Early 40's, own business, no pension - options?

webchap9

Thanks for that. Spoke to my accountant who put me on to a financial advisor who he works with so am seeing him after Christmas. Will put as much as I can into the pension straight away. Will amend mortgage over payments. My thought process of overpaying was to save the £20k odd of interest. Made good progress chopping that down a lot though so pleased I only have an £80k mortgage now. Will also have the option of getting somewhere smaller when the time comes and the kids have flown the nest also.

steampowered

Think of it this way -

Average life expectancy is 79 for men and 83 for women.

If you are 45 years old and want to retire at 65, you have 20 years of working life left to save for about 20 years of retirement.

So, each year of your working life needs to fund a full year in retirement.

The average long term return generated by stock and share investments on all the major markets is about 6-8% per year. Plus you get the tax benefits of investing in a pension.

On the other hand, overpaying your mortgage is only saving you about 2% per year. Yes you are saving interest but significantly less than you would be getting as a return on your pension.

Terron

BTL can work well if you are in the right area. Howeverit does require some effort even if you use a letting agent. So as you say you are already working long hours a pension is probably your best option.

cloud_dog

webchap9 wrote: »

Thanks for that. Spoke to my accountant who put me on to a financial advisor who he works with so am seeing him after Christmas. Will put as much as I can into the pension straight away. Will amend mortgage over payments. My thought process of overpaying was to save the £20k odd of interest. Made good progress chopping that down a lot though so pleased I only have an £80k mortgage now. Will also have the option of getting somewhere smaller when the time comes and the kids have flown the nest also.

Hi

Did you mean financial adviser or did you mean Independent Financial Adviser?

If it really is the former then I would be warey of seeing them as they will likely only be able to advise on a restricted basis. In fact, I wouldn't see them. Either DIY or IFA.

Albermarle

Average life expectancy is 79 for men and 83 for women.
If you are 45 years old and want to retire at 65, you have 20 years of working life left to save for about 20 years of retirement.

In fact if you have already reached 45 , then the average life expectancy is longer than 79/83.
Also if you have no health issues , have money etc then your are likely to live longer than average and if you have a partner than the chances are that one of you has quite a good chance of living into their nineties.
So if you were to retire earlier than 65 then you need to be funding more like 25/30 years of retirement .

atush

webchap9 wrote: »

Thanks for that. Spoke to my accountant who put me on to a financial advisor who he works with so am seeing him after Christmas. Will put as much as I can into the pension straight away. Will amend mortgage over payments. My thought process of overpaying was to save the £20k odd of interest. Made good progress chopping that down a lot though so pleased I only have an £80k mortgage now. Will also have the option of getting somewhere smaller when the time comes and the kids have flown the nest also.

Saving 20K of interest is a good idea, but doing that while paying tax you dont need to is Not a good idea.