FIRE Girls Pension Diary - Aim High & Dream Big

SouthCoastBoy

I always think it is good not to have all your eggs in one basket. Hence I have a 50:50 split between pensions and ISAs, means I will have plenty of non taxable income available to me. Governments always seem to be tinkering with pension rules, so you never know what is around the corner, so personally I think it is nice to have some flexibility.

enthusiasticsaver

We draw on our ISAs now to minimise tax paid on pensions.  We took a view we did not want everything in our pensions but wanted a second stream of income.  I pay very little tax as I maximise my TFA now on my SIPP and DB and the rest of my income comes from my stocks and shares ISA. DH also tries to stick under the higher rate TR by drawing on ISA rather than DC pension. I also agree it is nice to have the flexibility to take from either pot as although the tax breaks on pension contributions are great going in they are not so good coming out. 

Firegirl

Very true Michaels, but not sure my MFW obsession would allow me . I do have an offset mortgage so def an option.

Somebody

michaels said:

1 Jan this year I had put 70k into DW pension pot (non earner)

How is it possible to put in £70k into a pension pot for a non earner in that period?  10 years @ £3,600pa is only £36k?

Bostonerimus1

Firegirl said:

Very true Michaels, but not sure my MFW obsession would allow me . I do have an offset mortgage so def an option.

Your instincts are correct - or at least I agree with them as they align with what I did to FIRE. Mortgages aren't the worst type of loans, but you are paying to use someone else's money, whatever flavour of mortgage you choose. Get mortgage free and cover any gaps between retirement and pensions becoming available from savings, ISAs, general accounts and even part time jobs before you go into debt again.

QueenJess

Following with interest as I am on a similar journey to you. I am mixing up paying down the mortgage, saving to ISAs and putting money into my pension with the aim to retire early or at least have options to do so if I want.

michaels

Somebody said:

michaels said:

1 Jan this year I had put 70k into DW pension pot (non earner)

How is it possible to put in £70k into a pension pot for a non earner in that period?  10 years @ £3,600pa is only £36k?

Mixture of fund growth (randomly chose S&P 500) and sometimes adding extra funds that were not subject to tax relief, ie using the pension as an isa which works because she will not pay any tax on the drawdown.

Cus

michaels said:

Talking of what is possible, just checked what our numbers have done in the 8 years since I was 45 (average salary £62k), 1 Jan 2016, DW and I had pension savings of £250k.  1 Jan this year I had put 70k into DW pension pot (non earner) and my pension had gone to 720k plus a 25k DB (worth 625k compared as a 4% swr pot?)

How did you get a £25k DB in 8 years?

michaels

Cus said:

michaels said:

Talking of what is possible, just checked what our numbers have done in the 8 years since I was 45 (average salary £62k), 1 Jan 2016, DW and I had pension savings of £250k.  1 Jan this year I had put 70k into DW pension pot (non earner) and my pension had gone to 720k plus a 25k DB (worth 625k compared as a 4% swr pot?)

How did you get a £25k DB in 8 years?

Transfer in DC at generous rate, 10.1% inflation uplift on transferred in funds, plus max out contributions to EPA and added pension.

Firegirl

SouthCoastBoy said:

I always think it is good not to have all your eggs in one basket. Hence I have a 50:50 split between pensions and ISAs, means I will have plenty of non taxable income available to me. Governments always seem to be tinkering with pension rules, so you never know what is around the corner, so personally I think it is nice to have some flexibility.

Very good point about the govt tinkering with rules. My IFA said that to but I forgot about that.