No Pension / No Financial Focus / Help Needed

BathMoney

Hello I hope that you may be able to help me.

I am self-employed and in a bit of a slump due to ill health.

We have a £150,000 mortgage, with 7 more years to run on a fixed rate mortgage, no other debts

My wife is a teacher and we are "just about managing", have to draw from my savings to afford a holiday.

I am 46 have no pension to speak of, never felt that we had funds available.

My health issues have also made me reluctant to invest in a pension, not sure I'll get to enjoy it in any case.

Have recently sold one of my websites which has made me £10,000. I plan on developing another site but this will take some time.

Not sure what to do with the £10,000, pay of the mortgage, save it, add to a pension.

Anyone got any advice, I need some direction and some options?

Thanks in advance.

tacpot12

I would suggest that you should put most of your windfall into a pension. You should perhaps top up your savings with the rest of it, so that you can have more holidays. Holidays are important, especially if you are not sure that you will be claiming your pension!

Let the pension provider know that in the event of your death you want the money to go to your wife.

Paying the mortgage down will save some interest, but you should get a better rate of return investing in your pension, especially with the tax relief; just make sure you have earned enough in the year to get tax relief on all of your contribution to your pension. (You can pay in the same amount as you have earned and get tax relief on it).

kidmugsy

If you die before age 75 and you have nominated your wife to receive the pension money it will all go to her tax-free. Moreover it will move far more quickly than any money that is in your "estate". So it's probably a pretty good investment. On the other hand you may view her far future as already secured by a teacher's pension.

To add £10k gross to a pension you hand the provider £8k and they claim back the other £2k from HMRC. That would leave you with £2k cash with which to treat her to a holiday.

Alexland

If you have health problems which could cause your future self employment income to become unreliable make sure you have a big enough rainy day savings pot to cover these periods before locking away the money.

If you are considering a lump sum pension contribution make sure it is supported by relevant earnings in the current tax year. If you have 'sold' a website that may not count as earnings depending on how the transaction was recorded.

Alex

DiggerUK

Your wife has a secure pension. One of the best going. Not as good as having two good pensions, but added to state pension you won't starve.
Saving at the moment is not a nil gain, it is a plus loss. Not a good idea.

You need to prioritise the roof over your heads, especially if you have concerns about future income. Cannot emphasis how strongly I say pay the mortgage down, better than money in the bank..._

BathMoney

Thanks so much for your help and thoughts.

I was considering using the money to pay off part of my mortgage as (with my health) we are concerned about the evntual affodablity once the fixed rate ends.

I can see the benefits of a pansion but my experience with pensions (had a small pension that I gave up on years ago) is that:

• You seem to pay in money and the projections are mediocre
• I have no idea of how to manage them (possibly am mismanaging hence poor results)
• No idea where to go to get decent advice from someone I can trust
• No idea whats best for me a Freelancer who may need to modify monies paid in

To be frank it feels like I could be potentially dropping my money into a large hole. Just want something simple that works and which I don't need to be a finacial genius to figure out or manage.

Can you point me in the right direction?

BathMoney

Sorry DiggerUK I think I posted at the same time as you.

greenglide

No idea whats best for me a Freelancer

As a "freelancer" are you really self employed as you have claimed or are you actually employed by your own limited company?


As director of your limited company the tax advantages of a pension are difficult to beat!

Alexland

BathMoney wrote: »

I was considering using the money to pay off part of my mortgage as (with my health) we are concerned about the evntual affodablity once the fixed rate ends.

In which case I would keep the money liquid (try and earn some interest) until you understand what deal your lender (or other lenders) can offer you at the end of the current deal. You might need that money to cover the basic payments and it would be a shame if the money was sunk into over payments or a pension.

Alex.

xylophone

Have you or your wife ever had Nationwide Flexdirect accounts?
If not, open a sole each and a joint and earn 5% on £7,500 for a year.

You could each open a TSB current account and thus earn 5% on the remaining £2,500.

You would manage the monthly payments by payment from TSB to NW and back.

System

Assuming your wife has been teaching some time and is on a fairly high grade point you need to address why you're struggling with money. With a £150k mortgage and the sole income of a teacher salary on £30k or more you shouldn't be "just about managing" even with just one income.

It might be an idea to post on the Debt-Free Wannabe board, post a SoA (HowTo sticky on that board) and see where you're losing money.