Financial Planning — Advice Sought

penners324

I'm not an FA but for starters a big chunk of 1 should probably go in 5.

bpk101

penners324 said:

I'm not an FA but for starters a big chunk of 1 should probably go in 5.

Yet other non-FA friends and acquaintances have suggested aggressively saving towards and locking money away in a pension at this late stage might not be the best use of our money right now given my OH's pension might be more than enough (yes – assuming we stay together!).

Other factors to consider is a potential £150–200K inheritance coming through in the next 10-15 years. We may also downsize in later life and put any profits towards retirement. 

Again, i just feel some professional help to look at all these variables would help us understand and plan our finances better.

sheramber

Are you ( as in both of you) comfortable with spending a sum of money to  get that advice?

jimjames

I don't think you need to pay an IFA (note the I for independent) to tell you about a mortgage. You can find all that info available online on most bank's websites and decide for your self if you are happy with that mortgage. I also don't think you need advice to tell you that a repayment mortgage is the better option, there's a reason that most banks no longer offer interest only so that should be an easy switch to make yourself.

Pension should be top of the list, if you have nothing so far then it will give tax relief (although I'm not sure what happens with income as high and reducing it) and limit of £40k contributions. Maybe the pensions board will be a place to ask.

You've not said what sort of pension your OH is paying into and what contributions so that's something you need to check. The default values for a scheme might not give a great income in retirement compared to £330k.

bpk101 said:

penners324 said:

I'm not an FA but for starters a big chunk of 1 should probably go in 5.

Yet other non-FA friends and acquaintances have suggested aggressively saving towards and locking money away in a pension at this late stage might not be the best use of our money right now given my OH's pension might be more than enough (yes – assuming we stay together!).

Unless you know what the pension is (and it's not been detailed) then it's impossible to know if it is enough or not. Just because you've paid in for 13 years doesn't automatically mean it will be a decent sum. If you are 46 then access is only 10 years away.

bpk101

jimjames said:

You've not said what sort of pension your OH is paying into and what contributions so that's something you need to check. The default values for a scheme might not give a great income in retirement compared to £330k.

A works pension plan invested in a global equity index, current value is £115,000, projected value at retirement is £800,000 according to OH latest statement. 

Thrugelmir

bpk101 said:

6. Joint income planning — Our joint income is around £330k including bonuses with my OH's income accounting for about 70% of that. We've been together 12 years and up until now have always split things 50/50 (mortgage, bills, day-to-day spending etc.). However, with this arrangement in place (largely down to my own stupid pride) it can often be difficult to plan for things that i might struggle to afford personally (for example i might resist an otherwise affordable house price due to me not being able to afford payments based on a 50/50 split). It would be great for us to hear together some professional advice on how we might manage our joint income differently.

Perhaps sitting down and pooling your resources might be a good start. Make joint decisions. Draw up a budget. Understand where your money is currently spent. Not rocket science. Just requires discipline and a desire to achieve an objective. Professional advisors cannot run your lives for you. 

penners324

If you decide to retire 10 years early the pension will worth no where near £800k.....

eskbanker

jimjames said:

Just because you've paid in for 13 years doesn't automatically mean it will be a decent sum. If you are 46 then access is only 10 years away.

penners324 said:

If you decide to retire 10 years early the pension will worth no where near £800k.....

OP is 46, OP's OH (with the pension and the £200K+ annual earnings) is 38....

bpk101 said:

My OH (38) has been paying into a works pension for the last 13 years and it would be great to understand if she's getting the best deal. I on the other hand (46) have unfortunately never saved into a pension

enthusiasticsaver

bpk101 said:

Hi –

My OH and I would really like to get on top of our family finances this year but feel slightly overwhelmed by the various financial planning to-do's on our list and the sheer amount of advice out there relating to each of them. I was wondering if in our case, speaking with a financial advisor might be beneficial, and if so how we best go about finding one.

If i share the different areas of financial planning we'd like to tackle, perhaps someone could help offer thoughts on which of them — if not all of them — a financial advisor would be able to help with and ultimately whether it would be worth using one.

1. Best place to save and invest based on short term and long term goals — We currently have around £120k split relatively evenly across 2 x Cash ISAs and a regular savings account. Obviously not the best place to have them! Some advice on where best to put all of this based on our goals would be great. 

2. Junior ISA best funds advice — We opened a Fidelity S&S JISA last year for our 2 year old although i'm not sure the Index Fund i picked is the best option. It would be great to have advice on this.

3. Advice on our current mortgage — We've owned out first home for 6 years, the first 5 we were on a fixed repayment mortgage but moved to a part and part payment / interest mortgage to help free up cash when our first child was born. However it's making me a little nervous that we're not paying off much of the mortgage currently and i wonder if some of the savings should go towards that. Professional advice on this would be great.

4. Financial planning towards the purchase of a new home — One of our short / mid-term goals is to sell our current house and purchase a new bigger family home (another addition to the family is on the way!). It would be great to discuss what our potential budget might be based on current equity, salaries, outgoings etc. and how that might translate into monthly mortgage payments based on our ages / mortgage term. A sort of reality check really before we get too carried away, it's all very well shopping around with the absolute maximum amount a lender might offer but i think we both need it spelled out to us exactly what this will mean financially once we start having to pay off the mortgage. 

5. Personal pension advice — My OH (38) has been paying into a works pension for the last 13 years and it would be great to understand if she's getting the best deal. I on the other hand (46) have unfortunately never saved into a pension and some professional advice on what that might mean for us in the future and any steps we should be taking now would be great.

6. Joint income planning — Our joint income is around £330k including bonuses with my OH's income accounting for about 70% of that. We've been together 12 years and up until now have always split things 50/50 (mortgage, bills, day-to-day spending etc.). However, with this arrangement in place (largely down to my own stupid pride) it can often be difficult to plan for things that i might struggle to afford personally (for example i might resist an otherwise affordable house price due to me not being able to afford payments based on a 50/50 split). It would be great for us to hear together some professional advice on how we might manage our joint income differently.

Many thanks!

Check out unbiased.com for an IFA.  You definitely need to address your lack of a pension and I would be looking to move to full repayment mortgage too.  You have very good incomes so you should be maximising pensions, stocks and shares isas.  If you keep your finances separate and your OH earns vastly more than you then this can be tricky.  As you have a house and a child together is there a reason you do not use joint accounts? We had a disparate income and just put all the income and expenditure into one account and we both get personal spending money into separate personal accounts. If you have separate finances but your OH earns a lot more than you it would be fair to split the outgoings so that she pays more but that needs to be a negotiation. 

enthusiasticsaver

The IFA will focus on pensions and investments and possibly investing for your daughter.  The property discussion may need a mortgage broker.  The biggest issue here is your age as many lenders only lend up to 70.  Given you are  8 years older than your OH and have no pension so far what was your plan re retirement? Why do you not have a pension?  Does your employer not offer one? Is your OH sitting on lots of savings if she earns a lot more than you?  Do either of you have debt?