New higher salary

LB003g0676

Hi guys, I've just jumped from £40k a year to almost £69k a year.

I worked in the NHS and I wanted to check if there's any traps I need to be aware of, and if you were in my situation, what you would suggest I do with the extra.

I have a mortgage on a 2 bed flat, I am married, student loan, no kids or pets. I own everything else outright, don't really do credit cards.

I would just like a suggestion for what to do with the extra income each month as I would prefer NOT adjust to living with that income, I'd prefer do something with it that makes me safer going forward.

Thanks all!

p00hsticks

When you say that you worked in the NHS, do you mean you've moved to a non-public sector employer ? If so, my first suggestion would be to compare the pension schemes and if the new one offers less, put some of the extra salary into the new one (or a separate SIPP) to compensate. 

Emmia

Start pumping the extra per month into savings, I'd start with a mix of long term S&S ISA and cash savings until (unless) you have a good emergency fund of ~6 months of outgoings. When you have that, switch to pumping it into your ISA up to the annual limit.

As you're working for the NHS, your pension (I hope you're paying in) will be good, so I'd probably focus on non pension savings. This will give you flexibility if you want to retire earlier or if you decide to move to a house etc. in future.

If you're not signed up to the NHS pension scheme, do that as a priority.

Sam_666

As above post sugest, maximize work pension contribution and left over feed in to sipp vanguard s&p 500 index.
You didnt mention your age and retirement expected date, which are key info.

p00hsticks

Emmia said:

As you're working for the NHS, your pension (I hope you're paying in) will be good, so I'd probably focus on non pension savings. This will give you flexibility if you want to retire earlier or if you decide to move to a house etc. in future.

If you're not signed up to the NHS pension scheme, do that as a priority.

OP says that they 'worked in the NHS' (Past tense) which Is why I've asked them to clarify if they still do or if the higher salary is a result of moving elsewhere.....

LB003g0676

I'm 34 and expect to retire once I can't work anymore. But let's say 70. I am in the NHS pension scheme and absolutely intend to remain. It's basically like £1 in for every £3 I earn (though I expect my contribution rate will change now).

Is there sufficient faith in the markets that investment or S&S ISAs are the best bet? I appreciate that's probably the case, it just wasn't something I've invested a load of time looking at.

LB003g0676

My bad, actively working in the NHS. Still enrolled in pension scheme, know it's value.

DRS1

LB003g0676 said:

I'm 34 and expect to retire once I can't work anymore. But let's say 70. I am in the NHS pension scheme and absolutely intend to remain. It's basically like £1 in for every £3 I earn (though I expect my contribution rate will change now).

Is there sufficient faith in the markets that investment or S&S ISAs are the best bet? I appreciate that's probably the case, it just wasn't something I've invested a load of time looking at.

You are contributing 33% of your salary?  Or 25%?  That sounds quite high.
Given this is the Cutting Tax board the obvious suggestion is to contribute enough to your pension to get your taxable income down below the higher rate tax band.  But maybe you're already doing that and more?

Emmia

LB003g0676 said:

I'm 34 and expect to retire once I can't work anymore. But let's say 70. I am in the NHS pension scheme and absolutely intend to remain. It's basically like £1 in for every £3 I earn (though I expect my contribution rate will change now).

Is there sufficient faith in the markets that investment or S&S ISAs are the best bet? I appreciate that's probably the case, it just wasn't something I've invested a load of time looking at.

For the long term a S&S ISA will almost certainly beat a cash ISA - but it's a long term product you need to be looking at 10+ years ideally, and as always markets can fall as well as rise. You should have enough in cash to provide the instant safety net so you don't need to touch the investment.

Emmia

DRS1 said:

LB003g0676 said:

I'm 34 and expect to retire once I can't work anymore. But let's say 70. I am in the NHS pension scheme and absolutely intend to remain. It's basically like £1 in for every £3 I earn (though I expect my contribution rate will change now).

Is there sufficient faith in the markets that investment or S&S ISAs are the best bet? I appreciate that's probably the case, it just wasn't something I've invested a load of time looking at.

You are contributing 33% of your salary?  Or 25%?  That sounds quite high.
Given this is the Cutting Tax board the obvious suggestion is to contribute enough to your pension to get your taxable income down below the higher rate tax band.  But maybe you're already doing that and more?

And that's money locked up to retirement, it's inflexible in that way.

Emmia

p00hsticks said:

Emmia said:

As you're working for the NHS, your pension (I hope you're paying in) will be good, so I'd probably focus on non pension savings. This will give you flexibility if you want to retire earlier or if you decide to move to a house etc. in future.

If you're not signed up to the NHS pension scheme, do that as a priority.

OP says that they 'worked in the NHS' (Past tense) which Is why I've asked them to clarify if they still do or if the higher salary is a result of moving elsewhere.....

I think we posted at the same time - but the OP has clarified they're still working for the NHS.