Looking to the future. Any advice appreciated 🙏🏻

Retter

Just looking for some views on how you think I should save or invest in the years ahead...

I'm 43, married (no children), mortgage below £20k and will be cleared at the end of my fix (December 2026). I earn £50-55k as a civil servant and should have a good pension at my retirement age of 62. My house has recently been renovated which has been paid for outright so I don't foresee any major expenditure on that front. 

I have a good life but don't waste money or have any major vices or drains. I have been prudent over the last 10 years which has left me in a pretty good place.

I currently have £34k, mostly in Premium Bonds. I don't see any value in keeping it there without a larger holding. I want to allocate £10-12k for a car leaving me with a little over £20k to play with. 

I have a S&S LISA which I opened before I turned 40, just to have. This year is the first I have invested the full allocation in it. It's in an 'adventurous' fund appropriate for a long term investment. I intend to max this out until I turn 50 in similar risk funds. 

My question, and the crux of this post, is what should I do next? 

I opened a S&S ISA but have yet to contribute to it. I'm not sure whether I should put money there or if starting a private pension (SIPP? I don't know much about this) would be a better idea? 

I don't want to just stockpile cash when it could be working for me. I can probably allocate £1k p/m to this as I generally save at least this every month.

I don't have any goals or plans that I'll need money for in the medium term and haven't really thought about early retirement either. 

Any thoughts or advice would be appreciated. I think I am on top of things generally but I'd be interested to know what anyone thinks or suggests. I have found people's views on this forum very helpful over the years and they are part of the reason I am in a relatively good position. 

friolento

What is the financial position of your spouse, particularly regarding pension? Do you have separate or combined finances, or a mixture of both?

Dazed_and_C0nfused

If you are just tipping into higher rate tax territory (possible with £55k salary and lowish neg pay pension contributions needed in Alpha) then starting a personal pension or SIPP and making a relief at source contribution would be very tax efficient.

Say you are exaclty £1,500 into higher rate tax.  You pay £1,200 into the pension and get 25% gets added in basic rate tax relief.  You then have a pension fund of £1,500 which can grow and be used as a bridging pension if you want to retire before the Alpha NPA.

You can then claim higher rate relief from HMRC, which in this example would be £300.  Your pension fund of £1,500 has only cost you £900 in real terms.

Retter

friolento said:

What is the financial position of your spouse, particularly regarding pension? Do you have separate or combined finances, or a mixture of both?

Similar position to myself with regards to salary and pension. Finances separate. 

Retter

Dazed_and_C0nfused said:

If you are just tipping into higher rate tax territory (possible with £55k salary and lowish neg pay pension contributions needed in Alpha) then starting a personal pension or SIPP and making a relief at source contribution would be very tax efficient.

Say you are exaclty £1,500 into higher rate tax.  You pay £1,200 into the pension and get 25% gets added in basic rate tax relief.  You then have a pension fund of £1,500 which can grow and be used as a bridging pension if you want to retire before the Alpha NPA.

You can then claim higher rate relief from HMRC, which in this example would be £300.  Your pension fund of £1,500 has only cost you £900 in real terms.

Yes, this is why I was thinking of a SIPP over the ISA: it recoups some of my money. My wage will only increase, so if the tax brackets remain the same it looks like the best option. I think I need to do more research in this area. 

Albermarle

Retter said:

Dazed_and_C0nfused said:

If you are just tipping into higher rate tax territory (possible with £55k salary and lowish neg pay pension contributions needed in Alpha) then starting a personal pension or SIPP and making a relief at source contribution would be very tax efficient.

Say you are exaclty £1,500 into higher rate tax.  You pay £1,200 into the pension and get 25% gets added in basic rate tax relief.  You then have a pension fund of £1,500 which can grow and be used as a bridging pension if you want to retire before the Alpha NPA.

You can then claim higher rate relief from HMRC, which in this example would be £300.  Your pension fund of £1,500 has only cost you £900 in real terms.

Yes, this is why I was thinking of a SIPP over the ISA: it recoups some of my money. My wage will only increase, so if the tax brackets remain the same it looks like the best option. I think I need to do more research in this area. 

Reading through this forum and this one  Pensions, annuities & retirement planning — MoneySavingExpert Forum
is a pretty good way of researching pensions.

MX5huggy

I’m a very similar age, you’re probably ahead of me but kids are expensive! (Invest in the snip to keep on track) 

I’m stuffing as much as I can without over compromising on day to day spending (paid cash for a new car last year, go on medium priced holidays ect) in to my pension fortunate enough to have access to Salary Sacrifice AVC along side my local government pension. The basic plan is to drag that retirement date forward as much as possible. My dad was dead by 61 so want to get retirement into late 50’s if possible. There’s so many variables (stock market volatility, inheritance, what money the kids need for uni, career success or failure ect). At 50 to 55 things should become clearer but the money I’m stuffing away now will all help. 

Nebulous2

I think you need to get some goals or plans! 

You are in a very solid financial position, with a good DB pension. You could target earlier retirement than 62 and work towards that, you could indulge in expensive hobbies, you could aim for a bigger house etc. 

Most of all though, whatever floats your boat, you need to work out what this saving is for. 

That's slightly facetious, but as someone who kind of drifted through life without a great deal of planning, I found myself in the fortunate position of being able to retire at 59. I've also what can be an expensive bicycle habit.

Spending a bit of time with your spouse to work out what you want from life makes it easier to work on how you are going to get there. 

lookbook

Have you thought of buying a property for investment? I know it's not a pension but it is a steady income stream once on rent.

JamesRobinson48

lookbook said:

Have you thought of buying a property for investment? I know it's not a pension but it is a steady income stream once on rent.

I'm no expert, but the balance of opinion on this forum seems to be that investing in BTL is quite risky (unless you're an expert), and can bring with it numerous headaches in terms of rental voids, unexpected costs, tax liabilities, awkward tenants, etc.  May be unsuitable for a full time civil servant who currently has "a little over £20k to play with" plus savings capacity of ~£1k pm. IMHO, the suggestion by several on here to increase pension contributions is a much better one.

Retter

Nebulous2 said:

I think you need to get some goals or plans! 

You are in a very solid financial position, with a good DB pension. You could target earlier retirement than 62 and work towards that, you could indulge in expensive hobbies, you could aim for a bigger house etc. 

Most of all though, whatever floats your boat, you need to work out what this saving is for. 

That's slightly facetious, but as someone who kind of drifted through life without a great deal of planning, I found myself in the fortunate position of being able to retire at 59. I've also what can be an expensive bicycle habit.

Spending a bit of time with your spouse to work out what you want from life makes it easier to work on how you are going to get there. 

Thanks. I have a good life in terms of hobbies etc and have realised that more and more stuff doesn't really improve my life.

I'm in my forever home so no need to look at anything on that front. 

Easing back or changing role in work might be a good idea which I'll definitely consider when the mortgage is gone.