Is it ever too late to start a Pension

cactusmac

Hi Please can you help.
Everyone says its never too soon to start paying into a Pension,but can it be too Late ?
I am 55, I have some money in an ISA,and some money in seperate savings.I have a tiny work place pension (thanks to auto enrollment).
Would it be worthwhile putting the savings i have - but not the ISA- into a personal pension ?
I would hope not to have to touch it for 3-5 years.
many thanks for your time

dunstonh

Everyone says its never too soon to start paying into a Pension,but can it be too Late ?

No. indeed, many people carry on paying in to the maximum age of 75.

Would it be worthwhile putting the savings i have - but not the ISA- into a personal pension ?

You have to look at the pension as a tax wrapper and not a product. An ISA is a tax wrapper. A pension is a tax wrapper. Which tax wrapper is most suitable in your scenario?

MK62

As long as you are under 75, the tax relief available makes pensions hard to beat.

While starting at 55 is very late, and you probably won't be able to build a huge pot before you retire, a pension is one of the best ways to maximise that pot.

How much you can contribute depends on how much you earn, but it could be worthwhile investigating maximising your pension contributions by using both your savings and your ISA.

LHW99

An advantage of saving in the pension at your age is that you get tax relief, and unlike a 20 or 30 year old, you could access the pension anytime from now on.

kidmugsy

cactusmac wrote: »

Everyone says its never too soon to start paying into a Pension,but can it be too Late ?
I am 55 .... I would hope not to have to touch it for 3-5 years.

In many ways 55 is a perfect time to start because your money is available as soon as you like. Because your horizon is 3 to 5 years you wouldn't invest it inside the pension; probably you'd just leave it as cash. You'll get no interest but you do get the 25% boost when the money goes in. For instance, £4,000 becomes £5,000.

A good type of pension would be a SIPP: we use Hargreaves Lansdown. Their service is excellent and their charges are about zero if you leave the money as cash. The one thing to be careful about is not to close the pension within a year of opening - there is a hefty charge for that. Another provider that might suit is A J Bell (about whom I know nothing except that other people speak well of them).

Are you clear on the maximum amount you will be allowed to contribute to a SIPP in tax year 18/19?

Here's a tip: you won't be getting interest within the SIPP, just the boost on your contributions. Therefore leave your savings earning interest until late in the tax year. Then - in March, say - make your pension contribution. As long as you would be happy to keep the SIPP open until April 2020 then that's your most profitable strategy.

Or, even subtler, open the SIPP now with some small sum, and then fill it up in March. That gains you ten months off the waiting period: you could close it in July 2019 without the penalty. The HL website says "You can open a SIPP with us from £100 or with a Direct Debit from £25 per month." (If you are on the lookout for new direct debits to allow you to use current accounts that pay high interest, there's a possibility for you.)

Dox

cactusmac wrote: »

Everyone says its never too soon to start paying into a Pension,but can it be too Late ?

Not everyone says that - I don't. If you are so strapped for cash that you have heavy borrowings and credit card debt rolling up, much better to pay that off; ditto saving for a house may need to take priority. This is particularly true if you are self employed and thus the benefit of an employer contribution isn't on offer.

Can it be too late? Not much point when you reach 75 and the tax relief stops, but 55 - go for it!

cactusmac

Thank you so much for the replies

very much appreciated

nrsql

I didn't really start until I was old enough to access the money - too much risk before that.
Still contributing.

Alexland

nrsql wrote: »

I didn't really start until I was old enough to access the money - too much risk before that.

Although I agree it's never too late to start (while you are still under 75) the earlier you start the less the risk of having insufficient income in retirement so I wouldn't agree that people should delay starting until they can access the money.

atush

nrsql wrote: »

I didn't really start until I was old enough to access the money - too much risk before that.
Still contributing.

Too much risk of what? Big mistake to start late if you c an start earlier. Compounded returns and auto dividend reinvestment make a huge difference.

But never too late to start.

kidmugsy

Alexland wrote: »

Although I agree it's never too late to start (while you are still under 75) the earlier you start the less the risk of having insufficient income in retirement so I wouldn't agree that people should delay starting until they can access the money.

atush wrote: »

Too much risk of what? Big mistake to start late if you c an start earlier. Compounded returns and auto dividend reinvestment make a huge difference.

But he didn't say that he hadn't been saving and investing for retirement, he said that he hadn't opened a pension. That's a plain different thing.