Retirement Planning for a 30 year old

bootstrapbill

crv1963 wrote: »

As your wife is a teacher I'd also look at the post 60 tax situation as in when you take your pensions- will her pension be taxable? Or will she have a lower pension because of possible part time work after you have children? If she will it may be a good idea to put a bit away in her name, even if she doesn't get the 40% tax relief you would if it is all in your name.

Have 4 months salary saved as cash- what are your sick pay entitlements? It might be worth putting this up to 6 months with a high proportion into relatively easy access funds such as the 5% accounts with a bit of juggling or premium bonds- I expect you could use credit cards in an emergency and cash in the former to clear the cc by the time the bill came in?

Just a few quick thoughts.

That's the big question regarding the wife. At this stage we have no idea what she would want to do post Children, put I'd say part time work is likely. In which case, I'll open a SIPP in her name. We're currently looking into Faster Accrual in the teachers scheme for her, but the pro's and con's of that is probably a whole other topic.

Sick pay is relatively good at 13 weeks full pay. Yeah I think my credit rating is unblemished regarding opening new credit cards if needed in an emergency. I'll look into opening more regular savers for the cash sitting around earning barely anything.

Thanks for taking the time to reply.

crv1963

If sick pay is 13 weeks, then as long as you have enough to cover another 13 weeks I'd look to put a bit more into a higher risk saving, okay it could go down when you need it but clearly outgoings don't equal current earnings and you would have time to reduce savings if it looked likely you'd be off longer than 6 months. I know you are young - well a lot younger than I- do you have wills? Lasting power of attorney in place? If not think about this.


I know there is a general view cc's are bad news but if paid off in full every month then they can make sense- try using one for petrol used or food shopping pay in full before the interest hit and they make sense!

atush

20K in cash isnt too much cash. I'd look to be building that, esp if children are on the cards.

But paying more into a pension should be where you start as I make that you are still paying 40% tax on 6/K or so. And dont forget to tell HMRC about your pension contribs so that you get the other 20%. Have you been doing this?

We had a thread here recently where someone had been paying contribs for over 10 years and hadnt told HMRC.

bootstrapbill

crv1963 wrote: »

If sick pay is 13 weeks, then as long as you have enough to cover another 13 weeks I'd look to put a bit more into a higher risk saving, okay it could go down when you need it but clearly outgoings don't equal current earnings and you would have time to reduce savings if it looked likely you'd be off longer than 6 months. I know you are young - well a lot younger than I- do you have wills? Lasting power of attorney in place? If not think about this.

Thanks, that's the first time I've been called young in a while! That's a good point regarding higher risk saving. Although, based on other replies, my cash holding isn't as high as i thought, and maybe i should be keeping it like this with children on the cards. I always wonder what can be so expensive about someone so tiny, but I'm sure I'm being very naive.

We haven't got any wills or lasting power of attorney in place yet. You're right, I should start looking into this.

bootstrapbill

atush wrote: »

20K in cash isnt too much cash. I'd look to be building that, esp if children are on the cards.

But paying more into a pension should be where you start as I make that you are still paying 40% tax on 6/K or so. And dont forget to tell HMRC about your pension contribs so that you get the other 20%. Have you been doing this?

We had a thread here recently where someone had been paying contribs for over 10 years and hadnt told HMRC.

Thanks, that makes me feel better knowing that it's wise to forego some investment income leaving this much in cash. Good point about keeping it for childrens expenses!

Yes, I have been claiming the other 20%. Thankfully someone at work pointed it out to me a couple of years ago. Your comment regarding someone not claiming for over 10 years doesn't surprise me, as I really don't think its public knowledge or very well publicised. I know there is an argument that you should always find out for yourself, but I bet there are a lot of people foregoing this unintentionally.

GoingOn30

I'm in a similar situation having just turned 30 and starting to think about early retirement, I work in a very intense NHS job and won't be able to keep up these shifts until 68! I'd like to be able to afford to work 20hrs a week or less by age 62/,63 and not at all from 65.
I've got a higher outstanding mortgage at 230k but v.low rate of 1.6%.
Current assets 10k in high interest current accounts/regular savers.
I earn 50k and would like to have 2 x 8 month maternity leave in the next 5 years then reduce my hours, salary would likely drop to 40k.
I know the NHS pension has heavy penalties for drawing it before SPA. How would you advise me to bridge the gap from age 62?

bostonerimus

The one thing you have total control over is your saving rate and to increase the probability of you being successful you should maximize that. So do a detailed budget, then find ways to economize and put all those savings into pensions, ISAs or regular investment accounts.

AlanP_2

It looks to me that you are in a good position already and are thinking about adding the icing to the cake in some ways, and there is nothing wrong with that.

As regards CASH - 20K seems like a lot when it is just sitting there. If you were to lose your job whilst your wife was on maternity leave or working part-time for example it will not.

Equally a house improvement project, maybe replacing the kitchen can easily eat £10k of it in a few weeks.

Kids are expensive, astonishingly so and until you are there you don't really appreciate what you need, they need and what it all costs.

Paid for childcare could use up most of your wife's salary, holidays cost more, although we scaled back on the where and the type when we had ours so overall cost may be the same.

If you have boy(s) be ready to dramatically increase the food budget when they get to 10-18, particularly if they are sporty and burning lots of energy.

When our's come home (26 and 30 now) the fridge empties in front of your eyes.

Obviously you control how much they cost to some extent - designer baby clothes are optional not compulsory, as are the number and type of hobbies / activities you encourage.

AlanP_2

AlanP wrote: »

Obviously you control how much they cost to some extent - designer baby clothes are optional not compulsory,

This may not be true if you live in Essex :rotfl:

atush

GoingOn30 wrote: »

I'm in a similar situation having just turned 30 and starting to think about early retirement, I work in a very intense NHS job and won't be able to keep up these shifts until 68! I'd like to be able to afford to work 20hrs a week or less by age 62/,63 and not at all from 65.
I've got a higher outstanding mortgage at 230k but v.low rate of 1.6%.
Current assets 10k in high interest current accounts/regular savers.
I earn 50k and would like to have 2 x 8 month maternity leave in the next 5 years then reduce my hours, salary would likely drop to 40k.
I know the NHS pension has heavy penalties for drawing it before SPA. How would you advise me to bridge the gap from age 62?

I would bridge the gap with a DC pension, and S&S isas incl Lisa