Saving and Pension Planning Checkpoint.

bloke91

Hi all,

I am would like to have sufficient savings later in life for retirement, potential options to retire earlier if it was required and be able to help support my kids with first home etc.

Below is a quick summary and outline of financial position.  Wondered if it was an ok position for my age etc and circumstances etc.

·         I am married with two young children.

·         I am aged 42 and a 40% tax payer.

·         Both myself and my wife in full time employment.

·         Mortgage will be paid off in 9 years time.

·         Both me and my wife have 12 months of our monthly salary in cash as an emergency fund.

·         In terms of pensions my wife has a good local government employer pension on top of the standard government pension.

·         In addition to the standard government pension.  I have a local government employer pension yearly income expected to provide 8k a year from a previous job.  Also a 100k pot in a defined contribution stock market based pension, where my employer pays 8% and I pay 10%. i.e Combined total of 18%

·        No other debt.

·       Maximising yearly ISA allowance, mainly investing in stocks and shares with small portion in cash.

·       Also planning to pay more into my pension if possible to take advantage of the tax relief.

Welcome any thoughts on if feel doing ok from a financial perspective and if could me doing anything further?

Thanks in advance.

Catplan

40 % tax payer = pension 

You have enough in emergency funds so I’d be looking at pension all the way now.

If you saved 10k into an ISA last year, I’d get maybe £500 interest, maybe a little more. Putting 10k into pension becomes 12.5k straight away…… 

Dazed_and_C0nfused

And you may well be able to reduce your personal tax liability with additional contributions, making the real cost of that £12.5k pension even less than £10k.

Linton

It is impossible to say whether you are doing well or not since we dont know how much you will want to spend each year in retirement, when you want to retire etc etc.

So I would suggest 3 things
1)  Pay sufficient money into your pensions to get your taxable income below HRT as soon as possible
2)  understand your post retirement spending needs
3) Develop a year by year financial plan showing income, savings, and expenditure based on overall assumptions and adjust until it works to your satisfaction.  This is easy if you are confident with spreadsheets or there are several tools available.

Yorkie1

If you plan to help children with university fees, for example, make sure that you will be able to access those funds at the appropriate time. For example, you will be 57 before you can access pension funds. Compare that with your likely age at university time. 

MX5huggy

The Higher income child benefit charge has risen to £60k this tax year, so if your income is over £60k making those pension contributions to get your adjusted net income below £60k gets the Child Benefit restarted as an added bonus.