Pension or House Deposit?

NoMore

Edmond wrote: »

I have to pay off the debt first as these are minimum payments. Otherwise I would be prioritising the pension.

If you are at the point that you are not making minimum debt payments and your only option is to reduce your pension and not other things that are non-essential then you are in debt crisis and should contact a debt charity such as Stepchange, who will help you work out a repayment plan.

xylophone

My parents own their house outright, and I'll likely inherit half with my sister.

What if your parents should both need means tested care?

And if they live long lives, you could be waiting a very long time for your inheritance....a relative of mine is now seventy plus and his mother is still in the land of the living.....

crv1963

Edmond wrote: »

Yes, this is something I hadn't considered and I will include it in my next model. Does this essentially mean I would no longer need to consider a life insurance policy, as the pension effectively acts as the same thing?

Unless the lump sum completely cover the mortgage you'll need life insurance, with a child this is especially important, they are expensive and a lone parent would have additional costs.


I don't suggest living like a pauper, just I spent 16k over 8 years on coffee- now I pay into the Tea Fund, take a pack lunch and watch my work spend. I claim mileage every 3 months so it builds into a nice- not huge sum that I can use to fund nights out or garden spending.


We have a mortgage but our aim is to retire together before we are 60 hence the urgency of us building my wife pension pot up. We also have debt but are paying that down, I work bank shifts so we can do that faster, everyone works out their own way of sharing the cost of living/ family life.


I'd look at ways of increasing your income- is bank shift working an option? Can you do a car boot sale? Can you cut out any work related costs? Can you transfer cc balances to a 0% card? We saved £100 pm by just threatening to leave BT as our TV/ Telephone/ broadband provider!


Good Luck


CRV

Alexland

Edmond wrote: »

I do think you have to strike a balance, and there's a definite bias in this forum towards what I would I characterise as penny pinching. If you want to save every penny for your retirement fine, but are you going to regret not living your life when you were young?

Frankly if you are both significantly behind on your pension contributions and property situation relative to other people at your age / income then you probably have the balance wrong as you are otherwise heading for a massive lifestyle drop in old age.

Now I am not saying you have to save every penny, we all have our small luxuries, or that you need to be as fanatical as we are. However I am suggesting a shift in you thinking to determine what you need to do for the overall long term future of your family.

Ps on the credit card I would consider moving to a zero balance transfer fee & zero interest rate card such as the Santander Everyday card which means you can repay over a longer period without sacrificing your pension contributions.

Alex

Spreadsheetman

xylophone wrote: »

What if your parents should both need means tested care?

And if they live long lives, you could be waiting a very long time for your inheritance....a relative of mine is now seventy plus and his mother is still in the land of the living.....

Yes, don't count on inheriting anything. I have been looking at self-funded care for a relative recently and in one of the cheapest areas of the country you are looking at between £33k and £39k per annum. You could rip through the value of a average house in pretty short order with even one parent needing full-time care.

xylophone

£33k and £39k per annum.

Peanuts when compared with round my way....can be £60,000 + per annum.

CityOwl

Bimbly wrote: »

I work out, contributing to your NHS pension scheme would cost you £170 pounds each per month.

Maybe you need to view this in another way? I am not familiar with the NHS pension scheme, so I will provide an example from the LGPS which is also a DB scheme accruing at 1/49.

In the financial year to April 2017, I earned £38,229 and paid in £2,573.88 (£214.49 per month) in pension contributions, which is 6.8% of my salary. The return that I will receive for this contribution is a guaranteed income of £778 per year from the age of 67 until the day I die. It will take less than 4 years of pension payments to get this money back and I hope to live much longer than that.

It would be great if someone could give you a breakdown of what you are sacrificing by focusing on the here and now. The NHS pension scheme may be less favourable in 5 years time as most changes in recent times to public sector pension schemes have been made to save costs.

You are not just robbing Peter to pay Paul, as someone else stated, you are robbing your future selves of a guaranteed income that does not rely on the vagueries of the stock markets and investment returns.

Edmond_2

CityOwl wrote: »

Maybe you need to view this in another way? I am not familiar with the NHS pension scheme, so I will provide an example from the LGPS which is also a DB scheme accruing at 1/49.

In the financial year to April 2017, I earned £38,229 and paid in £2,573.88 (£214.49 per month) in pension contributions, which is 6.8% of my salary. The return that I will receive for this contribution is a guaranteed income of £778 per year from the age of 67 until the day I die. It will take less than 4 years of pension payments to get this money back and I hope to live much longer than that.

It would be great if someone could give you a breakdown of what you are sacrificing by focusing on the here and now. The NHS pension scheme may be less favourable in 5 years time as most changes in recent times to public sector pension schemes have been made to save costs.

You are not just robbing Peter to pay Paul, as someone else stated, you are robbing your future selves of a guaranteed income that does not rely on the vagueries of the stock markets and investment returns.

Is there somewhere I can work out what my pension contribution would actually be based on my income. I'm due to go up to £37750 next year and the salary calculator says my pension contribution will be
£227, which is more than what you're paying. I selected 'employer' and left 'contracted out' checked.

https://www.thesalarycalculator.co.uk/salary.php

crv1963

Try googling the NHS Pension Authority for more detailed information, as well as your Total Rewards Statement available when you log onto the intranet at work, or your Union website. Alternatively speak to your pension officer- who will not give advice they can only give you facts.


Read your scheme booklet or if you haven't got one ask the Trust Pension Officer to send you one or the link on-line if you can't find it on the Pension Authority website.


Edit- Your looking for the 2015 scheme as that's the version all of your savings will be in.

xylophone

'contracted out' checked.

The NHS pension is no longer contracted out.

https://www.nhsbsa.nhs.uk/sites/default/files/2017-03/Cost%20and%20contributions%20factsheet%202015-16%20%28Officer%29%20%2803.2017%29%20V3.pdf