Pension/Cash Balance

[Deleted User]

Loughton_Monkey wrote: »

1. Final Salary Pension Scheme(s). - Not got this
2. Pension 'pot(s)'. - Got several pots between us
3. Cash in Cash ISA. - Not possible yet
4. Cash in S&S ISA - Not possible yet but have discussed with our IFA
5. Cash in other (taxable) accounts. - Started with emergency fund in 2 x TSB, 1 Lloyds and 1 Santander current accounts.
6. Cash in other investments. - Not possible yet
7. House Equity. - Only recently come out of negative equity
8. The entitlement to a state pension at the appropriate age. - Still building up qualifying years but won't know where we stand with new flat rate pension until next year. We have both been opted out at some stage.

We have worked out projected income and outgoings in retirement and we know our targets re pensions, got pots of over £300k so far between us. We are now only at the stage where we have spare cash to think about and pondering how much to throw at the pensions and how much to keep as accessible savings. We also need to consider job security and definitely want to over pay the mortgage and be mortgage free asap. Lastly we have a house that needs work done on it, so many things to think about, trying to juggle and be sensible with the disposable income.

If we get to the investment stage there is no way I could manage this myself and would need our IFA to help us with this. Thanks for your thoughts, I shall try and digest them and keep things in mind for the next stage of our plans.

[Deleted User]

atush wrote: »

Our advice is accurate and to the point.

FA's, not being INDEPENDANT will be looking to see what they can earn for themselves and their company/bank instead of what is best for you.

If you want advice, use an IFA.

Thanks, our adviser is an IFA, shall use this term in future to be clear. We are very happy with him and he helps us a lot with our limited knowledge. We will be meeting again in October so will discuss the pension/cash balance then before we decide how much we are increasing our pension payments by. I'm just pondering about it now so I can have some of my own thoughts to discuss with him.

[Deleted User]

xylophone wrote: »

Then it would make sense to build up your cash savings in the Santander, moving on to opening sole Santander Accounts as well?

Yes, we are now building up Santander to the quota of £20k. I have allocated £500 per month for this, so all being well should take 2.5 years. It's tempting to just throw everything at it but must be sensible and split between pensions, mortgage and savings.

Going to see our IFA in October to increase pension payments and pondering how much by. Again it's tempting to throw most of our disposable income at this but must consider job security and have cash available and mortgage paid in full asap.

atush

[quote=[Deleted User];68973069]Thanks, our adviser is an IFA, shall use this term in future to be clear. We are very happy with him and he helps us a lot with our limited knowledge. We will be meeting again in October so will discuss the pension/cash balance then before we decide how much we are increasing our pension payments by. I'm just pondering about it now so I can have some of my own thoughts to discuss with him.[/QUOTE]


My comment was to the other poster who thought we were being inaccurate (we who have been here planning for retirement for ages lol)

atush

Lastly we have a house that needs work done on it, so many things to think about, trying to juggle and be sensible with the disposable income.

Try and work out how much this maintenance will cost- IMHO it is not the best idea to overpay a mtg on asset that might be deteriorating. Soend the cash necessary to do the work

Save this in current accts after you have built up your emergency pot? Keep adding to it monthly even while you a re spending.

[Deleted User]

atush wrote: »

Try and work out how much this maintenance will cost- IMHO it is not the best idea to overpay a mtg on asset that might be deteriorating. Soend the cash necessary to do the work

Save this in current accts after you have built up your emergency pot? Keep adding to it monthly even while you a re spending.

I totally agree with you about the asset being kept in good order. We've done most of the work that keeps the house safe, wind and water tight just need to re-point the front facing and the building structure is sound. Got 2 rooms and hall left to plaster and that will see the building work finished. Then at last we can go onto cosmetic stuff like new internal doors, fireplaces, fitted wardrobes, nice furniture, nice flooring, curtains etc. All in I'm hoping to complete for £20k but it will be done in stages to avoid debt!

Yes, will keep saving into current account and will dip in to re-point front facing and to maintain the house. I have allocated £500 as minimum for saving and worked out what we could put to pensions and mortgage OP based on his basic income, my income and lodger's rent. As OH often has overtime and bonuses there should be extra to play with, so we need to decide what to do with this. I'm toying between pension and mortgage OP for two reasons (or maybe a bit of both):

1. Pension - We are in our early fifties so time is not on our side.
2. Mortgage - to secure our home (thinking of job security and interest rate rise)

Once the mortgage is gone, we could plough more than £500 per month into the savings or if advised and more advantages more into pensions. This is what got me thinking about a number to aim for as ready cash. Definitely thinking £29k/£30k for the immediate future for emergency fund.

Also I forgot that I foresee a new car at some point although it will be secondhand. It's nice to be in this position finally, but I could explode sometimes trying to figure out how best to split the spare cash we will have after this month as we have so many places it needs to go.

I'd also like to mention that we are just ordinary hard working people who have made a lot of sacrifices to try and have a decent retirement. My husband is in a physically demanding job and is the oldest on the team at 53! There is a possibility that he may not be able to physically do the job until he is 67 years old. I am working part-time at the moment but hoping to return to full time work again in approx 2 years time (sooner if I can).

I'm terrified of being poor pensioners and we are trying our best with limited knowledge to look after ourselves when we retire.

atush

I might suspend the overpayment on mtg until more of your 20K for the house is built up? as that is essentially money into the property as a asset. You want to spread your savings between cash, property and Equities (S&S isas and pensions).


But keep saving in cash and pension.

somethingcorporate

You can hold more than 20k in santander by opening multiple accounts. 3 in total, one each and one joint.

Best place for large balances when you have exhausted all the low balance better accounts.

[Deleted User]

After pondering for a few days and taking on board everyone's thoughts, I have the next stage of our retirement plan put together and have decided how I am going to split the disposable income for the next four/five years and go forward. To summarise as a reference to keep me motivated the plan is as follows: -

Quadruple payments on Husband's main pension
Pay £2,800 are year into a small pension of mine (I'm a non-tax payer at moment and think I will get tax relief on this amount) - check with IFA
Still save £500 per month in cash (increase once mortgage paid off)
Reduce amount of over payment of mortgage to £500/£600 per month
Aim to have 4 years take home pay in cash savings at retirement (but secretly hoping for 5 years).

This will be tight at times as income can fluctuate but should even out. Discipline will be required but I'm up for the challenge. If it is tight some months (or indeed turns out to be too ambitious) the first option would be to reduce the mortgage over payments.

Other factors that I am aware of which could mean a mini review of this plan are: -
Still have work to complete on the house
I could be back in full time work at some point
Considering taking on a second lodger

I don't want to dwell on the curve balls that life can throw at the best laid plans, as this will make me panic and lose my focus. Will deal with these as and when they happen.

If we get to the stage that we could seriously look at investing some money in stocks & shares, I have come to the conclusion that I am not capable of this (it's me that make all the financial decisions). I think the best option for us would be to increase pension payments again, as that would still be using stocks and shares but leaving it to the professionals.

Thanks to everyone for their input. I feel better now that I have direction and targets, I love it when a plan comes together!