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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; Today at 1:22 PM.
Page 2
    • Terron
    • By Terron 2nd Oct 17, 9:28 PM
    • 80 Posts
    • 85 Thanks
    Terron
    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
    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.
    • Terron
    • By Terron 2nd Oct 17, 9:50 PM
    • 80 Posts
    • 85 Thanks
    Terron
    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.
    Originally posted by ComicGeek
    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
    • By somethingcorporate 3rd Oct 17, 10:48 AM
    • 8,835 Posts
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    somethingcorporate
    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.
    Thinking critically since 1996....
    • Lokolo
    • By Lokolo 3rd Oct 17, 10:53 AM
    • 19,773 Posts
    • 14,775 Thanks
    Lokolo
    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.
    Originally posted by somethingcorporate
    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
    • By adonis10 3rd Oct 17, 11:03 AM
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    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.
    Originally posted by kidmugsy
    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
    • By Tom Brine 3rd Oct 17, 11:10 AM
    • 57 Posts
    • 18 Thanks
    Tom Brine
    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
    • By somethingcorporate 3rd Oct 17, 11:10 AM
    • 8,835 Posts
    • 8,519 Thanks
    somethingcorporate
    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?
    Originally posted by Lokolo
    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.
    Thinking critically since 1996....
    • somethingcorporate
    • By somethingcorporate 3rd Oct 17, 11:13 AM
    • 8,835 Posts
    • 8,519 Thanks
    somethingcorporate
    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.
    Originally posted by Tom Brine
    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.
    Thinking critically since 1996....
    • Hutchch0920
    • By Hutchch0920 3rd Oct 17, 2:21 PM
    • 284 Posts
    • 471 Thanks
    Hutchch0920
    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.
    Originally posted by somethingcorporate
    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?
    Save £12k in 2017 / Dec 2017 Travel Cash = £12,400 / £14,000 88.5%[/COLOR]

    House Deposit = £20,500 / £18,000
    • somethingcorporate
    • By somethingcorporate 3rd Oct 17, 3:08 PM
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    somethingcorporate
    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?
    Originally posted by Hutchch0920
    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.
    Last edited by somethingcorporate; 03-10-2017 at 3:15 PM.
    Thinking critically since 1996....
    • Terron
    • By Terron 3rd Oct 17, 4:05 PM
    • 80 Posts
    • 85 Thanks
    Terron
    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
    Originally posted by Tom Brine
    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.
    • Tom Brine
    • By Tom Brine 3rd Oct 17, 7:48 PM
    • 57 Posts
    • 18 Thanks
    Tom Brine
    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.
    Originally posted by somethingcorporate
    Thanks.

    The sharesave scheme is a no lose situation. If the share price bombs I can take the cash. The plan will be to use the 4026 shares that I get access to in 2021 to either pay a huge chunk off of the mortgage, extend or improve the property, and or invest into my ISA in a different fund. Whatever happens the sharesave shares are in line for a quick sale when they mature.

    The £150 a month of SIP shares will be kept long term, I have to hold them for 5 years for them to be able to be sold tax and NI free. I see them as a slow burner in the background, reinvesting the dividends and will take stock of the situation in 5-10 years time, thats assuming I am still working for the same company. I have another promotion/move in me yet.
    • somethingcorporate
    • By somethingcorporate 3rd Oct 17, 10:31 PM
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    somethingcorporate
    Thanks.

    The sharesave scheme is a no lose situation. If the share price bombs I can take the cash. The plan will be to use the 4026 shares that I get access to in 2021 to either pay a huge chunk off of the mortgage, extend or improve the property, and or invest into my ISA in a different fund. Whatever happens the sharesave shares are in line for a quick sale when they mature.

    The £150 a month of SIP shares will be kept long term, I have to hold them for 5 years for them to be able to be sold tax and NI free. I see them as a slow burner in the background, reinvesting the dividends and will take stock of the situation in 5-10 years time, thats assuming I am still working for the same company. I have another promotion/move in me yet.
    Originally posted by Tom Brine
    Very similar position to me. I am putting mine aside for school fees but selling/diversifying when I can.

    I 100% agree these share schemes are almost impossible to lose on given the tax advantages, dividend shares etc. The only difficulty is watching a paper profit go up in smoke really quickly!
    Thinking critically since 1996....
    • ruperts
    • By ruperts 4th Oct 17, 1:20 PM
    • 655 Posts
    • 1,058 Thanks
    ruperts
    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?
    Originally posted by Hutchch0920
    The type of people being candid about their position in this type of thread is always going to be heavily skewed towards those in very good positions. The average pension pot held by people in their 30’s is not a lot (£14k according to one estimate).

    It’s pointless comparing yourself to others anyway really as your preparedness for retirement depends entirely on your own retirement lifestyle expectations and how much it will cost. Some people want all the premium bells, whistles and status symbols, others are perfectly happy with none of that.
    • JoeCrystal
    • By JoeCrystal 4th Oct 17, 2:11 PM
    • 1,277 Posts
    • 728 Thanks
    JoeCrystal
    The average pension pot held by people in their 30’s is not a lot (£14k according to one estimate).
    Originally posted by ruperts
    Well, that is darn depressing. Maybe I am doing better than I thought I was, relatively speaking. Stumbling across this forum was the best thing I ever did for my financial future!
    • Mogley
    • By Mogley 4th Oct 17, 4:19 PM
    • 217 Posts
    • 181 Thanks
    Mogley
    Myself and OH are 36 with three DD's. Financial Situation is:
    - Salary of £50k and OH at £21k (part time).
    - Workplace pension of 6% employer, 12% employee (6% required to get 6% matched). OH DB pension as civil servant.
    - Mortgage £130k on £200k lifetime house. Part on 2+%BOE variable, other part on 2.79%fixed.
    - £2k in S&S ISA, £3k in cash savings, £1k of overpayment reserve, £27k stooze pot (recently started to earn additional £750/yr).
    - Current pension pot of £51k (started late with this in 2010).


    Our situation has changed significantly in the past two years regarding me having a new job, our 3rd child arriving and the OH working part time. It has become quite difficult to effectively manage the finances during these changes.
    The plan is to continue to save in Cash to boost emergency fund, continue to contribute to JISAs and continue to slowly top up S&S ISA as this is the future life fund (DD university, DD house deposit, pension top up etc). I am currently happy with my pension contributions which I am hoping to use to retire at 65 and lead a modest life (not depending on state pension).
    You can tell by my number of posts that it is only relatively recently I have started using these forums to change from being in debt (kids are expensive) to starting to save.
    No.25 for 2017 £1070/£4000 saved.
    You should pay attention to the needs of the moment - otherwise there is no future. But to ignore the future is foolish - living solely for the moment leaves nothing for when the next moment arrives.
    • somethingcorporate
    • By somethingcorporate 4th Oct 17, 4:28 PM
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    • 8,519 Thanks
    somethingcorporate
    It’s pointless comparing yourself to others anyway really as your preparedness for retirement depends entirely on your own retirement lifestyle expectations and how much it will cost. Some people want all the premium bells, whistles and status symbols, others are perfectly happy with none of that.
    Originally posted by ruperts
    You can miss out the bolded word and it still be accurate. I make a large lifestyle sacrifice to pour cash into the pension (to the tune of £1000 cash at least pm). It's all about compromise.
    Thinking critically since 1996....
    • Thrugelmir
    • By Thrugelmir 4th Oct 17, 5:03 PM
    • 55,528 Posts
    • 48,880 Thanks
    Thrugelmir
    worse pensions,
    Originally posted by adonis10
    Many of us spent working years building our own pots as well. Not everyone has the benefit of a lifetime working in the public sector or for a company offering a DB scheme.
    "Wide diversification is only required when investors do not understand what they are doing." - Warren Buffett
    • adonis10
    • By adonis10 4th Oct 17, 5:08 PM
    • 1,455 Posts
    • 181 Thanks
    adonis10
    Well, that is darn depressing. Maybe I am doing better than I thought I was, relatively speaking. Stumbling across this forum was the best thing I ever did for my financial future!
    Originally posted by JoeCrystal
    Isn't it just! I fit this bill - 34, 15k in pension provision, hence why I am now desperate to catch up.


    A point about not prioritising mortgage overpayments that a lot of people advocate - it is inevitable that rates are going to rise so is it not better to get ahead of the game and start overpaying now?
    • Drp8713
    • By Drp8713 4th Oct 17, 6:56 PM
    • 746 Posts
    • 617 Thanks
    Drp8713
    I am turning 30 later this month unfortunately.

    Salary £38k, I have the following so far:

    LGPS £4k per annum and AVC of £2k, contribute £250 per month.
    S&S ISA/S&S LISA/IFISA/SIPP £21k, contribute £750 per month.
    Premium Bonds £5k emergency fund.

    My wife (also 30) and earns a bit less pays into the RPS and BRASS, she also has a S&S ISA/S&S LISA/SIPP worth £6k and pays £110 per month.

    Our rent is £9k a year but to buy a similar house would cost £450k. At those valuations I am not interested in buying. A house price crash could change our minds (expensive part of London).

    I dont know if I am doing well based on this thread! If you value the DB pension at 20 times then I am worth over £100k and doing alright, if you take it at face value it all looks a bit meager.

    That being said now im up to £750 per month the investments should start to grow a bit faster.
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