Advice at 30

MallyGirl

30andcounting wrote: »

Think I will up it to 6% - I can always reduce later down the line. I want to try and overpay my mortgage too. So much to think about and juggle at this age!

Investments plus tax relief is likely to massively outperform the small amount of interest you are paying on your mortgage. The only reason IMHO to overpay is in order to bring down LTV in order to get a better rate

Drp8713

30andcounting wrote: »

Thanks for the replies guys. My point being - not trying to be ahead of the game, just trying to see those around me at a similar age are contributing more or less. If I’m in the top 20% for example it’s more likely on pension income alone I should be by retirement age “ok”. Understand many other factors that get thrown into it. I also agree 17k is naff all, I have only really had higher % contributions and been on 50k plus for a few years.

Think I will up it to 6% - I can always reduce later down the line. I want to try and overpay my mortgage too. So much to think about and juggle at this age!

If you bring your income after pension conts down to under £50k you wont pay 40% tax and you can claim the full child beneft, that would be a good starting point?

zagubov

I was a perpetual student who didn't start full-time employment until I was close to your age, so didn't start a pension until then (wife same).

Few years in, we both took stock, and started paying up to the limit that MallyGirl suggests. And only just in time.

Now we've both retired (but still need to work to fund the kids, which is OK as we like our jobs).

Mortgaged to the hilt, but that's less important than the pension.
We don't regret pumping extra money into the pension at all, and we also feel we should have started earlier.

Put your finances under the microscope and have a think about the future.

Sea_Shell

Regarding your feeling of wanting to be on a par with the "average". That's all very well, but even if you meet this figure, it still might fall short of the type of retirement YOU want.

It's no good thinking, "great I'm doing well, as I've got more that most people my age", if that's still not enough.

Only you can decide if there are things in your current lifestyle that you can compromise on now, to enable you to save more for later, but unfortunately no one has a crystal ball, especially when you're trying to look 38+ years into the future.

Spreadsheetman

30andcounting wrote: »

... My point being - not trying to be ahead of the game, just trying to see those around me at a similar age are contributing more or less. If I’m in the top 20% for example it’s more likely on pension income alone I should be by retirement age “ok”...

No, that is irrelevant, you are a sample of one and you have to work it out for yourself based on your own (and your families) goals for retirement.

You may not have as much time as you think, many careers get precarious for the over-50s and a high-paying job cannot always be found once lost. I'd definitely recommend not relying on reaching state pension age in full employment.

PuzzledDave

The average person works until state pension age and can struggle in their twilight years. Don't be average.

Decide what you want out of the system, then design the inputs. For me, early retirement was my goal - so I put away enough money to aim for a specific age.

Anonymous101

PuzzledDave wrote: »

The average person works until state pension age and can struggle in their twilight years. Don't be average.

Decide what you want out of the system, then design the inputs. For me, early retirement was my goal - so I put away enough money to aim for a specific age.

Exactly this. I'm late 30's now, and aiming for Financial Independence as quickly as reasonably possible which means contributing way more than the standard 5-10% most people put into their pensions. Once I've achieved that then I'll decide what work looks like for me.

The OP is on a good salary for his age so I'd advise him to invest as much as he can as early as possible. Once the gross amount is in a pension there's a huge benefit from the compounding effect on all that tax relief which mean ultimately you need to invest much less than if you're playing catch up in your later years.

30andcounting

Thanks guys for all replies, very helpful - embarrassed to say I'm a chartered accountant so I understand all the tax implications but I'm still paying 40% tax on some of my income. It does make sense to bring all my income into the 20% bracket given 40% threshold is now £50K. I also have £124 a month childcare vouchers (maximum I am entitled to) so that takes off £1,488 off my income. So increasing it a bit will bring me down to the 20% band hopefully.

I have had a lightbulb moment with my finances this year so decided to ask for some advice. We have approx 80K equity on a house value of about £230K (live in midlands so house prices still v reasonable)

Anonymous101

30andcounting wrote: »

Thanks guys for all replies, very helpful - embarrassed to say I'm a chartered accountant so I understand all the tax implications but I'm still paying 40% tax on some of my income. It does make sense to bring all my income into the 20% bracket given 40% threshold is now £50K. I also have £124 a month childcare vouchers (maximum I am entitled to) so that takes off £1,488 off my income. So increasing it a bit will bring me down to the 20% band hopefully.

I have had a lightbulb moment with my finances this year so decided to ask for some advice. We have approx 80K equity on a house value of about £230K (live in midlands so house prices still v reasonable)

Its not just the tax implications that are important, its the effects of the compounding on the gross amount which can be staggering over a 35-40 year period.

I was in your position 7-8 years ago and didn't act strongly enough until a couple of years ago. If I had then I'd only have a couple of years left to work now, instead I still have around 10.

Read everything you can from the F.I.R.E crowd. Mr Money Mustache is a great place to start. If you've never heard of him this is possibly the most famous article on early retirement.

https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/

Lokolo

TBH, a mortgage of £150k, on £57k and you are saying you cannot increase contributions then I think you need to look at your budget.

My salary is £70k. I have a mortgage of £350k (£1400 a month), a partner who is on maternity leave (so currently I pay all bills and outgoings. She buys some essentials for the baby but I still top it up), I have to spend £400 a month on commuting, I also save each month. I contribute 16% to my pension, employer 9%. When the wedding has been paid for I will increase my contribution to 21%.

I would do an SOA

http://www.stoozing.com/calculator/soa.php

You can format it for MSE.