Saving for retirement whilst paying off debts?

debt-freeoneday

My hubby and I are heavily focused on paying back debt, every penny we can save or make in extra income by selling old stuff on Ebay goes towards the debts at the moment.

It hit me that we don't have much of a plan for retirement. I'm self employed so I don't get the chance to contribute to a company pension and the hubby's place of work doesn't have that option either.

Should we be saving just a small amount each month for retirement or should we still plough everything into our debts and worry about that later?

What do you do currently?

System

Are your husband's work place not going to be offering the new workplace pension scheme that is coming in via the Government?

Sorry I don't know the right name for it !

I would personally say pay the debts off now, if it isn't going to take you too many years, and then work on saving for your retirement. Odds are that the debt interest far outweighs what you would be making on savings or a pension.

Prothet_of_Doom

I think you should not ignore the Tax benefits of putting something into a pension now.

Can you estimate by using the pension calculator, the impact of paying into pensions now and taking longer to pay off debt, vs the impact of waiting until debt is paid off, and then paying to a pension.

To give you an idea. I have a SIPP. I have over the last 4 years only put £11K into it, but have managed to build up a pot of £22K. If I'd have taken the £11K as salary, it would have put only £7K into my hand, so what interest would I have saved by paying back that £7K ? Not £11K of interest saved I bet. More like £1K ?

katejo

How close are you to retirement and how large is your debt? How long is it going to take you to clear the debt?

debt-freeoneday

Many thanks for your replies.

My debt (the hubby's and mine combined) will take another 3-4 years to pay back - the amount is large but we are making good progress (it was £41K in January and is now down to £36K. I'm 33 and he is 35 so we have a good few years let before we retire however, we want to retire earlier than the statutory age!

The hubby's workplace doesn't have a pension, it's his own company, he's one of the directors. I don't know whether they can apply to be part of something the government is running?

I will check out the pension calculator to see if that helps me to make a decision. I guess the thing is that we don't have a lot of spare cash to put into a pension whilst paying debts off but perhaps something is better than nothing...!