Starting again with no pension at the age of 42

ZiggerZagger

I am recently divorced. During the marriage, I had an agreement with my husband whereby I would pay the mortgage and he would contribute to a pension fund (as his pension was a lot more generous than mine). He is 10 years older than me. I paid the mortgage off around 6 months before we split.

Just after we separated, he took a far far lower paid job. When it came to sorting out the finances, because of the children, I stayed in the house with them and he moved out to a rented flat. Due to his lower salary, it was deemed that I had to buy him out of the house and he would get to keep his pension.

So I am now in the position, at 42, of having a very large mortgage, looking after the house on my own and no pension.

My question is - what do I prioritise? Should I aim to pay more into the pension each month or into the mortgage? Should they be equal?

Or because it's so late to start from nothing, should I look to maybe invest in something else that gives me a better return like another property?

Just interested to hear what others would do.

kidmugsy

A pension is attractive if (i) you will get employer contributions, or (ii) you can pay by salary sacrifice, or (iii) you will avoid higher rate tax. If none of those apply, put it on the back burner for the time being.

First priority is probably building up an emergency fund - say 3 to 6 months of outgoings.

How about life insurance - what will happen to the children if you and/or their father dies?

saver861

ZiggerZagger wrote: »

My question is - what do I prioritise? Should I aim to pay more into the pension each month or into the mortgage? Should they be equal?

Or because it's so late to start from nothing, should I look to maybe invest in something else that gives me a better return like another property?

Just interested to hear what others would do.

Well the first priority would be to have 6 - 12 months money in an emergency fund so that you are covered for the short term.

From there much would depend on circumstances, intentions, etc and no doubt your circumstances will change, e.g. you may meet a new husband with an even bigger pension

What I would say is that a starting point would be map out all the options open currently and look at the pros and cons of each. Then perhaps get professional advice. Certainly you need to be as wise and as aware as possible yourself before embarking on advice from and IFA etc.

atush

First off, sounds like you had a poor lawyer. I agree you should have bought him out, but if you paid 100% of the house you should have gotten half his pension.

anyway, things aren't great (you wont be able to retire early perhaps) but you have 23-25 years til age 65-67 so you have time. Does he pay maintenance for his children?

First off, you cant do better with a property than a pension. Unless you are someone with building skills and are lucky. The pension get tax relief and hopefully employers contribs and income and growth are tax free. Income and growth on property are taxed.

Second, does your employer have a pension? If so join that and take the free money. Invest as much as you can afford (as long as you have emergency savings- if you dont, invest the min to get their max payment and save the rest). If they dont, when will they? they all have to soon? In the meantime open a personal pension. How much do you have to put aside each month?

Once you have a good emergency savings acct, then look to either up your pension, or open a S&S isa. Save more every time your pay goes up.

Invest for the children using their CB or some of the maintenance paid by their father. Into a JISA- investments not cash unless they are tens.

ZiggerZagger

Thanks everyone. I had a good lawyer took advice from more than one. The clincher was that I asked for a clean break divorce so that I didn't have to pay him ongoing maintenance - the job he took meant he went from a position of earning the same as me to earning less than a third of what I earn now. So to ensure my money is my own going forward, this was the compromise.

There is an employer pension - they pay 3% of salary (not salary sacrifice). I joined this month. I've got some ISAs I put aside over the last 3 years which could count as emergency funding (not a huge amount). I'm just wondering whether, after saving a bit to keep on the side whether I should focus on the mortgage or the pension. I have life insurance through work.

As for does he pay child maintenance - well I'll let you guess the answer to that grr - I know I could fight for that but tbh, working full time, 2 teenagers at home, just got through the divorce, I have little strength for it but I will soon.

atush

How a judge let him get away with doing that, impoverishing himself just to get money off you is ridiculous. If anything, that shows raw cunning and no love for his children. Do find the strength, even just to save it for them in case they go to Uni. What a dead beat dad.

Anyway, what kind of isas? Cash? How many months outgoings would it cover? I'd consider moving it to current accts that pay 3-5%, and future isas to be S&S isas.

but once you have 6 months covered, i would then up your pension. Future spare cash to S&S isas. If and when rates go up, you can divert S&S isa money to pay off part of the mtg?

ZiggerZagger

I know tell me about it . I've learned a lesson though! He was always useless with money. Never saved, what didn't go into his pension he just threw away. Since we've split he's racked up huge debt and I'm sure will end up squandering away the lumpsum he has from me but hey, not my problem any more. Has made me very wary of new relationships and men who aren't great with money I have to say!

(I kept all of this from the kids by the way. Was hard because I felt well and truly shafted by him financially!)

Thanks yes that sounds like a plan. Have a good job now but that's not to say it will continue so will look to get the emergency fund set up then focus on the pension I think.

atush

BTW, your pension. If he is on the nominations form, do change it to your children. Same with the LI.

And choose a trusted relative, other than him, to be your executor and guardian of the childrens' finances.

Anything happen to you, the kids go to him. You dont want his reckless paws on their money.

ZiggerZagger

Very good point!

Thrugelmir

ZiggerZagger wrote: »

So I am now in the position, at 42, of having a very large mortgage, looking after the house on my own and no pension.

One assumes the compromise was equity in the property. Is there not room to downsize and adjust your cloth accordingly.

atush

No there was no equity in the property for her in lieu.

The judge was boondoggled by him quitting his job for a lower paying one. As the (now but not before) higher paid spouse she got 50% of a house she paid 100% for, and was then forced to pay him for his half.

This judge should be sacked for not understanding what he was at. And didn't even enforce him to pay for his children? Boggles the mind really.