Starting to save from age 33

atush

Well it isn't a worry for most (if you look at the average UK pension pot size) and looks like another way to tax higher earners. Esp given the lower cap will hit middle income Final salary pensioners. The average should rise now that autoenrollment is in operation.

TBH, this smacks of coalition to me, which is unusual for the UK- and I am not sure how often it will happen in future. As with a coalition, you can't say which way things will go as there isn't a clear direction.

averageish

Hi all,

Almost one year on and I thought I'd post back with what progress has been made since my initial post which you all kindly responded to.

As we discussed I did take financial advice and split savings, but held short of overpaying the mortgage.

I now have cash savings of around 15k and 9k in stock, which isn't too bad considering we're now expecting a baby in December and I've had to buy all the associated gubbins, plus I treated myself to a new motorbike.

The plan for next year is simple, settle the mortgage, or start to. Hopefully we will clear it in around 4 years without making extreme cutbacks, then we can move house right around the time our son reaches school age. Savings rates are so poor I see no point in going past a simple emergency fund and some stock using pound cost averaging for a steady return.

On the subject of pensions, because of the £1.25m limit that westy22 pointed out, there is no rush to contribute and tax free vehicles such as ISA's are being used instead. Yes, you do lose the government contribution its true, but being the cynic I am, I honestly believe that this will be clawed back over time by the government, as the national deficit is so high, that is simply has to be at some stage, no matter who gets into Number 10.

That said, I will start a pension scheme at work on a smaller scale than I had planned. I'm just not going "all in" to a pension scheme. Hedging my bets, so to speak.

Everything these days, is a gamble, once I realised that, I felt much better about things in general. Knowing how to manage my risk has been the best thing to come out of this whole process.

Thanks again to everyone for your original replies.

Waldorf_Statler

"The £3m will be in money terms which would leave around £1.2m in todays terms..."

That implies inflation assumption in your calculations of around 5%.

No harm in planning for the worst, but that feels toppy to me. At 2.5% your £3m in 32 years time would be more like £2m in today's terms.

And what do you assume for investment returns over and above inflation?

SW17

averageish wrote: »

On the subject of pensions, because of the £1.25m limit that westy22 pointed out, there is no rush to contribute and tax free vehicles such as ISA's are being used instead. Yes, you do lose the government contribution its true, but being the cynic I am, I honestly believe that this will be clawed back over time by the government, as the national deficit is so high, that is simply has to be at some stage, no matter who gets into Number 10.

That said, I will start a pension scheme at work on a smaller scale than I had planned. I'm just not going "all in" to a pension scheme. Hedging my bets, so to speak.

Only just read this thread today as I was not an MSE user last year. Very interesting and I was in a very similar position to you, salary started to acclerate in early 30s and got debt free (excluding mortgage) around that time.

Does the above mean that you didn't join the company pension with 6% company contribution? If not, do it now now now. It's free money and even better that they don't insist you match their contribution into the same fund.
If your total taxable income (excl any ISA and other tax-free income) is close to £100k, and you can afford it, it's also definitely worth putting some of your own money into a pension to avoid the marginal tax rate of 60% on some income over £100k as they claw back your tax-free allowance. It doesn't have to be in the same pension as the company pension (you and any financial advisor should decide if it's a good scheme). However, if you use the company scheme and you can put money into it by salary sacrifice, you get the full tax relief up front rather than claiming it back through your tax return later.

Although the lifetime allowance is "only" £1.25m (and may even go down again if politicians think it will get votes, Lord help us), bear in mind that you can now only put a total of £40k per year of contributions tax-free into pensions (includes employer contributions and any pension uplift), so the quicker you build it, the better. Even if you can't afford the full 40k yet (especially with baby en-route, congrats), being a member of a scheme will allow you to carry forward unused allowance to future years.