Retirement Plan

Krautboy

Hi Everyone,

I gave it some thought since last year and i made the decision that i do not want to wait for my retirement until I am 67/68 or even older (Government seems to be always moving the goal posts).

I am 29 years old and ideally aim to retire at 55.

I jumped on to the housing ladder last year and should have paid of the mortgage by the age of 54.

My current portfolio for saving looks as follows:

Work Pension: Paying in £180 + employer top up £180. Total £360 a month. Currently the Pot is at £6700. These are currently in high risk Funds.
Share ISA: Putting in £50 a month. These are invested in passive funds and aiming for 5 % return a year. Pot size is at £500
SIPP: Putting £30 into SIPP account which is invested in Passive Funds Medium Risk. Pot Size is at £350
P2P Investments: Putting in £100 every two months into P2P with a 7 % projected return. Current size £500
Private Savings: I have about £3500 in Emergency Fund. I normally put in about £200 a month into the savings account, but used recent saving for a deposit for a house.

Monthly Salary is about £2000.

Aim is to be able to have a house paid off at 55, and having a basic “salary” of £10000 a year. If I can achieve more, that’s obviously better.

Let me know your thoughts on what I can improve.

Thanks

Brynsam

Very hard to comment usefully with so little info. Married? Children? Spouse's earnings (if any)? Type of mortgage? Monthly repayments and other outgoings?

That said, great that you are thinking well ahead and giving yourself plenty of time to work towards your goals. Maybe invest in yourself and do some training to improve your earnings potential?

dunstonh

I gave it some thought since last year and i made the decision that i do not want to wait for my retirement until I am 67/68 or even older (Government seems to be always moving the goal posts).

You cant blame the Govt for the fact we are living longer and the fact that that as a percentage of GDP, the Govt spends nearly 3 times more than it did on pensions then it did in the 80s.

Let me know your thoughts on what I can improve.

Given there is so little info, its hard to say. However, a quick and dirty look suggests you are not paying in enough to really consider earlier than state retirement.

Do not forget inflation.

Krautboy

Thanks for your comments.

I am currently single, no children. Mortgage is Fixed rate mortgages at 2.38 % for 5 years.

Outgoings:

Mortgage: £520
All combined Insurances: £160 (House, Contend, Life, income protection).
Council Tax: £121
Car: £200
Supermarkets: £60
Money towards Car extras: £80 (Insurance, repairs, MOT, Tax, etc.)
Towards holidays: £100
Recreation (this includes eating/drinking out): £150
Clothing: £50
Car Fuel:80
Gas/Elc: £75
Water: £25
Internet:£20
Mobile: £20

My pension is paid before I receive my salary of £2000. Currently pay student finance, which should be paid off next month. Should give me an extra £110 before tax.
Private Health Care Insurance, and Dental Insurance with work.

Terron

I am not a financial advisor, but I have been looking into pensions a lot recently as I am about to start taking mine (at 58).

I keep my emergency fund in an ISA. I get withdraw in a few days , and for more immediate purposes I have a credit card (which I pay off every month of course.

Your biggest payment currently is into your emergency fund, which seems OK as it is a little low. I would aim at between 3 and 6 months salary.
. Once you get to that level you could pay more into your SIPP.

You are saving about 15% of your income which isn't bad. Some in pensions which will do best in the long run, Some in ways that give you more flexibilitywhich is good in case your life changes.

There is a rule of thumb that says put into your pension a percentage of your salary equal to half your age when your start paying
You are doing more than that, but that rule comes from when 65 was the normal retirment age. I think you are set up for retiring a few years before the state retirement age, but for 55 you will probably need to save a bit more.

I am not certain it is worth doing detailed calculations since even 55 is so far off for you. Things are likely to change a lot.. Maybe your salary will increase and you will be able to save more whilst keeping the same standard of living. Or maybe you will get additional responsibilities such as children and will not be able to save as much.

Terron

dunstonh wrote: »

You cant blame the Govt for the fact we are living longer and the fact that that as a percentage of GDP, the Govt spends nearly 3 times more than it did on pensions then it did in the 80s.

Why not? They get blamed for everything else "wrong" with the NHS.

Brynsam

Terron wrote: »

Why not? They get blamed for everything else "wrong" with the NHS.

...and who elected them....?!

MallyGirl

It doesn't matter who you vote for, the Government always gets in

Thrugelmir

Krautboy wrote: »

Work Pension: These are currently in high risk Funds.
Share ISA: These are invested in passive funds and aiming for 5 % return a year.
SIPP: in Passive Funds Medium Risk.
P2P Investments: into P2P with a 7 % projected return.

First rule of investing is don't lose your capital.

Second rule of investing is don't forget rule one.

Third rule of investing is that taking a higher risk doesn't equate to a higher return in the long term.

Brynsam

Krautboy wrote: »

Thanks for your comments.

I am currently single, no children. Mortgage is Fixed rate mortgages at 2.38 % for 5 years.

Outgoings:

Mortgage: £520
All combined Insurances: £160 (House, Contend, Life, income protection).
Council Tax: £121
Car: £200
Supermarkets: £60
Money towards Car extras: £80 (Insurance, repairs, MOT, Tax, etc.)
Towards holidays: £100
Recreation (this includes eating/drinking out): £150
Clothing: £50
Car Fuel:80
Gas/Elc: £75
Water: £25
Internet:£20
Mobile: £20

My pension is paid before I receive my salary of £2000. Currently pay student finance, which should be paid off next month. Should give me an extra £110 before tax.
Private Health Care Insurance, and Dental Insurance with work.

Why do you pay for life insurance when you are single and have no children? Also your mobile bill is high at £20 a month. When your contract is due to expire, see https://www.moneysavingexpert.com/phones/cut-mobile-tariff. Not huge savings, but every little extra you can save brings your retirement goals that much closer.

Bravepants

Also, I would question income protection insurance. If you lost your job would you get a redundancy payout anyway? I used to pay income protection then I realised that if I lost my job due to redundancy I would get a 5 figure sum. Also, if I was ill I would get 6 months on full pay, and 6 months on half pay. Your emergency fund could be classed as an income protection fund, if not used for any other emergency of course; so you are effectivley self-insuring.

See what your employer pays for sick pay and what you might be entitled to if made redundant then, if you are happy, can the income protection.

Some insurances are just a tax on fear.