Tidying up the mess

Drawingaline

Wow matched betting! I looked into it but it was like a foreign language to me lol!

Enthusiatic saver, it may make sense to roll my small pensions into one. I am going to have to put my big girl pants on and venture onto the pension boards, right? I did look at trying to find a financial advisor to ask locally, but they all seemed to only advertise for people with millions too invest.

BabyStepper

Drawingaline I moved all of my small pensions into one and it makes it easier to keep track of and manage. I had the same problem trying to get pension advice a few years ago - they were only interested in massive amounts and my wee pension pots just didn't cut it. So I just moved them. I now have one pot that is still growing even without contributions, and I can easily keep an eye on it.

enthusiasticsaver

I think pension provision should be diversified but I would not use property. It is not diversified, requires maintenance, is not easily sold when needed and depends on human behaviour (good clean tenants who pay their rent on time). One look at slum landlords, nightmare tenants was enough to put me off BTL along with the unfriendly tax regulations and the problems of maintaining and dealing with things going wrong. I have enough of that at home

We did diversify though for our retirement provision. DB and DC pensions through occupational schemes and previous old pensions. Once we had those maximised though for company contributions all other spare money went into overpaying the mortgage, fixed term savings, investments in global multi asset investment funds via ISAs and SIPPs and cash. State pensions of course as well.

enthusiasticsaver

Drawingaline wrote: »

Wow matched betting! I looked into it but it was like a foreign language to me lol!

Enthusiatic saver, it may make sense to roll my small pensions into one. I am going to have to put my big girl pants on and venture onto the pension boards, right? I did look at trying to find a financial advisor to ask locally, but they all seemed to only advertise for people with millions too invest.

Yes, the pension board are helpful. The best thing to do is find out what sort of schemes and pensions you have. Presumably they are defined contribution rather than final or average salary? You can write to them to get a CETV (that is a transfer value). If any are defined benefit or GMP (guaranteed minimum pension) you may not and in some cases should not transfer. It is easy to do so you do not need a financial advisor but you do need to check the pension scheme benefits to make sure you do not lose any special protection by moving it over.

Drawingaline

Fab, thanks es. One was with lloyds bank and I paid in about 6k, the other two have hundreds in, as I didn't qualify due to low working hours for years then we were tupe over to a new company then I left after a year. I have sorted out all my log ins so I can access them in a half hearted attempt to sort them out!

Husband bought home a pension statement last week. It still doesn't look great, even though it is a good scheme. The amount at pension age isn't anywhere enough to live on. I do worry about it.

BabyStepper

Do you have more than one pension pot then, enthusiasticsaver? How many ISAs and SIPPs do you have? At the minute I have one SIPP, and savings total the amount of my emergency fund. Which doesn't really count as savings. I'm wondering if I should start looking around for different products for me to put cash into. I guess the tax benefits of my pension will win every time though.

My understanding is that you can only put the total mount of your wage into a pension pot in one year. Or £40k. Meaning that if you ever get a lum sum it might need to be drip fed into your pension, or put in other places. I don't know if I'll ever receive a lump sum, but it'd be better to know before hand what to do with it, should I be so fortunate.

I think the laws for BTL landlords changed recently and it's now much less attractive than it was as an investment. I did have a little fantasy of doing this at one point but probably not anymore. Does diversify not mean to put your cash in a wide range of different assets, therefore reducing the risk for you if one goes wrong? Maybe there is such a high risk now with property that it's not considered an asset as such. I don't know.

I wonder what the ideal way to save for retirement is? When I worked out our monthy outgoings after the mortgage is paid off and when the debt is gone, me and OH could easily live on a state pension. We may not be able to have more that one holiday a year but we could easily pay all our bills, buy gifts and run a small car. Anyone else worked out what life would look like for them on a state pension?

My plan at the minute is to max out OH's pension for the maximum match and pay 15% into mine. After that I will be switching up Dave's babysteps because there is really no point in doing them one at a time. We'll need to save 6 months expenses, overpay the mortgage (by some amount we haven't decided yet) and think about a newer car and a new kitchen.

So much to figure out.

savingholmes

At 67 if we contribute at least 6 more years we would qualify for full state pension. I estimate with those and existing private pensions we should get to £33K per year between us even if we contributed nothing more on the latter between now and then. I'm hoping we can get that up to closer to £51K. We are on baby step 2. Once we have baby step 3 fully funded emergency account of 6 months money - plan to start on remaining baby steps. Could invest serious money when mortgage complete in 2028.

enthusiasticsaver

BabyStepper wrote: »

Do you have more than one pension pot then, enthusiasticsaver? How many ISAs and SIPPs do you have?

We have several different pension pots. DH has a DB pension which was frozen when they withdrew the final salary pension in 2008. He had overpaid in since 1982 so had 26 years worth of a booster scheme aimed at early retirement. He also had a DC pot since 2008 to 2016 when he retired. As a sweetener to get them to accept the new DC arrangements the company doubled their contribution if he paid in 10% of his salary so 30% went in for 7 years then in 2015 they dropped their contribution down to 10%. I have a SIPP, a DB scheme through my last employer and an old DB scheme from my previous employer as I could not transfer it. We also both have s and s isas.

At the minute I have one SIPP, and savings total the amount of my emergency fund. Which doesn't really count as savings. I'm wondering if I should start looking around for different products for me to put cash into. I guess the tax benefits of my pension will win every time though.

The tax benefits are certainly attractive but as you are self employed I am not sure how it works as no company match. You could try posting on the pensions board when you are ready to see what the best route for SE is. It probably depends on your tax status.

My understanding is that you can only put the total mount of your wage into a pension pot in one year. Or £40k.

Yes, that is correct. I put in 100% of my wages into my SIPP for the last 3 years of my working life and we lived off a reduced income to make sure we could afford to retire.

Meaning that if you ever get a lump sum it might need to be drip fed into your pension, or put in other places. I don't know if I'll ever receive a lump sum, but it'd be better to know before hand what to do with it, should I be so fortunate.

Lump sums could be split between ISAs, SIPPs and unwrapped investments.

I think the laws for BTL landlords changed recently and it's now much less attractive than it was as an investment. I did have a little fantasy of doing this at one point but probably not anymore. Does diversify not mean to put your cash in a wide range of different assets, therefore reducing the risk for you if one goes wrong? Maybe there is such a high risk now with property that it's not considered an asset as such. I don't know.

Yes that is exactly correct. The general consensus with investing in anything is to diversify(large spread of different assets and geographies) to minimise risk of loss so if one asset group or geographical area goes down the part of your portfolio containing it is so small it does not have a huge affect on your portfolio as a whole. I have always gone for multi asset investment funds so a mix of bonds and equities (shares). We have recently signed with an IFA though and he has added commercial property investments into the mix. Our house is our biggest asset overall though and makes up about half our wealth overall ignoring our DB pensions so I do not want any more property as we have enough exposure to that


I wonder what the ideal way to save for retirement is? When I worked out our monthy outgoings after the mortgage is paid off and when the debt is gone, me and OH could easily live on a state pension. We may not be able to have more that one holiday a year but we could easily pay all our bills, buy gifts and run a small car. Anyone else worked out what life would look like for them on a state pension?

Yes we calculated it and decided it would be way too tight. We will get around £17k combined in state pensions in about 6 years time but we calculated we needed a minimum £25k. If we had to we would have to rein our horns in. We do run two cars though for now and have some expensive hobbies and travel quite a bit. Retiring early was our priority though. If you rely on state pension you have to wait until the government tells you that you can retire.

My plan at the minute is to max out OH's pension for the maximum match and pay 15% into mine. After that I will be switching up Dave's babysteps because there is really no point in doing them one at a time. We'll need to save 6 months expenses, overpay the mortgage (by some amount we haven't decided yet) and think about a newer car and a new kitchen.

So much to figure out.

That sounds like a good plan. Will you do a fixed percentage to each priority? Large emergency fund, overpay mortgage, car/kitchen? On the plus side you should have around £16k each year to play with based on the debt repayments you have been making so plenty of leeway.

My advice on preparing for retirement is pensions first for the company match/tax relief/investment growth over time and reevaluate every 5 years to see where you are with outgoings (how long left on mortgage), pension performance and how long you wish to carry on working. If you are happy to work until state pension age and have minimal outgoings then you do not need to rely so much on private pension and investment performance. If you want to retire early look at other investments like isas or fixed term bonds. We had a bond ladder for cash so fixed term investments maturing each year until our main pensions kicked in.

enthusiasticsaver

Sorry I should clarify that DB means defined benefit (usually final salary) and DC means defined contribution which many occupational pensions are and all sipps. A DC pension relies on investment growth whereas DB is linked to length of service and salary. I have obviously been on the pension board for too long to use the acronyms so much.

BabyStepper

Can I ask how you had this all figured out from such a young age enthusiasticsaver? Most of us seem to be faffing around and not getting our acts together until into our 30s, but you started in your 20s. Wow. Seriously impressed.

You make a good point about the government deciding for you when you can retire, if you depend on the state pension. I have lots of female friends who are in a panic over the sudden increase in retirement age for them. It got me thinking about how to bridge the gap between when I might want to retire and when the government says I can. Is that what your 'bond ladder' is for enthusiasticsaver? I had also read that everyone had plenty of notice about the age increase, but most people chose to ignore it or just forgot about it. I'm happy at work just now but who knows how I will feel in my 50s. So many people get tired and just want to stop. I think my retirement age is 68, need to check. Suddenly it all feels very real and not somewhere off in the distant future.

On the matched betting front I have managed to turn my £60 pot into £85 in 4 days. Not too shabby, and once my pot is bigger I can go for the bigger deals. I'm quite enjoying it. We've managed to arrange a shared lift to the wedding that will keep costs down, lower even than prebooked public transport as that would also involve a taxi or 2. I'm all over the wedding budget, we'll be ready to properly celebrate the big day without overspending. This is exactly the kind of thing I might put on a credit card previously. Not any more.