct 17, 2:17 PM
    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?
    Originally posted by adonis10
    It used to be more common (seemed so to me anyway) that there were penalties for transferring so I just left old pensions running. With one company I ended up with 3 as they had a GPPP and then a staff scheme and then were bought so we ended up with another new scheme. I had 2 with the same provider but one had higher costs for no obviously better performance so I transferred that one into the other. I still have 5 old ones plus the current one. I could take from some at 55 whilst leaving others to run, if I so chose. Using more than one provider also feels like spreading the risk. I am still considering transferring one really small one as it is not growing and is only worth £6k - that is a lot of paperwork to keep for £106 pa pension !
    • Kynthia
    • By Kynthia 2nd Oct 17, 2:17 PM
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    Kynthia
    • #9
    • 2nd Oct 17, 2:17 PM
    • #9
    • 2nd Oct 17, 2:17 PM
    I wonder what the effect of having children later will have on retirement? I'm quite lucky that at the end of my 30s now my partner and I have £20k pa built up in DB schemes. However future accruals and state pension will all be from 68 or later. Combine that with the fact my children will be finishing university and potentially needing help with house deposits and weddings while I'm 60+ means it's hard to imagine retiring before spa. Although we may be able to ease off working full time with a long commute for sometging less stressful.
    Don't listen to me, I'm no expert!
    • Hopingforthesimplelife
    • By Hopingforthesimplelife 2nd Oct 17, 2:22 PM
    • 6 Posts
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    Hopingforthesimplelife
    Interesting thoughts OP, some of which I have been wondering myself. Wife and I are both early 30's. Similar position in some respects to OP (£112k mortgage on £365k house) joint income of c.70k. Cash/investments position c.£30k.

    I read a report recently (think it was on BBC) that mentioned "our" generation was the first to be "worse" off than their parents generation (would be helpful if I could remember the specifics!). However could it be argued that people alive today do and will increasingly live a better standard of living due to improved technology (obviously numerous generalisations have been assumed in this)?

    To answer your question, time invested in with my one (soon to be two) children in the hope they become exceedingly rich. On a more serious note, nursery fees (1k per month, soon to be more) curtail any really serious pension contributions so will have to revisit this when they get older.
    • crv1963
    • By crv1963 2nd Oct 17, 3:09 PM
    • 131 Posts
    • 396 Thanks
    crv1963
    Hi, I'm not in my 30s- 54 later this month!


    I am planning taking retirement next year, with me working for a further 4-7 years to build a big enough pot to tide us over to SPA at 67. But in a role/ post that I will enjoy even more than my current one!


    I like Terron lost money on a house in the late 80s. I married at 30 and had children in my early 30s so can appreciate the high costs that this involves. At one point my then wife and I spent her entire wage on childcare!


    What I did do in my 30s was pay 2% of my salary into an AVC with Equitable Life until they were into difficulties. I then stopped and we saved the money into what is now a S&S ISA.


    Given that my (new) wife and I are working towards our retirement and she has little pension provision we will be putting as much as we can into a SIPP fund for her and starting a SIPP for me. As the tax returns to the pension would mean that we couldn't match it with ISAs.


    My advice- save as much as you can even if it's 2% of your take home pay for the long term on top of your pension contributions or you may find that you need to save an awful lot more later in life to get the lifestyle you want.


    Time in the market does really make the difference!


    CRV
    CRV1963- Light bulb moment Sept 15- Planning the great escape- aka retirement!
    • adonis10
    • By adonis10 2nd Oct 17, 3:23 PM
    • 1,455 Posts
    • 181 Thanks
    adonis10
    I am 30 in a years time. I won't be going into detail into exact salary as people know me on here.

    - 20% contribution (9% employer, 11% employee). Current value is just less than £100k.
    Originally posted by Lokolo
    That is an impressive pot at aged 29. How long have you paid into that to accumulate such a sum?
    • ruperts
    • By ruperts 2nd Oct 17, 3:32 PM
    • 660 Posts
    • 1,071 Thanks
    ruperts
    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 edited by ruperts; 02-10-2017 at 3:39 PM.
    • adonis10
    • By adonis10 2nd Oct 17, 3:40 PM
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    adonis10

    To be honest I only use the abive target and model the future 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.
    Originally posted by ruperts
    Excellent idea. This is one of the main reasons I am looking at it in more detail nowadays as I really do have a decent amount of disposable income of circa 1k/month after all bills and have been quite frivolous over the past year or so. Part of this is due to having the highest paying job of my life with a low mortgage outgoing (646 split between 2 of us) so enjoyed a bit of the excess, however I cannot go on being frivolous. I think setting an end financial goal is key and I need to work out what that is and work towards it. That said, with only 15k pension provision, my feeling is that as much as is humanly possible needs to go into that. I also do not envisage being able to earn much more (inflationary increases aside) than I currently do (depressing thought) so need to instil some discipline and realism.
    • RuleTheWorld
    • By RuleTheWorld 2nd Oct 17, 5:20 PM
    • 126 Posts
    • 30 Thanks
    RuleTheWorld
    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
    • mark5
    • By mark5 2nd Oct 17, 5:45 PM
    • 1,191 Posts
    • 809 Thanks
    mark5
    That is an impressive pot at aged 29. How long have you paid into that to accumulate such a sum?
    Originally posted by adonis10
    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?
    • Lokolo
    • By Lokolo 2nd Oct 17, 5:49 PM
    • 19,775 Posts
    • 14,778 Thanks
    Lokolo
    That is an impressive pot at aged 29. How long have you paid into that to accumulate such a sum?
    Originally posted by adonis10
    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.

    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?
    Originally posted by mark5
    Yep thats right. I don't anticipate the same sort of return over the next decade though.
    • kidmugsy
    • By kidmugsy 2nd Oct 17, 7:32 PM
    • 9,676 Posts
    • 6,434 Thanks
    kidmugsy
    - Salary is a modest 32k. ...
    - Good workplace pension (e'er contributes 16%, I contribute 13%),
    - I need to think about investment growth now and potentially a private pension.
    Originally posted by adonis10
    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.
    • JoeCrystal
    • By JoeCrystal 2nd Oct 17, 7:35 PM
    • 1,277 Posts
    • 730 Thanks
    JoeCrystal
    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 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.
    Last edited by JoeCrystal; 02-10-2017 at 7:49 PM.
    • ComicGeek
    • By ComicGeek 2nd Oct 17, 8:57 PM
    • 214 Posts
    • 154 Thanks
    ComicGeek
    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 now work for myself and work flexible hours to spend lots of time with the family. I took a large reduction in take home pay, but my company now also provides good company pension contributions for both me and the wife.

    I'm not someone who is going to retire early, I enjoy work too much. I'm also not going to live in poverty now to fund early retirement, I think a balance is healthy. Life is for living.
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