What now?!?

crv1963

As said previously- pension planning, with a 4 year old expense still to come as they get older the presents get smaller in packaging but no less expensive in my experience!

Look at maybe both working reduced days? Pensions and then look at retiring before SPA? Do you want to do what you do now for the next 22 years?

sandsy

Your financial goal now should be reviewing your retirement provision. What pensions, past and present, do you both have? Do you have any idea when you'd like to retire and how you'd like to spend that time?

Cruixer

Ok, so I am clearly annoying one of two people with my ignorance. This is because up until now I have not paid any attention to investments or pensions because I have always believed the first priority was to pay off the mortgage.



I did mention that my pension was tied to work. It has recently been changed to tie it to the state pension age, so I don't have an option of reporting early from this. I have been a passive participant to now but I need to learn more about it and probably maximise my contributions. I also have life insurance through work. I'm not a big fan of insurances to be honest, not really convinced of the value of this, although I am sure many world disagree with me.



I suppose part of the problem is that I don't know what I want to do or when I want to retire, and what I would do if I did retire. I would like to have a time off now to do everything I want to do in the house and garden and if I could take a sabbatical from work I'd definitely do that, but it's not really an option just now.


I think the short term is probably about maximising pension contributions, and filling up the isa allowance before the end of the tax year. I have most of the money in the Marcus account now, but think I probably need to start inserting that into longer term investment. In the medium term I need to think about a longer term plan.

BoGoF

As a higher rate taxpayer (based on the few facts available) your priority should have been mitigating any higher rate tax liability before overpaying any mortgage.

The problem you seem to have is you have no end goal at present. Until you sit down and work that out then it is difficult to give advice.

Do you get pension forecasts from work?

BoGoF

Meant to add, having that money in Marcus is devaluing that money due to inflation.

Kynthia

You need to plan what would happen if one or both of you died as well as your future retirement. Plus understand what it is you already have so then you know what you need.

Do you both work for the NHS with DB pensions? Have you looked at what each of you will have to live on if the other dies, as my DB pension only pays my spouse a third, is that enough. If either of you died now how much would it pay out as death in service and is that enough to meet the family's needs. If you die before retirement age you spouse will get a pension to help with living costs but if you both die leaving your child the person raising them doesn't get that pension there's just the child pension until adulthood, is that enough? If one of you became too sick to work and maybe needed care what would your income be and would that be enough?

It's just lots of scenario planning now. I'm in a good place financially, both work part time, and have taken out life insurance on top of our death in service amounts to ensure there's more than enough for the surviving partner to focus on the children. I've just started a SIPP and a S&S ISA to maximise savings and allow earlier retirement than SPA. I need to now consider PHI as we can afford to protect ourselves should we become sick long term. It takes time to learn all tgese things but just keep reading this forum and you'll learn lots.

Happier_Me

I think your next step is to get up to speed with both yours and your wife's pension arrangements. Do you have DB or DC schemes or a mix of both? What are the value of any DC schemes and how much do you and your employers contribute? If you have DB schemes, how much will they pay out and when and what is the actuarial reduction if you access these early?

I would also have a read of The Number thread on here. In order to plan for retirement... understand you pension savings gap... you need to know how much retirement income you want as a couple and when you want to retire.

When you know your number and you how much you have/are on track to have in pension savings you can start to work out how much extra you need to save for retirement to fill any gaps.

This is all about finding a balance that works for your family. You're in a similar situation to me (I'm a little younger, mortgage free, we earn closer to £40k each), no rental property but have some guaranteed passive income... I work less than four days a week for work life balance, hubby is still full time through choice, we know our retirement income number - £30k after tax, ideally from 55, though I'm considering increasing this to £35k per annum... and I know the gaps I have to address in our pension savings. I know we can afford to address these gaps, whilst having a bit of a life and it sounds like you're in a position to achieve something similar.

crv1963

Cruixer wrote: »

Ok, so I am clearly annoying one of two people with my ignorance. This is because up until now I have not paid any attention to investments or pensions because I have always believed the first priority was to pay off the mortgage.



I did mention that my pension was tied to work. It has recently been changed to tie it to the state pension age, so I don't have an option of reporting early from this. I have been a passive participant to now but I need to learn more about it and probably maximise my contributions. I also have life insurance through work. I'm not a big fan of insurances to be honest, not really convinced of the value of this, although I am sure many world disagree with me.



I suppose part of the problem is that I don't know what I want to do or when I want to retire, and what I would do if I did retire. I would like to have a time off now to do everything I want to do in the house and garden and if I could take a sabbatical from work I'd definitely do that, but it's not really an option just now.


I think the short term is probably about maximising pension contributions, and filling up the isa allowance before the end of the tax year. I have most of the money in the Marcus account now, but think I probably need to start inserting that into longer term investment. In the medium term I need to think about a longer term plan.

I don't get the impression you've annoyed anyone.

Not knowing what you want is not a crime either. You know what you'd do if you had time off now though so there's a start. We looked at what we do for a living and what we'd rather be doing. Maybe sit down with your other half and talk about what you would like retirement to look like? Saving is good but if you don't have a purpose for it then it's just as easy to turn the savings tap off.

Maybe it is a good idea to aim for retirement before SPA? 57 or 58? Leave the works pension until the Scheme RA? Save for the difference between going at 57 or 58 and when the pensions start? Have a look at a few threads on here and elsewhere, if you want to retire at SPA great for you. Many strive to go earlier, goals are clearly personal I want to go before or at 60, Mrs CRV at 57. One of my sons goal is 45.

Work out a few things- how much retirement income do you need?
How on target are your savings? Then work backwards, factor in expenses like cars and holidays not just living expenses. Do you or your spouse want to travel? Do either want to change career?

Look at your child, do you want to have more children? Time and memories are gifts for our children, we spent weekends doing stuff, getting experiences together, did all the football/ rugby/ school club stuff, often just being taxi and supporter. Holidays with grand parents etc.

Don't limit yourself, no one earns 50k without a degree of stress, I didn't think I was stressed at all, loved my job until health intervened, heart attack at 53- fully recovered now but I have changed my priorities, personal and professional and yes my driver for going by age 60.

Your 60k is a good back up fund, have 12 months expenditure as an emergency fund, then look at building a pension fund/ savings that can allow you to retire earlier- just because you can doesn't mean you have to. Knowing you can go changes your approach to work- I could give 3 months notice and take my work pension and it allows me to have the freedom to enjoy my new job even more. I don't go because "we" are not ready as in I don't want to retire without us both going. Choice is maybe what you should have as your savings goal?

sebastianshaw

Set the new goal and work for your dream - that's my response

Alexland

Cruixer wrote: »

I have always believed the first priority was to pay off the mortgage.

That's a common error - retirement saving and mortgages should take equal priority for most of your working life. Ok maybe some focus on mortgage overpayments in the early years when the LTV and repayments are high but otherwise its usually suboptimal to focus too much on the mortgage and more tax efficient and better return to make pension contributions.

Cruixer wrote: »

I'm not a big fan of insurances to be honest, not really convinced of the value of this

Hopefully you will never be in a situation where you really learn to value it. I agree small item insurance for losses you could easily bear is pretty pointless (as you will end up paying them more than they every pay you) but how would your family cope if one of you died or suffered a critical illness?

crv1963 wrote: »

Look at your child, do you want to have more children?

I often look at our son and wonder why my wife is pregnant again....

Alex