Anxious about S&S ISA Choices

Mynxmox

noggin1980 wrote: »

It's going to be very hard to save enough for you to retire at 65 unfortunately less you have other work pensions you've not mentioned.

I have this option:

'Members who are contributing to the NHS Pension Scheme can pay increased contributions to buy additional pension (AP) that will provide a maximum of £5000 extra pension a year when they are retired. The minimum amount that can be bought is £250.
AP is bought in units of £250.00 annual pension, from a minimum of £250.00 up to a career maximum of £5000.00. Units can be bought together or separately but cannot exceed £5000 in total.'

The last time I calculated it will cost me a lump sum of £61k to buy this now. Of course I don't have that figure available. If I choose to buy it over a few years it will cost more (a bit like an HP or paying off a loan). The NHS calculator is currently offline so I cannot calculate. My question really, is whether you think it is a good investment as an additional pension at about £15k per year for 5 years, to get £5000 pa pension. The issue I have with this is that when I die the money that I paid is 'lost'.

KGriff

Hoping not to be rude, but beginning investing at 53yrs is leaving things a little late in life. I suspect you don't need me to say that and that things have probably started to hit home.

Living in rented property is going to forever be a drain on your income and could make your retirement a bit more of a struggle... No saleable assets, but no maintenance costs.

I reckon you should try to sit down and work out what you can earn and save each year between now and say 65yrs (preferred retirement date).

Then, 'guesstimating' inflation, year on year, look at what your likely living costs required will be, during retirement. Obviously, these will be more in the first two to three years until you receive your state pension.

Look at the income from your works pension (not likely to be worth a fortune if you have only just begun to pay into it). You maybe able to add to those contributions to boost it, but seek advice on that too.

My wife looked into her pension when she was 53 and found it was not worth the extra contributions for what difference it would make to her lump sum and income. She chose not to bother, but she plans to retire a lot earlier than 65.

Your health and life expectancy obviously needs to be considered in all things.

I assume at 67/68yrs you will receive the full state pension benefit (35 contributing years)

There are lots of 'what if's' and 'buts' in trying to predict these types of things but apply common sense and perhaps even be over cautious.

So when you have calculated all your totals and can decide how much you are really likely to need, then you will know perhaps where best to place your money.

It's okay people saying stocks and shares and index trackers etc. but you have to remember that such investments can go down aswell as up and if you are as unlucky as I am they always seem to go down when you need them most and they track back up again when it's too late. They can of course be the right vehicle and keep going up and up and be the best thing since sliced bread.

Before deciding though to invest, you may find when you sit down and work things out you may have enough money if you place it in a savings pot and get 3% (or more interest).

Stocks and shares are normally long term and whilst equities involving single company shares may yield bigger profits (or losses for that matter) than 'wider-spread' managed funds, I would opt for the somewhat less riskier managed funds.

I consider 12 years as a long time personally, but you are not just risking your money, you may possibly end up delaying your hard earned retirement... So investing has to be done wisely, with careful consideration to your needs.

I would only 'gamble' with such funds or the indices trackers, if you find you have a fairly big shortfall in your retirement funds and find yourself predicting that would not have been able to retire anyway.

Alternatively you could fall madly in love with a rich old spinster (of sound mind), with a 'dicky ticker', no surviving relatives.. and seek her hand in marriage. (mind you that means you have to do even more cooking and washing up, after a hard day at work).

noggin1980

afraid I have no experience with that type of pension sorry

bowlhead99

Mynxmox wrote: »

The last time I calculated it will cost me a lump sum of £61k to buy this now. Of course I don't have that figure available. If I choose to buy it over a few years it will cost more (a bit like an HP or paying off a loan). The NHS calculator is currently offline so I cannot calculate. My question really, is whether you think it is a good investment as an additional pension at about £15k per year for 5 years, to get £5000 pa pension. The issue I have with this is that when I die the money that I paid is 'lost'.

Well, if you invested the £61k for 12 years and managed to achieve, say, 4% over and above inflation, you would have a retirement pot of £97.5k in today's money. Maybe a lot less, depending on markets, and especially if you're cautious and using low growth investments... but maybe more.

You quite possibly wouldn't be able to invest that less-than-£100k yourself in a way that would produce an annual £5000 inflation linked for the rest of your life (which could be 40 years). But depending on how long you actually live, and what the small print is (inflation linking, any guaranteed minimum, inheritability/ spouse pension etc etc) it might be better to self manage that £61k rather than buy the annuity.

Think of the ability to buy an annual additional pension income as an insurance policy against living a long time. You'll perhaps get more detailed analysis on the pension/ retirement board.

Mynxmox

Thank you all for giving me some pointers.

dunstonh wrote: »

You are 100% equity.

Hence the question of how to change the status quo and not make mistakes.

KGriff wrote: »

Alternatively you could fall madly in love with a rich old spinster.....

Being female I am looking for a rich old bachelor.......:rotfl:

bowlhead99 wrote: »

it might be better to self manage that £61k rather than buy the annuity.

I was inclined to think this way, thanks Bowlhead