Keep saving into SIPP, or leave it?

adamjoeite

Hello, I'm looking for a little advice on how best to utilise my savings long term.

A few years ago I had a little panic about working in the NHS until 68+ and that I didn't have any savings options to retire earlier, so I did some research and started some different types of savings. Now, a few years later, things are looking much better, and I'm wondering how best to proceed from here.
My current situ:

SIPP with 100k
LISA with 30k
ISA with 80k
NHS pension (95 scheme) available at 60 (dramatically better now that McCloud judgement applied): 13.3k and 40k lump sum
NHS pension (CARE scheme) available at SP age (68+): 3k but will accumulate as I continue to work in the NHS

I currently have no children, and the mortgage is paid on the house. We are looking to move, but we are just at the looking stage. I'm fortunate in that my wife and I have some normal savings at the moment as well. My wife should have a pension of ~5k available at age 60, otherwise we are saving into a LISA for her also, and it has the same total as mine.

My query, is... am I now saving too much in "tied up til I'm older" accounts? I was planning on putting another amount of maybe 10k into my SIPP this year, but I've held back because of the potential "house deposit" requirement, and now I'm wondering am I better to just let the SIPP "sit" for a while and keep more accessible savings, especially as it could be handy for house purchasing, or would I be foolish to let the 24-25 tax year slip away? (I'm higher rate so there is significant tax benefit to the SIPP at present)

My wife and I are not extravagant spenders, and I feel like the chances are that between us, the SIPP, 2 LISAs and 2 age 60 pensions should provide plenty of income to reach age 68 at which point my other NHS pension would be available plus hopefully state pension. The SIPP and ISA savings as they are at the moment, may even facilitate retiring between 55-60. So should I just stop ploughing money into the likes of the SIPP given that there's probably "enough", and use savings at the moment to live our lives, considering nobody knows whats around the corner, and the best laid plans etc.

Any advice would be welcome

Dazed_and_C0nfused

Is your wife going to have a 7-8 year period without anything other than the £5k pension you refer to to use her Personal Allowance?

If so a pension in her name might be worth considering at some point as she could get a lot out without paying tax despite having received basic rate relief when putting the money in in the first place.

adamjoeite

Yes, there currently wouldn't be anything to completely use her personal allowance at age 60. She will hopefully have a LISA available which, if filled for the next 9 years until she reaches 50, could potentially have 100k in it at age 60 (very ballpark guess). I know that wouldn't impact her personal allowance and I have considered whether a SIPP might be good for her, but again I'm wondering if it's too much 'old age' saving.

Linton

One way to judge whether you are saving too much is to consider how much you arw spending now and how much you will be spending after retirement.  The more you save the less you have to spend now and the more you will have in retirement.  So I suggest you aim to get them the same.

kempiejon

I started from a "What do I need?" Question rather than a how much have I got/can I get. An accurate detailed break down of expenses now gives a good starting point. I I did the work and collected a few years of spending in a spreadsheet. I expect to spend more indulging myself in retirement than when employed but as I am no longer paying into savings and pensions the same income would give me more disposable cash. I found https://www.firecalc.com/ a handy tool to model future incomes and investments. 

adamjoeite

Good tips, thankyou. I'll check out firecalc as well. I suppose it's somewhat tricky to know what current values in SIPPs or LISAs will end up as with compound interest/dividend reinvestment, but my feeling is, making the massive assumption that most things remain 'as is', that I'm close to having the 58-68 period 'covered', and post 68 should bring in state pension, so that period should be covered too.

So I'm now starting to think about accessible savings as I feel my wife might not be able to work in the NHS for much longer for various reasons, and I might well want to be leaving it well before retirement age too. Therefore in the last couple of years I've tried to fill ISAs, and I'll continue to try and do so, but given ISA allowance might well be cut back in the upcoming budget, are there any other good 'accessible' savings/investments that would be worth considering?

Dazed_and_C0nfused

adamjoeite said:

Good tips, thankyou. I'll check out firecalc as well. I suppose it's somewhat tricky to know what current values in SIPPs or LISAs will end up as with compound interest/dividend reinvestment, but my feeling is, making the massive assumption that most things remain 'as is', that I'm close to having the 58-68 period 'covered', and post 68 should bring in state pension, so that period should be covered too.

So I'm now starting to think about accessible savings as I feel my wife might not be able to work in the NHS for much longer for various reasons, and I might well want to be leaving it well before retirement age too. Therefore in the last couple of years I've tried to fill ISAs, and I'll continue to try and do so, but given ISA allowance might well be cut back in the upcoming budget, are there any other good 'accessible' savings/investments that would be worth considering?

Why are you prioritising ISA over pension for your wife?

Even a basic rate payer now and in retirement gets a 6.25% advantage from the pension over an ISA.

But a basic rate payer now with lots of unused Personal Allowance can gain far more than that.

It seems like she could have a ~10 year period until State Pension kicks in where she can get a lot of money out of a personal pension or SIPP without paying tax. 

MX5huggy

Are you aware that your NHS pensions are payable with reductions from 55? The reduction only reflects the early payment there’s no true penalty. Our plan is to take our NHS and LGPS pensions when we retire without lump sums to maximise inflation linked income. 

https://www.nhsbsa.nhs.uk/sites/default/files/2019-08/Early%20Retirement%20factsheet%20%2805.2017%29%20V3.pdf

LHW99

Another thing to calculate is the situation of the one that is left alone in old age. Will they have enough to cope?

Also have you checked both your state pensions? The NHS pension implies there willhave been a COPE deducted, in order to get a starting pension amount in 2016.

After that time, additional NI contributions will increase your SP entitlement, however if leaving work before normal SPA (67 / 68) you / she could be left short. The actual number of years contributions here to get the full NSP has ranged from around 28 to nearly 50!.

if you could be short, paying missing post-2016 years in due course is likely to be worthwhile.

adamjoeite

Dazed_and_C0nfused said:

adamjoeite said:

Good tips, thankyou. I'll check out firecalc as well. I suppose it's somewhat tricky to know what current values in SIPPs or LISAs will end up as with compound interest/dividend reinvestment, but my feeling is, making the massive assumption that most things remain 'as is', that I'm close to having the 58-68 period 'covered', and post 68 should bring in state pension, so that period should be covered too.

So I'm now starting to think about accessible savings as I feel my wife might not be able to work in the NHS for much longer for various reasons, and I might well want to be leaving it well before retirement age too. Therefore in the last couple of years I've tried to fill ISAs, and I'll continue to try and do so, but given ISA allowance might well be cut back in the upcoming budget, are there any other good 'accessible' savings/investments that would be worth considering?

Why are you prioritising ISA over pension for your wife?

Even a basic rate payer now and in retirement gets a 6.25% advantage from the pension over an ISA.

But a basic rate payer now with lots of unused Personal Allowance can gain far more than that.

It seems like she could have a ~10 year period until State Pension kicks in where she can get a lot of money out of a personal pension or SIPP without paying tax. 

Yes you make a good point. If can draw a SIPP 10 years before state pension it would make sense to at least have one with enough in it so that she use up the Personal Allowance in each of those 10 years before having to pay any tax. 

If you're drawing an early pension of ~5k, then having a SIPP with ballpark 100k in it would allow for 25k lump sum and 7.5k withdrawal every year for 10 years, which would use it all up tax free.

I think this would be worth looking into. I wonder will tax relief for basic rate payers be improved in the upcoming budget

adamjoeite

MX5huggy said:

Are you aware that your NHS pensions are payable with reductions from 55? The reduction only reflects the early payment there’s no true penalty. Our plan is to take our NHS and LGPS pensions when we retire without lump sums to maximise inflation linked income. 

https://www.nhsbsa.nhs.uk/sites/default/files/2019-08/Early%20Retirement%20factsheet%20%2805.2017%29%20V3.pdf

I was aware that the pensions would be available with reductions from 55 but I hadn't yet properly worked out whether this would financially be the best choice. 
I believe it would be a 21% reduction to take it at 55, so if my 95 pension was to be say 16k at 60, I would receive ~12.5k at 55. I would be in my late 70s before I would have got more out of taking it at 60... so it's worth considering. It just depends if other finances available to me at 55 make it more sensible to leave drawing that pension until 60.

What do you mean about retiring without your NHS lump sum... I was under the impression the lump sum under the 95 scheme was compulsory? Can it be added to your pension instead?