What to do with my money

Stretch999

Hi,

Would like to hear some opinions on what I'm doing / should do based on the below. Any ideas would be much appreciated.

I'm 43yrs old and earn £56k. I also get a car allowance. I have a £172k DC pension pot. I pay in 5% as does my employer (max). I also pay a £660 pm AVC to help my pension grow and keep me out of the 40% tax band. My pension is pretty much 100% in equities. Fairly heavily skewed towards the US, but with some UK/Europe/Emerging as well. I'm planning to use my pension to drawdown from when I retire (hopefully at 60).

I bought a house late and took a mortgage to run until I'm 61, but with the flexibility to make overpayments. I was making significant overpayments but switched these into the AVC when I got a salary increase a couple of years back.

I have £9k of legacy credit card debt (interest free), which I'm paying £150 pm minimum payments off.

I have £4k of shares (I get £172.50 of shares pm which only costs me about £90.

I didn't have any other savings until early 2020 since when I've saved £3k which is sat in the bank. I'm aiming to save a £6k rainy day fund by summer '21. I've opened a stocks and shares ISA, but not used it yet.

My kids aren't yet teenagers so I have a while, but I'd like to help them through university or with a house deposit. All I have saved for them so far is about £1k each in child ISAs. Their need for the £ is likely to correspond with me turning 55.

I'm very conscious of job security in the current climate.

I'd like to hear people's thoughts on the above. I've made financial mistakes in the past and want to ensure that I've considered as much as possible going forwards.

Many thanks

MallyGirl

I would certainly recommend planning to have some savings for uni as you have more than one child. On your salary you will need to contribute. If you have an OH who earns then you will probably be like me and have to contribute the difference between the minimum maintenance loan she gets and the max she would have got if we were low earners which is approx £4,500 pa.
Remember that the money in child ISAs is theirs to do with as they will at 18.

DT2001

If tax relief on pension contributions stays the same it is logical to use the 40% relief. Maybe using the 25% tax free amount to help with house deposits.
Have you worked out what income you want/need in retirement? (Good threads on here about ‘The Number’). Will your pot with reasonable growth and a SWR provide this?
Once you have your rainy day fund then with 12 years until Uni use your S&S ISA. 
Opportunities for funding change - 3 of our 4 children started HTB isa’s at 16 (the youngest is too young and cannot start a LISA until 18). We were expecting major drain on funds for 10/12 years but eldest took an apprenticeship, 2nd is at Uni in France (€170 p.a. fees) but 3rd aiming for Russel Group and masters. So plans need to be flexible.

Stretch999

Thanks for the heads up. Expensive business nowadays!

I'll probably put as much as i can into the my AVCs, and fund the university costs from the pensions 25% tax free allowance when I hit 55. I think I can do that.....

What I don't want to do is be so blinkered on having that as my aim that I neglect other things that need to be considered at the same time like the rainy day fund, mortgage, credit cards, and ISA saving.

garmeg

Stretch999 said:

Thanks for the heads up. Expensive business nowadays!

I'll probably put as much as i can into the my AVCs, and fund the university costs from the pensions 25% tax free allowance when I hit 55. I think I can do that.....

What I don't want to do is be so blinkered on having that as my aim that I neglect other things that need to be considered at the same time like the rainy day fund, mortgage, credit cards, and ISA saving.

As you are now 43 you wont be able to access your pension until age 57 as the age will have increased from 55 in 2028 (actual date unknown, probably 6 April 2028 but not seen a definitive date).

Thrugelmir

Stretch999 said:

I'm very conscious of job security in the current climate.

Then paying down the mortgage quicker is a usefull insurance.  Even without the current woes. As one gets older falling off the job ladder and attempting to get back on at the same level can be a real challenge. 

Stretch999

Re 'the number' - I'd like perhaps half of my current salary when I retire (so £28k per annum in todays money).

I know if I keep putting money into the pension like I am then if I achieve a real return of 5% then I would have £700k by the time I'm 57 - if (and its a big if) i can keep earning broadly equivalent to what I do today. That would give me £27k for university (at 57 - i'll have to find a way to fund it until then) and leave me with about £730k by the time I'm 60. 

Whilst I was aware of the increase in state pension age, I hadn't appreciated that that would mean that I couldn't draw down on my workplace pension until later, so thankyou for making me aware.

barnstar2077

Stretch999 said:

Re 'the number' - I'd like perhaps half of my current salary when I retire (so £28k per annum in todays money).

I know if I keep putting money into the pension like I am then if I achieve a real return of 5% then I would have £700k by the time I'm 57 - if (and its a big if) i can keep earning broadly equivalent to what I do today. That would give me £27k for university (at 57 - i'll have to find a way to fund it until then) and leave me with about £730k by the time I'm 60. 

Whilst I was aware of the increase in state pension age, I hadn't appreciated that that would mean that I couldn't draw down on my workplace pension until later, so thankyou for making me aware.

I too am 43, I am assuming I won't be able to access my pensions until I am 58, just to be on the safe side!