Pay rise..what to do with it?

happymum37

strawb_shortcake said:

I'd also bear in mind £10k doesn't mean an extra £10k in your pocket. My next promotion will see me get a £10k pay rise but after tax and increased pension contributions my additional take home is £500 a month 

Thank you.  Yes we are guestimating about 5-600 pounds extra

happymum37

DRS1 said:

If he is earning £50k pa then he is knocking on the door of higher rate tax.  But if you have rounded the number down to the nearest 10k then maybe he is already there.  Pension contributions will help with that.  Interest received outside an ISA will not.  It may be easy to trip over from having £1000 PSA to just £500.  So an ISA is a good idea even if it is "only" a cash ISA

Thank you.  No it's not very rounded up or down his wage will be 50k exactly

LHW99

Given the current / prospective salary, £15k savings doesn't seem quite enough to me.

If you are already increasing pension contributions, I would also tend towards a cash ISA. It's accessible if necessary (because wages drop down, job goes, roof blows off...), and if not needed it's always possible to transfer into an S&S ISA later.

From April 2027, you will only be allowed to add £8k £12k pa to a cash ISA anyway, so it may be worth building one up now (each?).

Amount corrected - Thanks @friolento

friolento

LHW99 said:

 

From April 2027, you will only be allowed to add £8k pa to a cash ISA anyway 

It’s going to be £12k max for under 65s

Albermarle

happymum37 said:

friolento said:

What are your own pension arrangements? Would your husband be happy to make contributions to your pension?

Regarding ISA: these are individual, you cannot share them.  Read the MSE guide for ISAs.

I'm a police officer but have not been in that long and am part time.  I already over pay into mine by an extra £150 per month. 

  Hes going to increase his pensions - its pretty appalling. His boss puts in 5% and he has been putting in 13% i think for only about 5 years. 

His pension pot is at about 150k at the moment

5% from the employer into a DC pension is above the minimum required and is probably about average.
Some more generous ( often larger companies) will add more like 7 to 12%.
Of course public sector employees, like the police add a LOT more.

Also £150K at age 49 is also well above average, but still not that large in pension terms, especially if he wants to retire many years before he gets the state pension.

Do you know if he has checked how his pension is invested, as this can play a significant role.
Most people have no idea and the money will be in a middle of the road default fund, or sometimes in an inappropriate lifestyle fund.

happymum37

LHW99 said:

Given the current / prospective salary, £15k savings doesn't seem quite enough to me.

If you are already increasing pension contributions, I would also tend towards a cash ISA. It's accessible if necessary (because wages drop down, job goes, roof blows off...), and if not needed it's always possible to transfer into an S&S ISA later.

From April 2027, you will only be allowed to add £8k pa to a cash ISA anyway, so it may be worth building one up now (each?).

Yes I would feel comfortable with more savings.  We are doing that monthly with our standard savings ( we wiped them out with the purchase of 2 cars) so I think the party rose should go to an isa

happymum37

Albermarle said:

happymum37 said:

friolento said:

What are your own pension arrangements? Would your husband be happy to make contributions to your pension?

Regarding ISA: these are individual, you cannot share them.  Read the MSE guide for ISAs.

I'm a police officer but have not been in that long and am part time.  I already over pay into mine by an extra £150 per month. 

  Hes going to increase his pensions - its pretty appalling. His boss puts in 5% and he has been putting in 13% i think for only about 5 years. 

His pension pot is at about 150k at the moment

5% from the employer into a DC pension is above the minimum required and is probably about average.
Some more generous ( often larger companies) will add more like 7 to 12%.
Of course public sector employees, like the police add a LOT more.

Also £150K at age 49 is also well above average, but still not that large in pension terms, especially if he wants to retire many years before he gets the state pension.

Do you know if he has checked how his pension is invested, as this can play a significant role.
Most people have no idea and the money will be in a middle of the road default fund, or sometimes in an inappropriate lifestyle fund.

His pension is with aviva and about 12 months ago moved most of the pots to a higher risk pot as previously everything was very low risk. 

I will dig out what it's in but I suspect it will be a default fund. 
He wants to retire at 60 . I can go from 55 but lose significant amounts so will go as close to 60 as I can 

MEM62

happymum37 said:

friolento said:

What are your own pension arrangements? Would your husband be happy to make contributions to your pension?

Regarding ISA: these are individual, you cannot share them.  Read the MSE guide for ISAs.

His pension pot is at about 150k at the moment

And he wants to retire in 13 years?  He is significantly behind the curve to meet that plan so needs to either start hammering that pension or plan a very modest retirement lifestyle.    

Albermarle

MEM62 said:

happymum37 said:

friolento said:

What are your own pension arrangements? Would your husband be happy to make contributions to your pension?

Regarding ISA: these are individual, you cannot share them.  Read the MSE guide for ISAs.

His pension pot is at about 150k at the moment

And he wants to retire in 13 years?  He is significantly behind the curve to meet that plan so needs to either start hammering that pension or plan a very modest retirement lifestyle.    

OP - to add to the above, there are two common mistakes people make when planning retirement.

They underestimate how much money they need to build up.
They underestimate how long they are going to live ( and need money) 

Also despite what you might read, retiring at 60 is still quite early. I think the average is about 63/64 and of course many carry on longer than that.

happymum37

MEM62 said:

happymum37 said:

friolento said:

What are your own pension arrangements? Would your husband be happy to make contributions to your pension?

Regarding ISA: these are individual, you cannot share them.  Read the MSE guide for ISAs.

His pension pot is at about 150k at the moment

And he wants to retire in 13 years?  He is significantly behind the curve to meet that plan so needs to either start hammering that pension or plan a very modest retirement lifestyle.    

If we can't make it happen it won't happen.  We both will get full state pensions when the time comes.  Granted my pension plus his pension might not be as much as people on here have but we are mortgage free and debt free.  I am 5 years younger than him so my wage will be coming in till he's 65 . We are not big spenders