Trying to save 100k

richpoortyke

Hi. I wondered if someone could give me some advice. I'm looking to save with the aim to have £100000 in savings within the next 10 years all being well. I currently have 20000 saved so only another 80000 to go I think the max I could save after regular bills etc and a little pocket money would be 500 pm. Anyone have ideas of how and where to save and will I meet my goals with that sort of amount or am I being over optimistic? The money I have saved so far is in 2 ISAs (10k in each). Thanks

eskbanker

What's the significance of £100K in ten years, i.e. is it for something specific or just an arbitrary target for the sake of having something to aim for?  Bear in mind the potential effects of inflation, i.e. £100K in 2034 won't be worth anything like £100K in 2024.

£500pm for 120 months is £60K so your contributions wouldn't require massive growth to hit the £100K, but chances are you'd be best investing rather than saving, at least for the first half of that period, in order to deliver meaningful growth - what is the £20K saved or invested in currently?

You don't say how old you are, but have you considered pension contributions?

richpoortyke

Thanks for the replies.i think the £100K in ten years, is a target so I will have comfortable retirement. I've mostly been on low incomes throughout my life. I rent my property but have no debts to anyone. I'd like the security of a figure like that if I do decided to buy a small property in 10 years time ready for retirement or conversely have that as a nest egg to see me through my retirement. My money is just split between 2 banks. I believe they are both simple ISAs paying about £30 per month in interest. Im not keen on any investments which puts my money at risk. I'm not sure what the rules are on tax on savings either. My income is about 27k gross. So take home is just under 1800 pm. I never paid into a pension due to struggling to manage on my previous lower income but started paying into one about 5 years ago. I expect I'll be working till retirement age so have another 15 years to go. There are sometimes opportunities for overtime if I need to increase income but my hopes are I can reduce to a 4 day week as I head towards my final few years at work if possible but the main aim is security of a home and enough to live on 

eskbanker

If you're saving for retirement then using pensions to their maximum extent is generally a no-brainer, due to the tax benefits if nothing else - are you able to increase contributions to your workplace scheme, and how are such contributions made, e.g. salary sacrifice, relief at source or net pay?

richpoortyke said:

I'd like the security of a figure like that if I do decided to buy a small property in 10 years time ready for retirement or conversely have that as a nest egg to see me through my retirement.

In what way would you see a small property as a 'nest egg'?  Are you referring to one you'd rent out to tenants to generate an income stream (in which case don't be under any illusion that this is as profitable as it used to be, and comes with plenty of other disadvantages), or one where you'd live (in which case it's illiquid)?

penners324

The best option to invest in your pension. 

Also look at the underlying investment of your pension scheme.

Plus have an emergency savings pot is also worthwhile.

xylophone

What kind of pension is the workplace scheme? Defined Benefit? Defined Contribution?

What is shown on your state pension forecast?

https://www.gov.uk/check-state-pension

richpoortyke

The house option would be to live in. Private rentals can be insecure and although I've been lucky so far I'm aware buying a house outright would give me more security in old age. The issue I have with pensions is I can never work out how much I will retire on or what effect making additional payments would have in the long run. There seems very little info or advice when it comes to work place pensions so I find it hard to grasp 

coyrls

richpoortyke said:

The house option would be to live in. Private rentals can be insecure and although I've been lucky so far I'm aware buying a house outright would give me more security in old age. The issue I have with pensions is I can never work out how much I will retire on or what effect making additional payments would have in the long run. There seems very little info or advice when it comes to work place pensions so I find it hard to grasp 

My advice would be that making more effort to understand pensions would be time well spent.

penners324

Look at the company pension scheme.

Current pensions (defined contribution) are investing with the added benefit of getting the income tax element added to them as well.

elkiedee

I think you should find out about the specific pension you're paying into and what you can expect if you retire at 67, and/or the impact of retiring or leaving that employer earlier. Can you ask at work - are there contact details on your payslip?

Also check the rates being paid on your ISA savings accounts - are you getting the best rate possible on both, and if you're looking to save £100K, or as much as possible within a 10 year timescale, could you get a little more, possibly by transferring to a limited access or a fixed rate? You would need to use transfer procedures and not take the money out and put it back in.

eskbanker

richpoortyke said:

The house option would be to live in. Private rentals can be insecure and although I've been lucky so far I'm aware buying a house outright would give me more security in old age. The issue I have with pensions is I can never work out how much I will retire on or what effect making additional payments would have in the long run. There seems very little info or advice when it comes to work place pensions so I find it hard to grasp 

If you buy a property to live in when you retire, you'll obviously avoid ongoing rental costs, but if you've ploughed all of your equity into the purchase, you still need to ensure that you have enough accessible income to live on.  Can you actually buy a house for £100K in your vicinity, even at 2024 prices?

In terms of pension income, a high level rule of thumb is to work on the basis of drawing down about 3-4% from a pension pot annually, but there will inevitably be a number of variables to consider, so if, for example, you're likely to have low life expectancy then you may be able to deplete it faster.