What now?!?

Alexland

BoGoF wrote: »

Even if possible it may not be the most prudent move. The lump sum is tax free, an increased pension would not be.

If the offer for guaranteed income is good enough it might be worth paying tax on.

Alex

Cruixer

justme111 wrote: »

Money is not an aim , money is a mean to an aim. An aim of what? - of a happy fulfilling life. Options what to do now that pressure has decreased are endless - work part time to have time with your child - child years are time limiting opportunity; now it may seem that it takes forever for him to grow up bit what you could do at 2 and have not done can not be done at 4 anymore; every age has unique opportunities which are never , just think about it - NEVER - are going to be available again.

Yes, this resonates. The single most important thing for me is ensuring that I have time for my daughter. My job at the moment is flexible enough to allow me to do that. I don't work at weekends, and I can usually be away in time to pick her up from nursery before 5 and spend the rest of the evening with her, finishing off any work after she goes to bed. She'll be going to school next year so there is probably no point in giving up work in order to hang around the house while she is at school, but I would want to be in a financial position that I could change jobs or go part time if this one started to push on the demands of my time. I am probably mostly there now with the mortgage paid off and money in the bank, so for me while the job still suits its about continuing to put money away to increase that security.



I don't have expensive hobbies, and I don't think that I will need a high income in retirement, but I do need to start to try and work out what level of income would make us comfortable in retirement and plan for that.


So while it still needs fleshed out a bit, that's the guts of my goal. I'd rather have time than money, although I need to firm up on how much money is enough. At the moment the work-life balance is ok, but I want to have the flexibility to be able to react if this balance shifts, the security to be able to push back on my employer if they start to push on those boundaries, and to be able to change into a lower paying job to protect my priorities if need be.

MallyGirl

Cruixer wrote: »

I don't work at weekends, and I can usually be away in time to pick her up from nursery before 5 and spend the rest of the evening with her, finishing off any work after she goes to bed. She'll be going to school next year so there is probably no point in giving up work in order to hang around the house while she is at school

Do not underestimate the amount of 'opportunities' there are for parents of primary school children to be at school - sports days, plays, concerts, themed lunches, etc,etc. They all fall within the school day for little ones. I worked 3 days a week till my DD was about 9 (then went to 4 and finally 5 by the time she was going to senior school). I could flex my hours to go to all sorts of events and also be part of the parents assoc etc.

Cruixer

MallyGirl wrote: »

Do not underestimate the amount of 'opportunities' there are for parents of primary school children to be at school - sports days, plays, concerts, themed lunches, etc,etc. They all fall within the school day for little ones. I worked 3 days a week till my DD was about 9 (then went to 4 and finally 5 by the time she was going to senior school). I could flex my hours to go to all sorts of events and also be part of the parents assoc etc.

Thanks for the heads up. I don't really report in to anyone on a daily basis, and my wife is similar, so we can usually deal with these things by planning our own calendar, working from home and dropping around to the school for a bit, maybe picking up the slack later on at night. Saying that, this is our jobs as they currently stand. If they were to change something that meant that I had to be in the office every day, and this could easily develop with not much more than a few months warning, I have the reassurance of knowing that I could drop my hours or change job without too much financial pressure. In my current job I have the feeling that if I dropped to 3 days they would just expect the same from me and pay me 3/5 of my salary so I would probably be looking to change into a job that was intentionally part time.

Cruixer

Audaxer wrote: »

Is there an option to take a higher pension and no lump sum?

It appears that additional contributions in the investment builder can be drawn down as a lump sum tax free option, or taxed as additional pension, but so far I haven't found the detail on what the deal is in terms of how much additional pension. As you say though, this is probably more something for nearer the time.

Cruixer

Starting to get my head around pensions and tax etc and have started to put together a short term plan while I think a bit more about the longer term. Whatever I decide to do longer term, the discussion on this thread has made it clear that I do need to build a better pension pot. This thread has been really helpful to me in general and has reinvigorated me into thinking about new goals now that the mortgage is paid off.



It strikes me that as I have a capital gain from the sale of my flat in April, I will have a hefty tax bill this year and this might be a good time to reduce my liability by pushing as much as possible to pension, while at the same time starting to build my pension pot.


If I push 100% of my salary to pension for the remainder of this tax year, which I can afford to do due to the capital gain, then I would bring my income down below the higher rate for much of the capital gain.



I am new to this and hoping that someone with more experience could validate whether my logic is sound here?


It is likely that I will still have cash left in the Marcus bank account which is depreciating, but it doesn't seem like there is any benefit to a cash ISA over the Marcus account while I am under the tax free interest threshold, but is it worth moving some of this into a stocks and shares ISA, or something else?

justme111

More knowledgeable people will hopefully comment on it , I do not know an answer to this question - are you sure that capital gains tax has anything to do with income tax and is going to be affected by your pension contributions?
Re cash versus investments - you would need some emergency funds in cash and beyond that it is your preference - either losing money to inflation or taking risk with investments .

Cruixer

justme111 wrote: »

are you sure that capital gains tax has anything to do with income tax and is going to be affected by your pension contributions?

According to the revenue site there are two bands for capital gains on residential property, basic rate and higher rate, 18% and 28% respectively. This year I will also still have income from overseas property which will push me up. My understanding is that the lower my taxable earnings, by using salary sacrifice for my pension, the lower my tax liability for both of these income streams when I complete self assessment.


I did hear back from my employer and they have told me that the only limit on salary sacrifice, is that I can't earn any less than the minimum wage, and this is calculated on a monthly, not annual basis.

LHW99

either of us would be fine with just our own salary

Just a thought, if one of you should sadly pass away while your child is still young, you have more than just lifestyle to consider. You may need to be able to cover higher child care costs, because there would be no partner to cover when the survivor has to be working. Also, no help when the little one is ill and needs to be at home - most childcare is extremely reluctant to look after a sick child. You may have grandparents able and willing and close, but they may be less happy to be permanent rather than emergency helpers.

Cruixer

LHW99 wrote: »

Just a thought, if one of you should sadly pass away while your child is still young, you have more than just lifestyle to consider. You may need to be able to cover higher child care costs, because there would be no partner to cover when the survivor has to be working. Also, no help when the little one is ill and needs to be at home - most childcare is extremely reluctant to look after a sick child. You may have grandparents able and willing and close, but they may be less happy to be permanent rather than emergency helpers.

Thanks, we both have life insurance with work, for my scheme it is 3x annual salary lump sum + half pension on death in service. Also have very willing grandparents.