Starting a pension at the age of 51!!!

lalaleona

Hi there, I'm embarrassed to say this but I really need some advice for my husband. Basically he's 51 and has no pension. I lie awake at night worrying about the future sometimes. We were both bought up very chaotically and were not educated about money atall. We have been through alot of hardship in life and it's only now our house is paid off we will have some money to save but not long to save it for before he is 65. We also have young kids. I know it doesn't sound ideal but that's the way things have turned out.I only have my work based Pension but at least that's something. We own our own home outright so hoping to downsize on that also. So basically we are now able to save or invest about £600 a month. We have no idea what is the best thing to do with that money..savings or investments? I feel so ignorant typing this and just wondered if anyone had any ideas? Thank you so much in advance.:o

Thrugelmir

What's the nature of your husbands employment?

lalaleona

He is self employed designer

Apodemus

I think you need to start by calculating what your total current pension provision is going to provide - check both of your state pension positions and find out how much your own works pension will pay at your retiral date. Compare all that with what you think your likely costs in retirement are going to be. This will give you an indication of just how far short you might be.

£600 a month over 14 years is not going to get a huge pension, but much better than nothing! It is likely that you will be better putting as much as you can into some form of pension rather than into other investments, but if you have kids, you might need to balance the inflexibility of pensions against the need for unforeseen costs.

robber2

lalaleona wrote: »

He is self employed designer

Is he a Sole trader or Director of a Limited Company? The answer makes a very big difference to his Pension options.


BTW in you original post you imply a retirement age of 65. He can carry on working for many years after that also he will not be entitled to State Pension until at least 67.


Rob

lalaleona

Hi he is a director of a limited company. Our house is worth about £500,000 so hoping to take £100,000 from that when the time comes. I am quite a bit younger than him so will carry on working about 15 years longer than him so we will have my income for the children's costs. Thank you so much for any advice!

lisyloo

so hoping to take £100,000 from that when the time comes

What do you mean by this?
Do you mean you'll move somewhere cheaper/smaller? or are you planning a formal equity release product at his age 67 and your much younger?
If the latter have you checked you qualify on age criteria?

Spreadsheetman

lisyloo wrote: »

What do you mean by this?
Do you mean you'll move somewhere cheaper/smaller? or are you planning a formal equity release product at his age 67 and your much younger?
If the latter have you checked you qualify on age criteria?

OP mentioned downsizing.

lalaleona

Sorry I meant that we will move somewhere smaller and cheaper later.

RD42

If you start now, rough calculations for a pension show (Assuming basic rate tax payer, paying in annually £7200, adding £1800 tax relied and getting 3% growth) that at age 66 a pot of around £180,000 could be accumulated by retirement age.

Others here will advise on the best way to get the money into the pension efficiently, e.g. avoiding paying NI as well as getting tax relief.

Audaxer

RD42 wrote: »

If you start now, rough calculations for a pension show (Assuming basic rate tax payer, paying in annually £7200, adding £1800 tax relied and getting 3% growth) that at age 66 a pot of around £180,000 could be accumulated by retirement age.

That's certainly a possibility, but there is no guarantee that growth will average 3% over next 14 years. Good growth in the last 10 years could mean we are in for a period of poor investment returns, but worth adding £7,200 each year to a SIPP anyway and getting the £1,800 tax relief, and investing in maybe a medium risk low cost, globally diversified multi asset fund like Vanguard LifeStrategy 60 - but OP (original poster) should research DIY investing in SIPPs, by learning what they can from this forum and sites like Monevator, before doing anything.

I think if OP does this and checks SP forecasts to see if her and her husband need to make any additional contributions to get to the max £164 each per week by the time they retire, and are able to downsize property nearer retirement, they will hopefully have enough to retire on.