Planning for 40 and beyond.

atush

LXV wrote: »

Hi Kangorra

Thanks for the reply, apologies the wife is working too and earns over 20k pa and is in government pension through work.

I also earn over the child benefit allowance (over 60k). I am salary plus bonus but if expectations are my salary will remain over this (else I'd be grossly underperforming in my role!)

Is this the same for NI credits?

With my pension I can put in as much as I like but the company will match 6%. Can I also open a SIPP if I have a work pension too and pay into that (as I suspect the Standard life And Aviva pensions will be mainly bonds?) as well as a S&S ISA? Completely understand your point on tax relief, in my head my plan was to get the equivalent savings in ISAs to equal/surpass my mortgage in the next 10years and then the remaining 15 years before I am 55 I could really pump into a pension as I will be closer to that age and it not tied up for what is probably going to be 40 or so years by the time I get to retirement age.

What is your lifestyle creep like?

Can you afford to pay in enough to take you out of HRTax, esp as the wife is earning 20K?

LXV

Wow thanks Maxi. I now understand the workings.
Definitely some reading into compounding needed. Thank you so much for taking the time out to help and explain.

MaxiRobriguez

You're welcome. Best of luck in your process.

LXV

Hi Atush.
Thanks for your message.

Our lifestyle isn't relative to my wage (we aren't careless with money) but we do like to go for meals out from time to time, and enjoy nice holidays...having a nearly 3 year old this also brings about it's own costs! We aren't money wasters, if we can find the same thing for a cheaper price we will & dont really spend money on very expensive designer items or clothes. House is now pretty much where we want it, new kitchen, fully re decorated, new boiler etc etc so that's sorted for a few years!

I would have to do the numbers, this year I will be very close to 6 figures (very very good year) so maybe it's a mindset thing but that would feel like a huge amount when in essence I guess it's only 60% of it.

This thread so far has certainly given me perspective on pensions. I'd be interested if anyone can link me to recommendations on platforms for S&S ISA etc as I think I am going to be wasting holding both vanguard and HL. But naturally that money is there and I wont completely neglect the S&S ISA so would continue to pay some money in there a) incase interest rates rocket I can pay off a chunk of the mortgage b) if I did want to early retire I would need access to some money earlier and then c)family situation further up the thread, I would want to be in a position if I needed to take time out of work etc.

That said before the thread is was tunnelled into a goal of getting parallel to my mortgage as my S&S ISA, where as now my gut feel is I will increase my Pension to probably 15% minimum and then scale up depending on if I feel we still have excess disposable at month end after putting in a much smaller portion than planned into my ISA.

recruit18

I currently put extra contributions into my company pension so that I don't pay any 40% tax and also get to keep my child benefit. The marginal tax rate between £50-£60k is very high (something like 58% IIRC). So I think its something like every £1 extra that goes into my pension only costs me about 42p less in my bank each month....It's an absolute no brainer if you can afford to get your adjusted net income below the £50k mark. Where else can you get that sort of return?

https://www.theguardian.com/society/2018/sep/01/high-earner-tax-penalty-child-benefit-50000-salary-pension


https://www.theguardian.com/uk-news/2018/nov/03/tax-trap-budget-children

As others have said I also have a pot of money in ISA's as we don't know when I'll be able to get at my pension money. 55 now but could rise to 57 by the time I get there. This gives me a bit more flexibility.

The most you can put in a pension in one year is £40k (although you can use the last few years 'unused allowance' using pension carry forward rules.

The good thing is you're saving and asking the right questions. Good luck!

MaxiRobriguez

LXV wrote: »

Hi Atush.
Thanks for your message.

Our lifestyle isn't relative to my wage (we aren't careless with money) but we do like to go for meals out from time to time, and enjoy nice holidays...having a nearly 3 year old this also brings about it's own costs! We aren't money wasters, if we can find the same thing for a cheaper price we will & dont really spend money on very expensive designer items or clothes. House is now pretty much where we want it, new kitchen, fully re decorated, new boiler etc etc so that's sorted for a few years!

I would have to do the numbers, this year I will be very close to 6 figures (very very good year) so maybe it's a mindset thing but that would feel like a huge amount when in essence I guess it's only 60% of it.

This thread so far has certainly given me perspective on pensions. I'd be interested if anyone can link me to recommendations on platforms for S&S ISA etc as I think I am going to be wasting holding both vanguard and HL. But naturally that money is there and I wont completely neglect the S&S ISA so would continue to pay some money in there a) incase interest rates rocket I can pay off a chunk of the mortgage b) if I did want to early retire I would need access to some money earlier and then c)family situation further up the thread, I would want to be in a position if I needed to take time out of work etc.

That said before the thread is was tunnelled into a goal of getting parallel to my mortgage as my S&S ISA, where as now my gut feel is I will increase my Pension to probably 15% minimum and then scale up depending on if I feel we still have excess disposable at month end after putting in a much smaller portion than planned into my ISA.

Couple of (good) options with the S+S ISA. You can go down the 'passive only' route, not getting involved with complex decisions and just buying a cheap VLS passive fund in Vanguard's ISA offering and forgetting about both it and doing anything else. Come back annually to top it up, but do nothing else. Perfectly fine option.

Other option if you want to get a bit more involved is a platform with low transaction fees. iWeb which I use is pretty good for this, X-O is another option. You can then use this to buy not just funds like VLS but also any other security across global markets, including single stocks. If you go down this route it'll be more work and bigger risk, but potentially bigger pay-off.

Avoid expensive platforms that come with advice and 1%+ AMCs and fund charges. It'll just sap any gains you make with very little benefit. Most of these experts can predict market shifts no better than you or I, you're just paying them for nothing.

Eco_Miser

MaxiRobriguez wrote: »

Other option if you want to get a bit more involved is a platform with low transaction fees. iWeb which I use is pretty good for this, X-O is another option. You can then use this to buy not just funds like VLS but also any other security across global markets, including single stocks.

Note that iWeb (which I also use) and X-O have low transaction fees (around a fiver) which is great for topping up your ISA occasionally , but if you want to tweak your holdings regularly, a percentage fee/no transaction fee platform could be cheaper.

AlanP_2

LXV wrote: »

Hi Alan, would that need to be salary sacrifice or is it as simple as if for an example in a given year I earn say 75k, if I put in more than 15k into my pension (to be below 60k) then I would be eligible for some child benefit? This will be useful to know as whilst I "should" earn above 60k - if have a quiet year this could certainly end up being the case where with an increased pension my earning after pension could be 50-60k bracket.
Thanks

I'm no expert on this and have never been in the situation of doing it but my understanding is that the "salary - pension contributions" value is the key number.

Others may be able to comment as it is a strategy that comes up on a fairly regular basis.

LXV

Thanks again Maxi. As per the original post, at present I hold a HL account and a Vanguard (different years). I have around 12 AIM stocks as mentioned and then 2-3 FTSE100 companies and then my Vanguard LS80 and Vanguard Global all cap... question is what's the cheapest way to get either all value or as much value onto a new platform - can you transfer or would I have to sell each stock? I assume I can sell from my Vanguard easy enough and then re buy via another platform like I-Web?

LXV

I will take another look in the forums Alan.. very useful to know.