Balancing finances - am I putting too much into pension

longwalks1

ossian said:

I think there is another possibility to entertain.... that we have a crash followed by a bear market in which case your pensions may fall below the Lifetime Allowance.  This doesn't need to happen before you start drawing either.  It means that the funds in excess of the lifetime allowance are more advantageous than they at first appear.  They are also still accessible.

That is another possibility yes, so any extra/excess in my pension is of benefit, to cover any potential drop in its value.  I've been warned by so many colleagues to NOT go over the LTA, but none could give good enough reason for itossian said:

I would have the same concerns as you do if I were in your situation and conclude that I'd continue to pay income at the 40% rate into a pension and ISA invest and pay off mortgage in excess of that.  Another useful thing to do with spare cash below the additional tax rate is to spend it on home improvements and repairs otherwise you'll find you spend money early in retirement on home improvements that you could have funded and enjoyed in work.

Don't forget to live life as time passes by...

Plan is to have our home (wherever it may be) completed and ready for retirement so I'm not working on it constantly or spending on it too much.

One of the main reasons too for asking my original question, is it feels like I'm saving too much for 13 or 14 years time, and possibly not enjoying things now.  But I'm not going without, not having holidays (when we can), am doing home improvements etc.  The only money I am voluntarily sacrificing each month is 10% of my salary before tax (I think its about £450).  Which, at the moment, I dont actually need each month

QrizB

britishboy said:

One of the main reasons too for asking my original question, is it feels like I'm saving too much for 13 or 14 years time, and possibly not enjoying things now.  But I'm not going without, not having holidays (when we can), am doing home improvements etc.  The only money I am voluntarily sacrificing each month is 10% of my salary before tax (I think its about £450).  Which, at the moment, I dont actually need each month

If you're enjoying life on your reduced income, I don't see a problem with it. You don't miss what you never had

Another thought (may have been mentioned already, upthread, but I didn't see it). Is your extra 10% paid by salary sacrifice? If so you could save a bit of NI by making "lumpy salsac" as one of the forum regulars call it. Rather than paying 10% extra every month, pay 0% extra for 9 months and 40% extra for 3 months. The months that you pay 0% you'll incur 2% NI on the additional income but the months you pay 40% you'll save 12% NI on the additional sacrifice.

(This assumes your salary is around 60k, which you're reducing to around £50k by paying your 5% + 10% pension contributions.)

Albermarle

britishboy said:

Thrugelmir said:

And if it doesn't grow 5% on average?  What's plan B. 

Then move it across into something safer than a shares weighted portfolio until things settle, or keep it held as cash until times pick up.  My smaller company pension I've grown between 10%-15% a year for the last 4 years (no great gauge I know) but 3 of their available funds have grown very well, even last year.

I know this kind of growth isnt achievable year on year, but a few good years now will ease the need for risk nearer retirement age.  My SIPP which is only a few months old has also performed well about 5% growth.  Again, it wont continue at that rate, so i am monitoring it closely

In theory a well invested medium risk portfolio should be able to achieve 5% before inflation ( so say 2,5% real growth ) as an average over the long term . Recent times have been good to investors and 5% after inflation has been relatively easy . Even higher for an adventurous investor . However your comment in bold above is showing some naivety about how to handle a crash in values when it happens . By the time you have moved it to cash it will already have lost a lot of value . By holding it in cash you will miss out on the recovery when it comes, as unless you are lucky you will not be able to time reentering the market correctly ( or you will be too nervous) .
The normal advice in a crash is not to sell and sit tight . 
If you need income during this period then you should have a cash savings pot to fall back on rather than selling investments at a loss.