32 and planning for retirement. £500 per month surplus

pauljohno

Hi all,

Like most people, I'm looking for a little advice on how to plan for the future. I'm a higher rate tax payer and opted into the company pension at 30. I've recently bought a home too and have have a surplus of £500 per month which I'm looking to put away for retirement. Whatever I do with the money, I intend to put it away for 30yrs, until I'm 62. I'm quite comfortable and won't need access to the money.

Looking for some advise on how best to make this money work for me. Saving this money alone will get me to £180,000 in 30yrs, but I'd like to understand how I can grow this figure. Would appreciate some pointers please folks!

Thanks in advance.

Mistermeaner

Read loads of threads on here. You've not provided enough meaningful info to get answers but you can help yourself by learning a bit more. Come back when you know what your questions are and what info you need to provide.

It pays to help yourself

atush

Compounded returns and tax relief will get your total higher.

As will raising that 500/m when your salary increases.

MDMD

atush wrote: »

Compounded returns and tax relief will get your total higher.

As will raising that 500/m when your salary increases.

Bear in mind HR tax relief is looking more likely to get the chop it may be wise to try to grab it while you can.

http://www.dailymail.co.uk/money/pensions/article-3408536/Wealthy-savers-face-pension-shock-Budget-reveal-tricks-help.html

https://forums.moneysavingexpert.com/discussion/5386421

bigadaj

There is essentially no different in terms of a pension, isa or unwrapped in that you can hold the same type of investments.

So your money inside your pension can be invested normally in wide range of funds, including equities and bonds, wide range of geographical spreads, specialist areas etc and its up to you to decide how this can be done. Many people favour passive u vesting through low cost trackers, spread across the world, others think active managers can out perform on some or many areas.

Monevator website is a good starting point to read from though it is passively biased and there are frequent debates in this forum of fans for different strategies as well as ifas.

Keep reading and learning and putting money away and it will grow over time, just don't panic or react to short term market movements.

atush

MDMD wrote: »

Bear in mind HR tax relief is looking more likely to get the chop it may be wise to try to grab it while you can.

http://www.dailymail.co.uk/money/pensions/article-3408536/Wealthy-savers-face-pension-shock-Budget-reveal-tricks-help.html

https://forums.moneysavingexpert.com/discussion/5386421

Possible.

But i tend to base my answers on the laws/regs of the day of the question.

Facts really. Not speculation (however well founded).

ischofie1

I think your calculation of £180K will be way off the mark considering the 30 year time period.
As someone has previously stated, there is not enough information for anyone to reasonable make a judgement but I'll try whilst making some assumptions.
You say you have £500 PM available and are a HR tax payer. I'll assume that £500 is from your net pay hence could get 40% uplift as a HR tax payer.
I'll assume you receive 3% salary increases over the next 30 years of employment and thus increase you pension contribution by the same amount.
I'll assume you are invested 100% in equites which considering the 30 year time frame may be the best way to go. Historically this will provide returns of 5% + inflation. I've ignored inflation to keep the final calculation in today's monetary terms.
After 30 years the pot would be £826.7k. Actually higher but effectively what it would be worth in today's money.
As stated, there are a a lot of assumptions I've made that if not correct will change things + many more I've not mentioned.

As for what you can do to best maximise your pension.
1. Take the time to become knowledgable on investments. It doesn't have to be done overnight but the sooner the better. A good starting point would be read "Smarter Investing" by Tim Hale & the wealth of information on this forum.
2. Keep increasing you pension payments where possible & where you're comfortable doing so. IE let's say you got a promotion & a 10% pay increase. take that opportunity to increase your pension contributions. The vast majority of people would simply allow the extra money to drift in to their everyday spending and then wonder why their pension wasn't what they expected come retirement day.

Good luck.

enthusiasticsaver

As someone else said I think that higher rate tax relief on pensions may be targeted soon by the government so you would be best off looking at putting the most you can afford into your pension now before that is withdrawn. Stocks and shares isas would be the next best option.