Self employed retirement

xylophone

https://www.pensionbee.com/pensions-explained/pension-contributions/contributing-to-your-pension-from-your-limited-company

https://www.cavendishonline.co.uk/pensions/

https://monevator.com/low-cost-index-trackers/

See IFA? https://adviserbook.co.uk/ Tick confirmed independent and such other specialisms as required.

Check state pension statement for each of you.

https://www.gov.uk/check-state-pension

Book by John Edwards may be worth a read.

DIY Pensions: A Simple Guide to Pensions, SIPPs & Retirement Planning

dunstonh

SamW123 wrote: »

So we shouldn't be trying to make cash savings? I don't see there's much else we can do- in terms of investments we've bought a house, although I don't expect house prices will rise much going forwards (they may even fall)- we're hoping to pay it off as quickly as we can obviously- so perhaps a house isn't much of an investment any more...


Obviously it's critical that we don't run out of money and that things are as certain as they possibly can be, which is why I don't want to go down the road of "investing" in things particularly as I wouldn't know what I'm doing.

Cash is great for short term needs. You cant afford investment volatility for short term savings. However, cash is very poor for long term needs. You would need to put aside around 2 to 3 times more per month than conventional investments in a pension to get the same sort of income in retirement.

we're hoping to pay it off as quickly as we can obviously-

Its not that obvious. With even basic middle of the road pension funds returning 6% a year for the last 20 years and the tax you pay on income which you get back with a pension, that usually is much better than trying to clear a mortgage at 2% p.a. or thereabouts.

Correct, it is a partnership. I suspect if we made it a limited company our accounting might become more complex and we would have to enlist the (expensive) services of a professional accountant to sort everything out- especially if pensions were involved.

If you are earning over around £40k a year, then the tax/NI savings and ability to control your taxation better means it is better to be a limited company. Even after accountant costs. Do you not use an accountant already? A lot of their costs are recovered in the allowances/reliefs they can apply to your situation.

Thrugelmir

SamW123 wrote: »

Thanks for the reply, and the advice. You say invest rather than save, but invest in what? I'm very wary of stocks and shares and want to eliminate risk as much as possible.

How secure is your business income. With a £285k mortgage to clear. That's one aspect I would focus on. If you are risk adverse. No mortgage to service makes a real difference.

justme111

1. Could it be that you just did not want to think how not having to pay mortgage will impact on your finances ? I can not imagine any sentient , let alone clever enough person to be able to save 4 k/ month not being able to do it.
2. Those people who state that you need like 1 million to fund 10k/ year retirement are erring on extreme caution side in my opinion. Fair enough if they can afford it. If you have limited money but want to be treble sure you will not run out of it in retirement you run the risk of never retiring. Stock markets returned on average what - 6%/year over last century ? Assuming 5% return you will run out of money at the age of 90 if you withdraw 4k monthly and at about 150 years of age of you withdraw 3 k monthly. Hardly bad life , is it ? It is up to you what predicted return you are happy with. May be you want to be sure you will be fine even if do not intend to invest in anything because you are worried it will become valueless and you want to have enough money so that even at 15%/year inflation you still have enough with your savings being kept in cash - you probably would have to save till the age 150 then... Mind , if you kept money in cash it might not help anyway as you would be losing to inflation, ie trying to fill the bucket with a hole in it..

Prism

SamW123 wrote: »

Obviously it's critical that we don't run out of money and that things are as certain as they possibly can be, which is why I don't want to go down the road of "investing" in things particularly as I wouldn't know what I'm doing.

Without investing in stocks and shares its going to be very difficult - no wonder your numbers don't really work out. Everybody that has a pension is invested in stocks to some degree via funds. Its something you may have to learn about to make the most of your money. Some people pay an IFA to do it. You have 14 years to go before you need some of the money - I believe you will need to learn to take some risk as otherwise it is very likely that you will run into the problem you say its critical to avoid - running out of money

CBN

SamW123 everything that you’ve said in this thread suggests your biggest risk to a happy, prosperous retirement is a complete lack of acumen when it comes to money.



Hire an accountant to stop you !!!!ing away money with your business. Hire a financial adviser to give you some sensible advice on creating a balanced pension portfolio. Look through the short term cost of these services, they will pay off in spades in the long run.

Posting on here could be the best thing you ever did. But only if you listen to the sensible advice you’ve been given.

p00hsticks

SamW123 wrote: »

Problems: Having looked at a number of retirement calculators and websites discussing what would be a "good" retirement income i.e enough to live on comfortably (but not excessively) - it seems that an average retiree needs an annual income of about 27K (although with inflation I would expect that to be rather more in 14 years' time). So for both of us that would be a requirement of at least 54K.

I'm not convinced by the calculators / websites you've been using.

54 k is way over the average annual household income, and if you are a homeowner you should be aiming to have paid off the mortgage by retirement so only have housing maintainance costs ratehr than rent/mortgage, which is a major epxense for most households.

They say two can live as cheaply as one and although this is a bit of an exaggeration if two people are living together there's only set of utility bills etc

Although you do need to consider the survivors financial position on the death of one party, I think you'll find that you don't need to ain for as much as you are currently saying you do.

SamW123

Thrugelmir wrote: »

How secure is your business income. With a £285k mortgage to clear. That's one aspect I would focus on. If you are risk adverse. No mortgage to service makes a real difference.

It has been very steady and growing slowly for over 10 years and we have a range of diverse clients so we're not overly dependent on 1 or 2 very "key" clients. We are indeed focusing on clearing the mortgage as swiftly as we can (while still putting a bit aside into savings)

SamW123

Thanks to everyone for all the replies. It's clear though that there are two broad camps here - those who say that we should be ok based on the target / expected savings provided we work out our costs at the time, which shouldn't be huge- and those who say that far from being ok, we will actually be stuffed unless we invest in stocks and shares / pensions (which would mean hiring an accountant, an investment advisor and perhaps other experts).



I'm not the sharpest tool in the box but I'm pretty sure that these schools of thought can't both be true, so I guess I need to figure out what to do next.

atush

SamW123 wrote: »

Correct, it is a partnership. I suspect if we made it a limited company our accounting might become more complex and we would have to enlist the (expensive) services of a professional accountant to sort everything out- especially if pensions were involved.

Dont be too sure. Loads of tax to save if a LC

might be worht a few hours of an acct's time, if you get your paperwork ready in advance (to avoid the extra back and forth time if you are asked for further info)