Overpaying mortgage versus increasing pension contributions

Squint

I am not sure if I have put this in the right place, but is it generally better to increase your pension contributions or to overpay your mortgage?

I have tended to overpay my mortgage when I can and do overpay fairly regularly. I checked an online pension calculator recently which indicated people generally want to aim for pension income of about 2/3 of their working income. It indicated that to achieve that I need to increase my pension contributions significantly.

Is there any guidance anywhere on how to find the right balance?

elantan

Hi Squint

This is a question that comes up very often, and sadly there is no one definitive answer, probably mathematically speaking the best course would be putting your money into your pension and many people do, even to the extent of keeping their mortgage well into retirement. But we are all human, we have different drives, needs and desires so go some paying the mortgage off and having that sense of security is more important, you can only answer what is right for you .... What I would say though is as long as your doing one or both your way ahead of the game in comparison to others

Squint

Thank you that helps

Thrugelmir

Repaying the mortgage earlier gives one security in later life.

To obtain a good pension it requires a good level of saving throughout ones working career for most people. Therefore is equally about how you spend your money. Cutting out frivalous spending and saving it will pay dividends in the longer term.

I would prioritise the mortgage. As once it's repaid. Then significant increases in pension contributions are possible.

Having said all that, if you are a 40% taxpayer then pensions hold an added attraction in terms of available tax relief.