Retirement Plan

John-K_3

Salary. You can and should improve your salary. You are not on a very good wage. Any improvements you can bring in the next few years will continue to accrue for the next thirty.

I had a revelation twenty-something years ago when commuting past Basingstoke, and having a vision of my future. I!!!8217;ve nothing against Basingstoke, but I realised that that was where I!!!8217;d end up if I stayed in my civil service job. I!!!8217;d get old, get married, and live in a the bedroom semi before dying there on day unfulfilled.

The next day I applied for a doctorate, I then resigned when the offer came through, and three years later parlayed the new degree into a job in investment banking.

Plans for my future changed a lot from that point, and I enjoy the work in the interim too.

You don!!!8217;t need to make such a massive change, but swap that £24k for £44k, or £64k, and you!!!8217;ll have a far better chance of a comfortable retirement later.

westv

The £2k is net after tax?? So more than £24k annual?

dunstonh

It is worth noting that income protection in its proper form, known as permanent health insurance, is a very good product to have. In its budget Payment protection insurance form, its nowhere near as good. PHI pays out until retirement if needed. It is long term insurance and most claims do go beyond the 12 months that a good employer may pay.

Brynsam

Bravepants wrote: »

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.

Check the sort of income protection you have to ensure it meets your needs and you understand what if offers. If you have Permanent Health Insurance (nowadays seen as a rather outdated term on the basis people are always confusing it with private medical insurance - but PHI remains a good description), it doesn't cover loss of income resulting from redundancy.

westv

Employer provided PHI where I work is 75% of basic salary for 5 years or until SPA whichever is sooner.

dunstonh

westv wrote: »

Employer provided PHI where I work is 75% of basic salary for 5 years or until SPA whichever is sooner.

That would be a budget plan. Better than PPI, not as good as it could be. Anything that restricts the period of sickness cover puts you in the budget section rather than the standard/comprehensive range.

westv

dunstonh wrote: »

That would be a budget plan. Better than PPI, not as good as it could be. Anything that restricts the period of sickness cover puts you in the budget section rather than the standard/comprehensive range.

Correction. I misread it. It's actually 5 years or SPA if sooner.

Tealblue

dunstonh wrote: »

That would be a budget plan. Better than PPI, not as good as it could be. Anything that restricts the period of sickness cover puts you in the budget section rather than the standard/comprehensive range.

But also costs a lot less...not everyone can afford the luxury of 'open ended' cover which takes you through to retirement. Better to have something in place, even the 'budget' version, than nothing.

dunstonh

Tealblue wrote: »

But also costs a lot less...not everyone can afford the luxury of 'open ended' cover which takes you through to retirement. Better to have something in place, even the 'budget' version, than nothing.

You would be surprised at how little the cost often is between the budget and the comprehensive plans. Some budget plans cost more than the best ones.

I suspect most buying dont even realise the scale of product differences.

AlanP_2

OP - How are you getting through a month only spending £60 at the supermarket, seems quite low?

Agree with comment re Life Insurance - who is the beneficiary? Is it tied to mortgage?

Whilst you may not want to put much in there at the moment open a LISA whilst you are still eligible. Can withdraw from Age 60 without penalty and get 25% gov't bonus along the way.

What are your realistic career / salary prospects? Why have a SIPP as well as the main DC pot via your employer - what do you see as the advantage?

Sounds like you are currently on ~35k Gross which is a good salary compared to national average despite the comments above. If it is realistic to think that you could get payrises / promotions and get into Higher Rate tax bracket (£45k plus) in the next few years saving the additional pension contributions up and putting them into the SIPP / DC scheme at that point would get you a bigger tax boost.

Things to think about but you can't set anything in stone as yet, life events happen and things change. Finding a partner and possibly children will affect things dramatically.

Well done for starting to think about your longer term future.