Help with my Pension planning please

save4Life

Hello All,

I am always worried about will I be able to afford ourself after retirement, I understand "afford" is on a case by case basis and dependent on lifestyle. I want to get your view on what best can I do with my current savings/investment before I meet an IFA.

Age 41yrs

Total Saving in Bank accounts : £13K (1.5% saving interest)
Total Cash in Fixed Deposits (6.75% p.a. ) : £31K
Shares : £22K
Lisa : £600

Credit Card debt (@ 0%) : £14K

Mortgage : £98K @ 2.0% fixed till 2022
Value of Property : 260K

Employer Pension
Current pot : 140K

Contribution : 6% , Employer (Maximum) : 4% , Gross Salary : 78K

I did a AgeUK pension calculator and my results based on their assumption that i need 50% of my gross after retirement to live.

How much shall I save for my retirement?

Some of the obvious ones are to increase my pension contribution from 6% to 12-15%
SIPP : ??

OldMusicGuy

Only you can answer how much you will need to save for retirement. An IFA can't tell you that. Before you meet an IFA, you should do some financial planning. Look at your current expenditure and lifestyle and compare this with how you will live in retirement. You probably won't have a mortgage and some other costs (like kids?) may no longer affect you. What kind of lifestyle will you want in retirement? Lots of holidays and entertaining or will you stay at home and write your three-volume novel? If it's the former, include how much you would spend today on the type of holidays you like to take.

Come up with a rough annual spend (in today's money) that will support your retirement lifestyle. Then get state pension forecasts for you and your partner. Add those together, subtract them from the annual income level you need in retirement and the difference is what you have to fund from your pensions and savings. If you retire before SP age, you will also have to fund that gap.

Once you have done this an IFA can help you identify the types of investments you may want to make to meet any shortfall. Or you can educate yourself and make your own decisions, which is what I have done (and many on here do).

Marcon

Save as much as you can as early as you can - but don't tie up so much cash that you have to borrow to fund your current lifestyle.

save4Life

OldMusicGuy wrote: »

Only you can answer how much you will need to save for retirement. An IFA can't tell you that. Before you meet an IFA, you should do some financial planning. Look at your current expenditure and lifestyle and compare this with how you will live in retirement. You probably won't have a mortgage and some other costs (like kids?) may no longer affect you. What kind of lifestyle will you want in retirement? Lots of holidays and entertaining or will you stay at home and write your three-volume novel? If it's the former, include how much you would spend today on the type of holidays you like to take.

Come up with a rough annual spend (in today's money) that will support your retirement lifestyle. Then get state pension forecasts for you and your partner. Add those together, subtract them from the annual income level you need in retirement and the difference is what you have to fund from your pensions and savings. If you retire before SP age, you will also have to fund that gap.

Once you have done this an IFA can help you identify the types of investments you may want to make to meet any shortfall. Or you can educate yourself and make your own decisions, which is what I have done (and many on here do).

thanks OldMusicGuy , in terms of planning where and what to invest and how what books/articles will you suggest? Also on pension is it worth me having my SIPP as well to put more pension saving in?

Marcon wrote: »

Save as much as you can as early as you can - but don't tie up so much cash that you have to borrow to fund your current lifestyle.

Thanks Marcon, is there a rule of thumb how much should one save from monthly net income?

atush

AS a 40% taxpayer, the obvs solution is to put more into the pension. 100 into a pension is going to cost you 60.

save4Life

atush wrote: »

AS a 40% taxpayer, the obvs solution is to put more into the pension. 100 into a pension is going to cost you 60.

thanks atush , and should I be increasing my employers pension contribution or start a SIPP ?

OldMusicGuy

save4Life wrote: »

thanks atush , and should I be increasing my employers pension contribution or start a SIPP ?

I would say it depends on the fund choices in your employer's pension and the charges on them. If the employer pension is limited in choice and expensive, it may be best to start a SIPP. There's a thread comparing the cost of different SIPP platforms here, with a good spreadsheet: https://forums.moneysavingexpert.com/showthread.php?t=5583030#topofpage.

A good book to start you off is "DIY Pensions: A Simple Guide to Pensions, SIPPs & Retirement Planning" by John Edwards.

atush

I agree itht h above. If happy witht he employers scheme it is easiest and fastest to start there.

If you want to invest in something they dont cover (like maybe Vanguard funds or investment trusts) then open a sipp.