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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 5
    • adonis10
    • By adonis10 6th Oct 17, 7:14 AM
    • 1,455 Posts
    • 181 Thanks
    adonis10
    Given what has been said above, it might be an idea to delete your post, and for me to delete this one when you have done so, then any offence to others would have been removed.
    Originally posted by chucknorris
    Done. Apologies to PP and happy for you and him to delete relate posts to avoid this thread going off topic.
    • Fred_carno
    • By Fred_carno 8th Oct 17, 3:13 PM
    • 1 Posts
    • 2 Thanks
    Fred_carno
    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
    • By somethingcorporate 8th Oct 17, 11:53 PM
    • 8,835 Posts
    • 8,519 Thanks
    somethingcorporate
    Just sneaked into the 40 something bracket but here goes anyway.

    Me : 42
    Originally posted by Fred_carno
    Just???
    Thinking critically since 1996....
    • somethingcorporate
    • By somethingcorporate 9th Oct 17, 12:14 AM
    • 8,835 Posts
    • 8,519 Thanks
    somethingcorporate
    Me - 33 - Accountant, on £80k + bonus which in the last few years have been £30k-£50k range, with 10% ee pension contributions
    Originally posted by PensionPost
    Do you work in accounting?

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

    (asking for a friend )
    Thinking critically since 1996....
    • PensionPost
    • By PensionPost 9th Oct 17, 8:35 AM
    • 3 Posts
    • 4 Thanks
    PensionPost
    Do you work in accounting?

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

    (asking for a friend )
    Originally posted by somethingcorporate

    Construction.


    Up to 40% cash annual bonus and up to 20% LTIP share bonus. Last few years have been good on both counts.
    • somethingcorporate
    • By somethingcorporate 9th Oct 17, 7:52 PM
    • 8,835 Posts
    • 8,519 Thanks
    somethingcorporate
    Construction.


    Up to 40% cash annual bonus and up to 20% LTIP share bonus. Last few years have been good on both counts.
    Originally posted by PensionPost
    Thanks, that's interesting to know.

    South East?
    Thinking critically since 1996....
    • adonis10
    • By adonis10 10th Oct 17, 10:29 AM
    • 1,455 Posts
    • 181 Thanks
    adonis10
    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
    • By Mutton Geoff 10th Oct 17, 11:45 AM
    • 889 Posts
    • 938 Thanks
    Mutton Geoff
    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
    Compensations/Refunds from Banks & Institutions - £4,165 | Stooz Profits - £7,636 | Quidco - £3,963

    All with a big thank you to Martin and MSE.com from Mutton Geoff!
    • bigadaj
    • By bigadaj 10th Oct 17, 11:48 AM
    • 10,335 Posts
    • 6,634 Thanks
    bigadaj
    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?
    Originally posted by adonis10
    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
    • By adonis10 10th Oct 17, 12:10 PM
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    • 181 Thanks
    adonis10
    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.
    Originally posted by bigadaj
    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
    • By AlanP 10th Oct 17, 1:03 PM
    • 939 Posts
    • 648 Thanks
    AlanP
    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.
    • adonis10
    • By adonis10 10th Oct 17, 1:19 PM
    • 1,455 Posts
    • 181 Thanks
    adonis10
    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.
    Originally posted by AlanP
    Good point about getting one opened even with a notional amount. No harm in just getting one sorted now and spending the rest of this tax year researching, taking advice and deciding what is the best option. I will do that and then it's done and I can focus my mind on how much to put in and in what funds.

    Already a homeowner so would be going for the retirement isa option.
    • List Maker
    • By List Maker 11th Oct 17, 12:42 PM
    • 35 Posts
    • 11 Thanks
    List Maker
    Whilst sorting through some pension admin for work it got me thinking and I have ended up here.

    So for me:
    30....... 42k
    Company Pension: 3% Ep 5% Ee Current Worth = £8500
    Private Pension: 2% Current Worth = £1500


    Saving for a house is my current aim, after this year is out the way (holidays! opps) should be putting in around £1200-1500 pm away.

    Once on the housing ladder £1k per month can be split between different options.
    Compared to my peers I am doing pretty well. All around the same salary range, some not saving into a pension at all, others only putting in 1.5% and spending the rest on life.

    I'd say I have another 30 years until I would like to retire, so who knows what will happen.
    • Malthusian
    • By Malthusian 11th Oct 17, 1:08 PM
    • 3,077 Posts
    • 4,472 Thanks
    Malthusian
    "Aged 40 or younger? The chances are there will be no State Pension by the time you retire." Decided not to read any further. Then I did, to check whether they're being ironic - they aren't. But it continued with another gem - "Wiping that kind of liability off the Chancellor’s books would be a welcome move for any political party." It would be the death sentence of any political party.

    It is more likely that the State Pension will be expanded to all working age adults (at a reduced rate) to solve the benefits trap - it's called Universal Basic Income - than eliminated.

    I realise that the aim of that sentence is to shock under-40s into paying into a pension, but I have never believed that bullcrap is a good foundation for financial planning.
    • RuleTheWorld
    • By RuleTheWorld 11th Oct 17, 3:37 PM
    • 126 Posts
    • 30 Thanks
    RuleTheWorld
    not sure why there are always comments about oh but the state pension is not going anywhere?

    means testing it starting it off at something like HR tax payers don’t receive it is hardly that unlikely and would gain as many votes as it would lose imo.

    also I would see at some point a complete break from any link between personal pension and state pension i.e. take your own pension at 55 (or 57) but your not getting the state one until 71
    • carlskinner1
    • By carlskinner1 13th Oct 17, 9:12 AM
    • 17 Posts
    • 18 Thanks
    carlskinner1
    Really enjoyed this thread, I'm 26 so much closer to my age than the majority of threads.

    I'm been extremely fortunate in a sales role which is giving us a big early boost in our financial wealth:

    Me- Basic £56,000 + Commission between £50-100k extra
    OH- Salary- £31.5k

    House- £350k (£110k equity)
    Stocks and Share ISA- £75K
    BTL- £230k (£80k equity)
    Plus two paid off nearly new BMW's.
    My pension- £25k (only started 18 months ago)
    OH Pension- £15k

    We just remortgaged and decided against moving with uncertainty (in my eyes) around the global market and house prices, mainly with Brexit and US/ Korea playing battle.
    We hope to be in a position in 2-4 years to be able to sell my BTL, raise a bigger cash sum to enable us to buy our forever home which would cost circa £650-700k and put down a £250k minimum deposit.
    With a bit of luck house prices will drop a bit and our forever home will come down in a price, 5 years ago they were under £500k! This will mean we have our forever home by 30 and will be paying off the mortgage like mad to hopefully get it paid off in 20 years, before we are 50.

    My current goal is to be in the position to retire at circa 55, which means investing heavily in my pension now. A lot of variables with my job though, high turnover of staff and commission isn't guaranteed, but we're very lucky at the start we've had.

    Hopefully this thread continues!
    Last edited by carlskinner1; 13-10-2017 at 12:37 PM.
    • stoozie1
    • By stoozie1 13th Oct 17, 9:19 AM
    • 344 Posts
    • 187 Thanks
    stoozie1
    Me- Basic £56,000 + Commission between £50-100k extra
    OH- Salary- £31.5k


    My pension- £25k (only started 18 months ago)
    OH Pension- £15k

    Originally posted by carlskinner1
    To obtain 40% tax relief, would it not make sense for you to move the ISA money into your pension over the next 2/3 years?
    • Lokolo
    • By Lokolo 13th Oct 17, 9:24 AM
    • 19,774 Posts
    • 14,778 Thanks
    Lokolo
    Yes pension over ISA for Carl. His OH should be putting money in both ISA and pension. He hasn't gone into the detail of where the money is going and coming from though.

    I would also hope that the BTL is in tenant in common with 99% in the OHs name (why pay more tax than you need to). But if selling the BTL in 2-4 years then it won't be too much of an issue.

    Other than that it is a good position to be in. But it is a sales role which I suspect will be one of the first incomes to reduce if things get tough in the economy.
    • Abatement
    • By Abatement 13th Oct 17, 12:16 PM
    • 134 Posts
    • 39 Thanks
    Abatement
    Myself and partner 34 and 33. Currently fortunate to earn very healthy salaries (180-200k total depending on bonuses, with partner working part time). Current joint position is: 250k in pensions (c. 150k and 100k respectively), 180k in equity investments (mostly in ISAs), 300k in house equity based on purchase price (although probably closer to double that based on current valuation) and around 20k cash.

    Currently contributing heavily to pensions, but probably need to ease off on that a bit with the lifetime allowance in mind. Need to make a couple of decisions e.g. where to live in the long term and whether to send kids (x2) to private schools. Don't have a clear goal/path to retirement, but don't see ourselves working into our 60s certainly.
    Last edited by Abatement; 13-10-2017 at 12:30 PM.
    • carlskinner1
    • By carlskinner1 13th Oct 17, 12:33 PM
    • 17 Posts
    • 18 Thanks
    carlskinner1
    @Stoozie,

    The ISA funds will be used as deposit on our next house purchase, which is why it hasn't gone into my pension, but yes otherwise would definitely make sense.
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