Late 40s self employed no pension. Help!

LHZ

Hello all

I've had a scan of the boards to find answers to my question but I wasn't able to find an exact answer so I thought it was reasonable to ask the question on a new thread.

I'm a 47 year old self emlloyed (sole trader) musician with zero pension provision. Yes I know it's financial madness but I've never earnt enough to even consider opening a pension but since 2014 I've started earning relatively decent money.

I now own a house with about £10k mortgage left on it and my plan is to buy another house to live in and rent my current house out and put the net rental income into a pension (circa £650 per month net of fees).

I've so far offered on three houses but have been out bid on all of them. Its difficult not to feel the pressure to buy the house so I can rent mine out and start contributing to that all important pension pot so to take that pressure off I'm thinking I should just set up a pension now rather than wait. I could easily manage £200 per month.

So, question is, should I contact a professional advisor in order to set up a suitable pension or, given my circumstances, is there a no brainer option that will save me any advisor fees and allow me to just crack on with building a pension pot?

Any advice greatly appreciated and I'm happy to add more detail if needed.

Albermarle

So, question is, should I contact a professional advisor in order to set up a suitable pension or, given my circumstances, is there a no brainer option that will save me any advisor fees and allow me to just crack on with building a pension pot?

There is no dilemma here as no advisor would be interested in these sums , so you will have to do it yourself .

A pension is just another kind of investment but with some tax benefits and a restriction when you can take it ( 57) .

The tax benefit is in the form of tax relief on your earnings , but you can not get more tax relief than you earn ( rental income does not count , only earned income) . Once you set up the pension ( very easy on line ) and contribute , the pension provider will automatically add the basic rate tax relief. e.g.

You add £200 , they add £50 . When you take the pension , you might pay some tax but overall you still get a benefit.

Then the slightly tricky bit is what to invest in within the SIPP (pension). Some providers make it easy to make the choice by asking you a few questions about your risk tolerance, age etc and then make a suggestion . Most have some sort of general guidance on their websites. Suggest you take a look at a few online to begin with . Hargreaves Lansdown; Nutmeg; Wealthify; Fidelity; Vanguard.

Also some more reading 

Pensions & Investing - MoneySavingExpert

Pensions and retirement | Help with pensions and retirement | MoneyHelper

Finally you should be aware that starting at 47 and only adding £200 per month , will not turn into a big pot capable of generating a good income . You should really think about increasing that as soon as you can.