Post mortgage planning

Retter

Having been attentive over the past few years I should be in a position to clear my mortgage within 3 years. At this point I will be aged 41. I am a public servant with a good DB pension and a retirement age (currently) of 62. I am confident that my pension will provide me with a healthy income in retirement.

I allocate around £1000 p/m to my mortgage which is a mixture of standard payment, overpayment and further saving for the time when I decide to clear the remaining balance. In three years time this sum should be available for savings and investments.

My question is where should I put it? The way I see it I have a few options:

- I can open a S&S LISA and make minimal payments until the mortgage is clear then max it out every year then draw when I’m 60.

- I can start a private pension in addition to my work one. This may or may not be more efficient than the LISA as my income hovers around the higher rate threshold so would mainly get basic rate tax relief.

- Start using my S&S ISA allowance which gives me more freedom to withdraw than the LISA.

Any advice or alternate suggestions would be appreciated!

MovingForwards

Do you have cash in the bank? As you would want a healthy float.

Can you make additional voluntary contributions to your DB pension to bring you comfortably into the lower tax bracket?

Supposing you feel like retiring a few years earlier than planned, you need the money to tide you over until your DB pension kicks in.

There are several threads in this forum and the pensions forum with the same quandary, have a look over them whilst you wait for more answers.

NedS

First question will be at what age do you want to retire? If it's below the age you can draw your DB pension then you will need to make provision for that.

One risk you face when planning is that regulations can change. For example, your DB pension age of 62 could conceivably rise, the age at which you can withdraw from a LISA may change. If you save in a SIPP, these can currently be accessed from 55, but this is due to rise to 57 in 2028 and could conceivably be higher again if state retirement age continues to rise.

atush

Do it all.

Save into a S&S isa, save into a DB pension (esp in case you want to retire before your scheme age) and maybe save some into cash for short term (ie 3 years or less) spending on larger expenses like holidays, replacement of white goods, new car etc.