Mid 30s, new to pension and investments

cloud_dog

shell145 said:

steampowered said:

A S&S LISA is only suitable for first time buyers (which you are not) or if you are saving for retirement. If you want to withdraw your funds from a S&S LISA before retirement, you will pay a 20% penalty, which will remove the government bonus. If you are not comfortable locking the money away until retirement then you should use a regular S&S ISA.

I guess what I'm really trying to find out, is if I should put all of my money 100% earmarked for retirement into a pension, or if  I should put some into an S&S LISA. 

As with most things in life, you can utilise a number of the vehicles to achieve your goals and a LISA can certainly be one of those.

For retirement before age 55 currently (as it will increase to 58 at some point in the not too distant future) you'll need to look at ISAs.  After early retirement age (55 currently) you can use pensions.  To support post age 60 a LISA is useful.  And then you are back to utilising any combination of these plus state pension etc.

I would give more weight to filling the LISA simply because you are limited to £4k contribution each year and cannot contribute after age 55.

Use of a LISA (over a pension) is predicated on you being a basic rate taxpayer and that you do not benefit from being paid under Salary Sacrifice.

Dazed_and_C0nfused

shell145 said:

I've set up a pension with vanguard, my 15k lump sum became 18.75k, 650/month by d/d. it feels good!
I'll put a small amount extra into a S&S ISA
thank you so much for the help, and letting me clear up my own head!

With the profits from your self employment and rental property you could possibly benefit from some higher rate tax relief as well when you come to complete your 2020:21 Self Assessment return.

kangoora

Albermarle said:

shell145 said:

What is the link for the calculator you're using? I can't find anything from Google.
Putting just 7,200 into a pension for 26 years, with a lump sum of 13k, surely wouldn't produce an 800k pot?

I took the £800K figure from a previous post ( from kangaroo) without really checking it .
I read it again - it assumes 5% growth + 2 % inflation .
So the £800K includes inflation over 30 years and is not in todays money + the growth is on the optimistic side.

I also increased the monthly pension payment with inflation for 30 years (it was mentioned).

https://www.thecalculatorsite.com/finance/calculators/compoundinterestcalculator.php

Start pot 13k, £750/month (increasing with inflation) i.e. £600 plus tax relief, 5% compounded and 2% inflation for 30 years = £846k

Using 4% compounded and all others being the same = £709k

Using 3% compounded and all others being the same = £598k

Pick whichever compound rate you wish, it's just an example using a set figure which is easily adjusted in any compound interest calculator

grumiofoundation

shell145 said:

penners324 said:

Pension Bee is easy to open and manage and offers a limited range of funds. And has an easy to use app.

I just tried to set up a pension with Pension Bee. They say I can't because you need to have at least one pension to transfer to use them. Damn

If you want to have a pension with PensionBee you could just set up a pension with another provider for a small amount (~£100*) then transfer this to PensionBee.

*on small amounts can use referral/cashback offers to get a good initial ‘return’.