Finally Mortgage Free

The_Generals_Wife

We have just paid off our mortgage and want to save the mortgage payments for our retirement. We are both 54 yrs and looking for the best but safest way to save this money.  Any advice much appreciated. 

Thanks

jimi_man

Not really enough detail to make suggestions. It depends on what earnings you both have, your tax status, type and amount of pensions, other savings - cash or otherwise, experience of investment, attitude to risk, what you want to achieve, when you want to retire etc etc.

In general saving through a pension can be an efficient way to build up a pot, especially if one or both of you are HR taxpayers. Other than that it's a case of just reading some of the threads and building up knowledge. 

mark55man

Assuming you plan to retire at around 65 you still have 10 years or so before you start withdrawing your money and hopefully many years after that in which to do so.  10 years is regarded as an adequate period of time in which to consider a higher risk profile in that you have time to recover should things take a bad turn.  By concentrating on your mortgage you have missed some years to take advantage of compounding and tax relief, but the mortgage clearance / pension debate is a very personal one

It is common practice (although some disagree) to build up a years worth of living expenses so you are never forced to drawdown when the markets are poor.  you should consider that, but it just has to be ready at your target retirement date not as a priority

beyond the above, the most important aspects are to understand what you want from the investment - and from your retirement - eg a little extra money every month for a more comfortable retirement, or a pot to draw down for you bucket list items, or even something (or nothing) to pass on to the next generation

in terms of safety most of the platforms which you can use for pensions are regarded as safe as you are investing in funds which they hold on your behalf.  In terms of risk you need a balance between a risk of not keeping up with inflation (and losing purchasing power) if you are too cautious and a risk of losing capital if you are too adventurous (and/or not willing to ride out any troughs in your portfolio)

Usually risk is moderated by mixing bonds and equities, often in a multi-asset fund, but sometimes in a lifestyle fund which can be the pension providers own offering - sometime expressed in risk terms, sometimes expressed in age terms (and by implication time to retirement). 

When you have   your pot you then have a number of options as to how to draw it down, including at that point buying an annuity (not peoples current favourite choice as poor value), or combinations of tax free / taxable income - with a view to meeting your retirement objectives above.    

The best thing though you can do to reduce the risk is to read around and understand the basics of investment and the mechanics of pensions during growth and drawdown