FIRE Girls Pension Diary - Aim High & Dream Big

Firegirl

Lovely to pop back and see all your comments!

@MiserlyMartin the number I really want to aim for is £800 000.  Likely this is quite an over estimation but thinking of being able to take 40k a year without withdrawing from the pot.  Main reason as @LL_USS suggests is taking advantage of tax relief by heavily contributing to pension.  I’m mid 40s so not quite ready to retire yet either.

I have been thinking of the kids as they get older and what on earth their pension planning will look like.  I’ve a few ideas up my sleeve on how I’d like to help them out but it largely depends on what they do over the next few years.  When they turn 18 I’ll get them to open a LISA and maybe I can match what they save to try and help them get on the property ladder.  Be a motivator to get them saving but maybe I’m to harsh and should be more kind and just help them when the time is right!  Instead of trying to enstill all these life lessons and hardships  Also had thoughts of getting them to open a pension and putting 5k in when they are 18.  That would hopefully grow nicely overtime. But who knows what the future will look like. Investment models as we know it could be binned and we’ll be living in a black mirror episode where social media likes give you social status and wealth

i suppose as the perm job goes through I’ll probably feel more settled and be able to plan more precisely too!  I really enjoy seeing how everyone does things differently because it challenges my thought processes.

Firegirl

I’m going to occasionally post my balances (Rounded up or down to the nearest £500.) Everything is heading north at the minute so there’s no hardship checking…….my intention is to do the same through a time of market volatility. (If I’m brave enough to keep looking)

Pension 1-£209,500
Pension 2-£62, 500 (Approx)
Pension 3-£12,000  (Approx)
ISA-£121,000

Total £405,000

Crazy how much it’s increased recently!  I won’t check Pension 2 and 3 all the time but I’ll check them yearly.  I think it will be really interesting reading back on the thread after a period of volatility and see how it is through a storm and hopefully after weathering a storm. I’m hoping if and when that happens this thread will give people the confidence to ride it out.

LL_USS

Firegirl said:

Lovely to pop back and see all your comments!

@MiserlyMartin the number I really want to aim for is £800 000.  Likely this is quite an over estimation but thinking of being able to take 40k a year without withdrawing from the pot.  Main reason as @LL_USS suggests is taking advantage of tax relief by heavily contributing to pension.  I’m mid 40s so not quite ready to retire yet either.

I have been thinking of the kids as they get older and what on earth their pension planning will look like.  I’ve a few ideas up my sleeve on how I’d like to help them out but it largely depends on what they do over the next few years.  When they turn 18 I’ll get them to open a LISA and maybe I can match what they save to try and help them get on the property ladder.  Be a motivator to get them saving but maybe I’m to harsh and should be more kind and just help them when the time is right!  Instead of trying to enstill all these life lessons and hardships  Also had thoughts of getting them to open a pension and putting 5k in when they are 18.  That would hopefully grow nicely overtime. But who knows what the future will look like. Investment models as we know it could be binned and we’ll be living in a black mirror episode where social media likes give you social status and wealth

i suppose as the perm job goes through I’ll probably feel more settled and be able to plan more precisely too!  I really enjoy seeing how everyone does things differently because it challenges my thought processes.

@Firegirl, one of my two children has turned 18 but we decided not to open a LISA for him because I suspect he would aim at a property over 425K (given how expensive things are where he would like to live in young years). I hope the government would reconsider this threshold soon.

I need to look into guiding them about pensions too. It is quite a difficult task at this stage as we don't know where they will end up working or how the future (investments, regulations) roughly looks like. I suppose they may work outside of the NHS and universities (they are not keen at the moment) and that may mean work-place pension is not as good so yes they may need to just start a private pension (hopefully as soon as they can - I am juggling plans for myself too, adding plans for two others on top is quite overwhelming)

Firegirl

@LL_USS

I remember you telling me that about the LISA before actually. It’s a real pitty about the threshold because it’s such a great boost if the numbers match up.  I think you are amazing giving your kids help on the property ladder.  I wonder what my motives are for wanting to get kids started in pension savings. Is it to start good habits and make life easier for them in the future or do I want them to get to retirement and think of me fondly and say how I always had good advise and that they have a wee pot that was from their parents.

We do need to remember they will do their own thing too, so who knows what they’ll be up to. My 14 year old announced the other day he wants to explore the world starting in South America and Poland  He said but if I work for someone I won’t get that many holidays…..I said if you have your own business you can travel the world and work your way round….or set up your own business and leave your staff you trust looking after it for a while

LL_USS

@Firegirl, for myself I have leaned more towards property than pension when I know I cannot do both substantially (I only make volunteer contribution to keep me under a higher tax threshold and avoid charges etc) because property for me (and then later on for kids) are in our hands, whilst pension is only realised at much later stage and we don't know what the future holds. In addition, I had friends and colleagues (and know other cases) who did not even have a chance to enjoy much or any day of their pensions, very sadly. Having said so, to be fair, money in the pension is outside of IHT whilst properties aren't - but that's another issue for another discussion.

I now realise maybe I can only think that way when doing up and moving up our home was cheaper/ more manageable and because with work I have a secure defined benefit pension that should still be all right even without much intervention - so effectively that little pot is looked after as I steadily work, and other savings etc will top it up for a more comfortable after-work life, whilst an appropriate amount within what I pass on to my children will be retained as a loan (not gift) for less likely scenarios.

As I said, I will have to adjust my mentality when working out financial planning with and for the children. I too do teach them how to manage finance and as long as they each has a suitable job, I will help them up the property ladder first, then we perhaps will work out pension planning. I suppose I am also delaying this pension planning for them because these investments would need managing, working out where to invest etc, which I am trying to avoid doing even for myself, as I don't feel confident. I am trying to be kind to myself by sorting out only one thing at a time for them for now. My salary is quite modest given my age and experience, whilst my work is still so busy as I handle all of these together - I can't have a very aggressive approach . My 18-year old kid has taken out student loans and I suppose my younger one (14 years old like yours) will do too. What I save instead of going to paying for all university costs will go straight to the fund to help them each buy.

Somebody

@Firegirl Why wait till they're 18 before opening a pension for your kids?  If you have the cash I would bung in £2,880 (£3,600 with the tax relief) for each of them now and repeat in future tax years.

We did this for ours for a couple of years which ended up in ReAssure plans; they have all transferred to Vanguad now and choosing their own funds so it got them interested in investing to an extent.

Firegirl

@somebody. Oh dear I think I’m finance savy but didn’t know I could do this before they turned 18? I just keep it in my ISA for the moment. Also thinking best first stop if they live near us in UK then LISA is best option to help get them on property ladder, but as I have the ability to do both perhaps I should be thinking of this!

Update- I remember now I always thought I wouldn’t have money in the kids names until I knew they would be sensible adults. My friends daughter spent 10k they’d saved since she was born on a new kitchen in rented accommodation and moved out 6 months later!

My oldest kid is about to turn 17 and sensible enough and good at saving, still not sure he wouldn’t blow anything I gave him on a lads holiday (In fairness he’s saving for that himself)

Youngest…..who knows 😆

but you have me thinking about putting a bit away in a pension for them because they couldn’t take that out anyway.  Emmmmmm thinking!

Firegirl

Another update. I remember now why I didn’t do this and it was because the govt, in the future could change pension age so high that they’d never see it!  So my options are:

1. Put a bit in a pension for them now
2. Wait til they are 18 and put it in a LISA for their first house if they stay in UK. If not it will sit there til pension age or they’d loose the topup
3. Keep it in my ISA until I’ve more certainty what they are doing with their lives and then come up with a more robust inheritance planning idea with them when they are a bit older.

LL_USS

Firegirl said:

Another update. I remember now why I didn’t do this and it was because the govt, in the future could change pension age so high that they’d never see it!  So my options are:

1. Put a bit in a pension for them now
2. Wait til they are 18 and put it in a LISA for their first house if they stay in UK. If not it will sit there til pension age or they’d loose the topup
3. Keep it in my ISA until I’ve more certainty what they are doing with their lives and then come up with a more robust inheritance planning idea with them when they are a bit older.

Each of your options has its own merit :-). Good luck. I tend to do a combination when I am not sure. I still build up LISAs for myself when I can even though I was not a first time buyer when setting up my first LISA - just because it's nice to have a sum from a different source at a different age (60) than the minimum (57) or normal retirement age (68 our time?). LISA has limited options for investment though - i only rely on the 25% Gov top up to balance the loss of tax treatment by not having that amount in my pension pot.

michaels

If you are basic rate taxpayer when you put money into your pension and when it comes out then a LISA is better value than a pension.