How are your savings and investments allocated?

Prism

bostonerimus wrote: »

I was lucky enough to know an old colleague at MIT who has a small startup and needed some R&D and engineering work done. So I have one client and that could disappear at any time. It's not that good after taxes...as a self employed consultant I have to pay employee income tax and both employee and employer payroll taxes. My hourly rate is $100 which is the going rate, but about $30 of that goes on state and federal taxes so I'll have a big bill soon.

Are there not similar ways in the US as the UK to get tax advantages by setting up a limited company? I reckon that if I didn't need the income I could get around 55k per year out of my company tax free. Admittedly I would have to pay tax on pension drawdown later.

bostonerimus

Prism wrote: »

Are there not similar ways in the US as the UK to get tax advantages by setting up a limited company? I reckon that if I didn't need the income I could get around 55k per year out of my company tax free. Admittedly I would have to pay tax on pension drawdown later.

There might be, but I don't want to go to the trouble. As a "sole proprietor" I don't need to do anything other than declare the income on my personal taxes and a self employed pension allows me to defer tax on up to about $50k.

Anyway my point is that I wish people would put as much effort into budgeting and controlling spending as they do into investing.

kidmugsy

bostonerimus wrote: »

I wish people would put as much effort into budgeting and controlling spending as they do into investing.

The returns are more certain than those from investing.

AlanP_2

aroominyork wrote: »

Retired but still earning $100k pa. “Lord, what did I do wrong?”

Depends what you class as retired.

Working 2.5 days per week roughly, based on 1000 hours a year, wouldn't fit my definition of retired.

Semi-retired or working part time possibly more accurate.

Not knocking you Bostonerimus, good luck and you obviously have marketable skills and if you enjoy the work why not do it.

ossie48

53 - Retired
£38k pension
Better half works part time £20k a year
2 DB pensions to come at age 60 (total value approx £8k).
Mortgage paid - property value £550k
No debts
Kids grown up but still helping them on their way
£50k in VL60/40 combo (Inc S&S ISA's)
£40k in premium bonds
£10k in occupational sharesave /sharepurchase scheme
£40k cash (Santander 123 / TSB)

Monthly outgoings £600 (utilities etc)

We save / Invest approx £1500 a month.(£700 in VLS60 /£300 shares / £500 cash)

jonnygee2

53 - Retired
£38k pension

The dream!

Prism

ossie48 wrote: »

53 - Retired
Kids grown up but still helping them on their way

The other dream!

Albermarle

I was under the impression it was a much of a muchness to the pension vs. S&S ISA as a basic rate tax payer, with the benefit of being able to access the S&S ISA if needed.

As already mentioned for a basic rate taxpayer there is a 5% advantage for a pension over a S&S ISA. So it is a personal decision between this 5% and not being able to access the money until age 55.
If you are a 40% taxpayer but are likely to be a 20% tax payer in retirement , then the pension is the much better option.
By the way your stingy employer will have to increase their contributions to 3 % from April 2019.

bostonerimus

AlanP wrote: »

Depends what you class as retired.

Working 2.5 days per week roughly, based on 1000 hours a year, wouldn't fit my definition of retired.

Semi-retired or working part time possibly more accurate.

Not knocking you Bostonerimus, good luck and you obviously have marketable skills and if you enjoy the work why not do it.

I'm taking my pension and getting retiree health insurance so in one way I'm classed as retired. I still working about 20 hours a week, but I'm going to taper that down next year as although it's fun I want to be doing other things. I save all of my part time income as the pension and rent cover my needs so stopping would not be an issue...it's a nice situation to be in. And I'm in that situation because I have good control on my spending and planned to have stable sources of income to cover that spending rather than having to rely on investment income.