Mortgage paid What to do with money.

Jersey24

Hi,
I am currently 46 and have just finished my mortgage (not a very big one)
I am now unsure on where to invest money.
I will be using it for travel this year but from 2026 I am hoping to invest it into an Isa or all into my workplace pension,or split between the too?
I would love to think I could retire before 65,….58 maybe so I am learning towards my pension,any thoughts.?

Marcon

Jersey24 said:

Hi,
I am currently 46 and have just finished my mortgage (not a very big one)
I am now unsure on where to invest money.
I will be using it for travel this year but from 2026 I am hoping to invest it into an Isa or all into my workplace pension,or split between the too?
I would love to think I could retire before 65,….58 maybe so I am learning towards my pension,any thoughts.?

Bit short on detail to make any helpful comments! Are you a higher rate taxpayer, for instance? What tax rate do you anticipate paying in retirement?

ali_bear

There is some sensible advice about what to do with spare money but I'm too old to remember it clearly.

You could start off with thinking about investing in an even split between your pension, stock-market investments (think S&S ISA), cash deposits, cash savings, and spending money. 

Are you content with staying put or are you going to climb the housing ladder? 

Jersey24

Hi Marcon
Sorry it’s my first post am a newbie.
I am currently a high rate tax payer but hoping to be paying 20 percent tax in retirement.
My question really is if I were to be serious on trying to retire in 10years @55 would it better to build up my pension pot using my mortgage payment £1000 and start using that at 55 ,
Or save a cash flow for 10 years in isas ,then use this as income before using my pension,but obviously pension pot total would be lower if am using isa s to save for income from.or split between the two?don’t really need the money now as working so learning towards pension?
currently have 20k cash in savings through long work share scheme 
thanks?

eskbanker

Pension will generally beat ISA, especially if you're currently a higher rate taxpayer - you get more tax relief on the way in and 25% tax free when accessing it.  If you choose to draw down from the pension when not earning anything else, you'd also be able to use up your £12,570 personal allowance each year....

Marcon

Jersey24 said:

Hi Marcon
Sorry it’s my first post am a newbie.
I am currently a high rate tax payer but hoping to be paying 20 percent tax in retirement.
My question really is if I were to be serious on trying to retire in 10years @55 would it better to build up my pension pot using my mortgage payment £1000 and start using that at 55 ,
Or save a cash flow for 10 years in isas ,then use this as income before using my pension,but obviously pension pot total would be lower if am using isa s to save for income from.or split between the two?don’t really need the money now as working so learning towards pension?
currently have 20k cash in savings through long work share scheme 
thanks?

You won't be able to draw your pension until at least age 57 (minimum age rises from 55 in 2028 and could rise again before you get there), so splitting your cash between pension (currently gets higher rate relief, which may or may not be around in years to come) and ISA makes sense.

barnstar2077

I also plan to retire at 55.

I am saving enough into my ISA for two years of money, plus a healthy house maintenance and white goods replacement fund.  With everything else going into pensions.

Simon11

Jersey24 said:

Hi Marcon
Sorry it’s my first post am a newbie.
I am currently a high rate tax payer but hoping to be paying 20 percent tax in retirement.
My question really is if I were to be serious on trying to retire in 10years @55 would it better to build up my pension pot using my mortgage payment £1000 and start using that at 55 ,
Or save a cash flow for 10 years in isas ,then use this as income before using my pension,but obviously pension pot total would be lower if am using isa s to save for income from.or split between the two?don’t really need the money now as working so learning towards pension?
currently have 20k cash in savings through long work share scheme 
thanks?

You haven't provided any information about how much you have in your pension pot nor what your number is. Hopefully you haven't thrown everything at the mortgage and forgotten the pension?

I would be looking to throw everything into the pension that you would be paying 40% tax on with your salary. If your pot is currently low and you are happy to take a risk plus wish to retire earlier, I would take out a smallish mortgage to keep you afloat (home mortgages are one of the cheapest forms of borrowing) and put in the maximum 60,000 into the pension pot per year to get back on track.

squirrelpie

Jersey24 said:

Sorry it’s my first post am a newbie.

Don't worry, we've all been there.

My question really is if I were to be serious on trying to retire in 10years @55 would it better to build up my pension pot using my mortgage payment £1000 and start using that at 55

The first thing to do is to make a cashflow plan. It all depends what sort of pension arrangements you've got. If you've just got one that you can access at 57 or whenever, then you just need to estimate how much money you'll need each year and how much you need to save in the pension to pay that. But if you've got any other pensions or e.g. ISA savings then you'll need to incorporate those in your plan. Generally though, saving in a pension that you can access when you want after 57 is the best way to invest, because of the tax benefits.

ali_bear

Yes if it was me I'd start paying into pension at least enough so that I no longer pay any higher rate tax. 

The only problem with putting it all in your pension is that its locked away until retirement. So there's a balance to be struck between pension, other long-term investments, savings and enjoying life while you are still fit and able. 

jim8888

I'd put the majority into a pension, maybe 75% of it, and the rest into stocks and shares ISA. Given your time horizon, I'd invest it all into equity funds, if you can stand the ups and downs of the market. Personally, I invest into global tracker funds, such as the Vanguard Lifestrategy 100% Equity fund. If you don't know anything about investing, don't fret, you can find plenty of advice and information on these boards and elsewhere. I'd say it's very worth doing versus alternatives (even with cash returning c. 5% at the moment). You seem to have an interest in personal finance, so you might even have fun finding out about it all 
P.s. Does your pension allow you to choose the funds that you want to put your money into?