3-6 months salary untouched

nearlyrich

aliasojo wrote: »

Nobody lkes a show off.:p:D

I have a green ceramic pig with some loose change. :rotfl:

Amazing how it all starts to stack up when the kids are independent they cost a fortune :eek:

aliasojo

nearlyrich wrote: »

Amazing how it all starts to stack up when the kids are independent they cost a fortune :eek:

Yeah I was thinking of selling mine in order to kickstart the old savings thing. :whistle:

atush

katejo wrote: »

I also have an end salary pension into which I also pay AVC 's. I can't do that as well as save 6 months pay.

Does your FS scheme allow the AVCs to be used to fund the tax free lump sum?

If not, it could be worth diverting some of the future AVC money into savings. And should you want to retire early, into S&SD isas as well as cash once you have 6 months worth. As you want to avoid commuting an indexed linked pension into LS, or to take your pension early to avoid actuarial reduction.

jimjames

There seems to be some confusion whether it is 3-6 months salary or 3-6 months savings to cover expenses.

If you have enough savings to cover the critical bills for 6 months then I think it is less important to have exactly 6 months wages which might have a bit element of savings in and discretionary spending which you could immediately cut.

katejo

atush wrote: »

Does your FS scheme allow the AVCs to be used to fund the tax free lump sum?

If not, it could be worth diverting some of the future AVC money into savings. And should you want to retire early, into S&SD isas as well as cash once you have 6 months worth. As you want to avoid commuting an indexed linked pension into LS, or to take your pension early to avoid actuarial reduction.

Not sure what you mean as I will get a lump sum anyway . Started AVC payment to make up a small gap and so I could have the option of retiring at 60 if I wanted to .

bigadaj

katejo wrote: »

Not sure what you mean as I will get a lump sum anyway . Started AVC payment to make up a small gap and so I could have the option of retiring at 60 if I wanted to .

What atush means is that it can be advantageous to take a tax free lump sum if you aren't losing out on a high rate of return from teh pension. If you are losing some of that benefit by taking he lump sum then it can be better to save elsewhere.

jamesd

First priority before overpaying on a mortgage is to have ample money available so you can pay all the bills for a good long time. 3-6 months is a minimum range, not a good target one.

I stopped accumulating cash savings when I got to around two years worth of spending level and started switching to investments above that. With the investments in S&S ISA they are available if needed if an interruption of income happens to take more than a few months.

Today I have a mortgage that I could clear at any time but I also have enough money to pay that and all bills for life, which gives me a lot of financial security. Not as much safety margin for investment performance as I like in that yet but it's getting there.

atush

katejo wrote: »

Not sure what you mean as I will get a lump sum anyway . Started AVC payment to make up a small gap and so I could have the option of retiring at 60 if I wanted to .

You may get a LS anyway, but it might reduce the max pension you could get if you can reverse commute. It is always best to get the maximun index linked guaranteed pension you can, and not to get a LS from the pension that reduces that.

But only you know who you work for/the pension is with. And we aren't mind readers. You obv don't want to say- fine. but don't expect informed opinions if you don't/won't.

Perelandra

I use an interest-only offset mortgage. This means that any savings I have are effectively the capital that have repaid-to-date on my mortgage. I don't need to have an emergency fund on top of that.

katejo

atush wrote: »

You may get a LS anyway, but it might reduce the max pension you could get if you can reverse commute. It is always best to get the maximun index linked guaranteed pension you can, and not to get a LS from the pension that reduces that.

But only you know who you work for/the pension is with. And we aren't mind readers. You obv don't want to say- fine. but don't expect informed opinions if you don't/won't.

My pension scheme is a university superannuation one . What is 'reverse commute' ?