How much to put into a new SIPP today?

Middle_of_the_Road

To my shame, for one reason or the other, I've never planned for retirement.  Now at 57, and having recently inherited around £250K, I am unsure how to wisely make use of my parents legacy.
As of now, these funds are in various recently opened savings accounts. Some fixed term, but most in easy access. I have no plans to splash out on holidays or a new car etc, and realise I should Invest some of this money. The thought of investing worries me in these uncertain times, and I know little of it all works.
I'm self employed, although very reduced earnings over the past few years, but managing bills and have no big debts. I have a small DB pension which paid me a lump sum at 50 and £250 monthly. 
I've been reading up on SIPPs and yesterday opened one with HL. I deposited £100 initially, as was uncertain how much I could put in, based on my earnings. My profit from self employment for 21/22 was £5000. 
I would like to put the maximum allowable in, but as I won't know my total earnings until 04/23 am unsure of how much, and when is the best/correct time to do this.
I was thinking of leaving the cash in for a few more years to benefit from the tax relief.
Thanks for reading, and any thoughts you may have.
John

Marcon

Middle_of_the_Road said:

To my shame, for one reason or the other, I've never planned for retirement.  Now at 57, and having recently inherited around £250K, I am unsure how to wisely make use of my parents legacy.
As of now, these funds are in various recently opened savings accounts. Some fixed term, but most in easy access. I have no plans to splash out on holidays or a new car etc, and realise I should Invest some of this money. The thought of investing worries me in these uncertain times, and I know little of it all works.
I'm self employed, although very reduced earnings over the past few years, but managing bills and have no big debts. I have a small DB pension which paid me a lump sum at 50 and £250 monthly. 
I've been reading up on SIPPs and yesterday opened one with HL. I deposited £100 initially, as was uncertain how much I could put in, based on my earnings. My profit from self employment for 21/22 was £5000. 
I would like to put the maximum allowable in, but as I won't know my total earnings until 04/23 am unsure of how much, and when is the best/correct time to do this.
I was thinking of leaving the cash in for a few more years to benefit from the tax relief.
Thanks for reading, and any thoughts you may have.
John

Given the amount of cash you've inherited and your limited knowledge of investments, spending some of your cash on proper advice from an independent financial adviser would be no bad starting point.

It would also be worth ensuring you maximise your state pension, if necessary by buying extra years. See https://www.moneysavingexpert.com/savings/voluntary-national-insurance-contributions/

Middle_of_the_Road

Thanks Marcon, will be looking to increase my state pension as I need 6 more years at the moment.

Also will look for a local IFA in the new year. I was just looking for a bit of insight regarding funding the SIPP.

I know i should get advice, as am also considering buying the other half of my shared ownership. 

Secret2ndAccount

It's a problem for self employed people that they often can't know exactly how much they could pay into a SIPP until it's too late. You have to make a guess. If your profit will be 5,000 then you can pay in 4,000 to the SIPP. It will be topped up to 5,000 by the taxman. Your choices are to pay in a bit less, and miss out on a bit of tax uplift, or to pay in potentially too much, and have to go back to your SIPP provider and ask for the money back.
Safe to pay in 2880 (2780 plus the 100 already paid) as everyone is allowed to put in that much. Top up the rest in March or when you have your best guess as to how much.

Pensions_matter_2

Money Helper (a government backed body) do free pensions help sessions for self-emploted people who are considering building up their pensions. Worth a look?

Albermarle

Pensions_matter_2 said:

Money Helper (a government backed body) do free pensions help sessions for self-emploted people who are considering building up their pensions. Worth a look?

Good pointer, but as the OP has £250K, and can only add about £4K pa to a pension, it is more important to look more generally at how to use the money.

OP - The main issue is that normally cash savings interest is usually less than inflation, so your money loses value/spending power each year. Over a long retirement this could be a big issue.
Most people get around this by investing at least some of their money, as in the long term the returns should beat inflation ( but not guaranteed). 
So probably you need to be looking at a mixture of
Cash savings
Pension
Investing , via a Stocks and shares ISA is simplest, although there is an annual contribution limit of £20K

An IFA could well be the best route for you, but even then it is useful to have some basic knowledge.

Investing in stocks for beginners: how to get started - MSE (moneysavingexpert.com)
Stocks & shares ISAs: find the best platform - MSE (moneysavingexpert.com)
How to invest in a stocks and shares Isa: The quick and easy guide | This is Money

Middle_of_the_Road

Thanks, this is what I was trying to understand. I will now add the 2780 and see where I am nearer tax return time.

Middle_of_the_Road

Pensions_matter_2 said:

Money Helper (a government backed body) do free pensions help sessions for self-employed people who are considering building up their pensions. Worth a look?

Thanks, will check this out.

Middle_of_the_Road

Albermarle said:

OP - The main issue is that normally cash savings interest is usually less than inflation, so your money loses value/spending power each year. Over a long retirement this could be a big issue.
Most people get around this by investing at least some of their money, as in the long term the returns should beat inflation ( but not guaranteed). 
So probably you need to be looking at a mixture of
Cash savings
Pension
Investing , via a Stocks and shares ISA is simplest, although there is an annual contribution limit of £20K

An IFA could well be the best route for you, but even then it is useful to have some basic knowledge.

Thanks for the links, definitely something to consider.