Target achieved, age 44

Mistermeaner

Hi

Checked our balances in our various investments today and following some decent stock market growth we've now hit our arbitrary target of £1mil+ in savings. I am 44 and my partner is 39.

It is split:

My SIPP £767K
My LISA £36K
My S&S ISA £37K
My cash ISA £10K

Her SIPP £146K
Her LISA £23K

(When i say 'my' / 'her' its all one pot as far as sharing goes thats just who's name it is in)


First thing I would say is the wisdom gleaned from folk on here works - it really works, I/we have earned well but never mega bucks, I am a salaried middle manager and she took 5 years off looking after kids - these savings are the results of many years of dilligent saving, prudent living and good investment approach (generally monthly purchasing of passive global funds)

Now in the strange position that we don't really need to save any more but would also find it hard to pay a shed load of unnecessary tax 

Would appreciate peoples thoughts on what to do differently now that the target has been achieved..... e.g.

- Is it worth the tax hit to have more money outside of the pension wrappers?

- Is it worthwhile de-risking portions of our investments; they are pretty much 100% global passive equities, as we don't need mega growth might it be sensible to put £500K of it somewhere 'safer'?

Should we look at some further form of diverse investment, e.g. a holiday property or BTL or something else?



We have 4 kids, ages 5-17 so they are going to cost us a bit but we are managing well at the moment with our current level of investing. They have various JISA's and SIPP's already (that we pay into regularly)

Our house is worth maybe 500K with 190K still on the mortgage - i have thought about actively paying that down but that would come at a cost of tax efficiency, vs saving into the pension so would be hard to do 

Basically I feel that due to the tax incentives it really is still worth maxing the pension 

I earn 100K +annual bonus of around 10-20K

My partner earns 25K and is in the LGPS 

We both have full state pension entitlement so far (as in we have both worked every year possible to build counting years so far)

Marcon

Maybe spend some money on proper financial advice, based on a full understanding of all relevant factors? Could be your next 'best investment' - and well done!

Mark_d

It looks like you're well on track for an extremely comfortable retirement.  My partner and I are similar ages to you guys not neither but we're slightly behind you in terms of salary/pension saving.

Whilst you might be extremely tax efficient, what are you saving for?  What are your objectives/priorities?

Absolutely keep maxing your LISA's which you can benefit from age 60 but perhaps start enjoying your wealth now, whilst you're still in good health and the kids are still there with you.

About a year ago I had some bad news relating to my health.  As a result I'm no longer adding to my savings (my pension is on track to be comfortable) and instead using all my annual leave for seeing the world

Linton

Your problem seems to be that you may already have sufficient money to retire but you cannot access most of it for at least 14 years or so.  So perhaps you would have more flexibility to retire early if you focussed on maxing out your S&S ISAs for a few years after only paying sufficient pension to keep your taxable income below £100k. 

I see no point in focussing solely on tax efficiency if the only benefit is that you will die richer. 

penners324

Paying mortgage off, going on some good holidays. Enjoying life....

barnstar2077

Sorry, I have no wisdom to impart, but just wanted to say well done, that is quite an achievement!

Brenster

How about reducing your working week to a 4 day week (if possible) ? gaining some extra work / life balance ? you will earn 20% less, but the reduction would save tax at the higher band rate.  I am a similar age to you, maybe 3 years behind the stage you are at now (financially), but certainly am looking forward to a reduced working week when the time is correct, and finances allow.
Well Done !

pensionpawn

Linton said:

Your problem seems to be that you may already have sufficient money to retire but you cannot access most of it for at least 14 years or so.  So perhaps you would have more flexibility to retire early if you focussed on maxing out your S&S ISAs for a few years after only paying sufficient pension to keep your taxable income below £100k. 

I see no point in focussing solely on tax efficiency if the only benefit is that you will die richer. 

Hopefully you have also lived life to the max whilst accumulating such an impressive range of investments? My father would remind me that tomorrow is never promised, so not to fully mortgage the moment on future dreams and live every day without regret. Well done however to echo Linton hopefully you have considered how your non-pension investments financially bridge the gap between your desired retirement date and until you can access your funds, at around 58 years old? Of course at that age, anyone drawing down more than the personal allowance, post TFLS, will also pay tax. I have nowhere near your holdings, however I am happy. I have a friend who until the last budget was concerned about his pot approaching LTA. If we've acquired what we need to achieve our goals, it doesn't matter how much / little that is!

barnstar2077

Brenster said:

How about reducing your working week to a 4 day week (if possible) ? gaining some extra work / life balance ? you will earn 20% less, but the reduction would save tax at the higher band rate.  I am a similar age to you, maybe 3 years behind the stage you are at now (financially), but certainly am looking forward to a reduced working week when the time is correct, and finances allow.
Well Done !

I second this idea!  I only work a four day week, best decision I ever made!

Albermarle

Should we look at some further form of diverse investment, e.g. a holiday property or BTL or something else?

With four kids and both working full time, I think the last thing you want is the hassle of a BTL/holiday home !

 Is it worthwhile de-risking portions of our investments; they are pretty much 100% global passive equities, as we don't need mega growth might it be sensible to put £500K of it somewhere 'safer'?

I think the risk takers/experienced investors on here would say stick with the 100% equities at your age, as historically this has always been the best way to go over the very long term.

However the majority of people would not like the potentially volatile ride, and would be gutted ( panicked even )  to see their investments drop 30 or even 40%, so would dilute the equity part for a smoother ride.

I notice you only have a relatively small amount in cash savings. Maybe you could bump these up as a way of making the whole portfolio a bit ' safer' . Interest rates are above inflation at the moment.

ColdIron

barnstar2077 said:

Brenster said:

How about reducing your working week to a 4 day week (if possible) ? gaining some extra work / life balance ? you will earn 20% less, but the reduction would save tax at the higher band rate.  I am a similar age to you, maybe 3 years behind the stage you are at now (financially), but certainly am looking forward to a reduced working week when the time is correct, and finances allow.
Well Done !

I second this idea!  I only work a four day week, best decision I ever made!

Agreed, I went down to 4 days for 5 years before I retired, it was a great decision

You'll appreciate the shorter working week but really notice the 3 day weekend and you get to pick Monday, Friday or split the week in half. There are more Monday bank holidays than other days but you get to choose when to take them which can be useful

I didn't really notice the reduced take home pay as it took me out of higher rate tax