What now?!?
Comments
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As a higher rate taxpayer (based on the few facts available) your priority should have been mitigating any higher rate tax liability before overpaying any mortgage.
Maybe from a purely financial perspective, but my motivation for paying off my mortgage first is security. With no mortgage our home is not at risk unless we both lost our jobs, and couldn't get another before we used up all of our savings, and even then in the area we live we could sell and live in a house half the value and still live comfortably. In my mind this peace of mind is very valuable.
Agreed.The problem you seem to have is you have no end goal at present. Until you sit down and work that out then it is difficult to give advice.
Yes. I need to understand these better, I have hardly glanced at them before now. It seems to say that I have currently accrued a pension of £4.4k and a lump sum of £13.4k.Do you get pension forecasts from work?0 -
Meant to add, having that money in Marcus is devaluing that money due to inflation.
I'm aware of that, but it was better to get it in there and earn some interest in the short term while I figured out what to do with it.
What would you suggest, using up the ISA allowance for the year and starting a stocks and shares ISA?0 -
I note the comments about what it I or my wife died. I have thought about this, but if one of us died the other would receive work life insurance and pension, and to be honest either of us would be fine with just our own salary, even without the death benefits. If both of us died, my concern for my daughter would not be financial, she would inherit a £700k house and any benefits from the work life insurance. There are enough family members that would look after her and enough cash to help them support her.
Also, regarding more children, my wife unfortunately can't have any more children so we know what we are planning for in that respect.
Lots food for thought here and I appreciate all the comments. I've got the little one on my own this weekend so I have limited time to think about this, but I will make a better start once my wife is back.
I obviously need to do a bit of study into our pensions. I am fairly sure that I can increase my contributions so maybe that is the first step. I need to learn and to understand investing with my surplus income. I haven't had a moment to think over the last few years as I have been doing a PhD, working full time, moving house, and determined to still keep plenty of time for my daughter. With the PhD complete and the mortgage paid off, both in the last few months, and the main issues with the house sorted, I should have time now to start to think in more detail about the future.
Thanks all for your comments. I will get some more details about my pension etc and then return to this thread.0 -
Money is not an aim , money is a mean to an aim. An aim of what? - of a happy fulfilling life. Options what to do now that pressure has decreased are endless - work part time to have time with your child - child years are time limiting opportunity; now it may seem that it takes forever for him to grow up bit what you could do at 2 and have not done can not be done at 4 anymore; every age has unique opportunities which are never , just think about it - NEVER - are going to be available again.
Have more quality time with your wife.
Spend time doing sports - benefits and enjoyment are second to none.
Dedicate time to your other interests or hobbies.
Do voluntary work in an area you are passionate about.
Start some side work project.
You see , the above listed can easily fill 2 full time lives without any work at all and all of the above enriches your life more than work which we do to earn money to support ourselves.
Option 2 - investments of whatever type in order to achieve financial independence and /or retire early.
Of course if there is something you dream of now is the time to buy it but spending money just because you have it because you sold your life time (that is what we essentially do when we work) is silly.The word "dilemma" comes from Greek where "di" means two and "lemma" means premise. Refers usually to difficult choice between two undesirable options.
Often people seem to use this word mistakenly where "quandary" would fit better.0 -
Spreadsheetman wrote: »Yes, that is a very significant risk for people planning to work to SP age. I used to have PHI, but stopped it once my early retirement plans had progressed to the point they made it unnecessary.
Likewise.
Reduced the premium, by having a deferred period so it paid out when my employee's company protection ended.
Wouldn't care to rely on ESA (or UC) and PIP these days.
In OP's shoes I'd look at pension provisions for both him and his wife.Alice Holt Forest situated some 4 miles south of Farnham forms the most northerly gateway to the South Downs National Park.0 -
You both have very good salaries. If you want to maintain anything near that level of income and lifestyle in retirement, I would recommend investing as much excess income as you have into a SIPP to benefit from tax relief and growth until you have enough pension to retire comfortably. Investing a significant amount every month should be possible as you say your expenses are minimal. That in my view would be a decent goal for you to aim for now that your mortgage is cleared.I am 46, we are both earning around £50k, have around £60k in the bank left over from our recent sales, still have one of my previous homes rented out overseas with the rent covering the mortgage which I think will be paid off in around 10 years. We are in the house that we expect to stay in until we are of an age that we need something smaller. My wife has a company car, I got rid of my car a few years back and don't really want another, with a 4 year old we don't go out much so our expenses are minimal.0 -
I note the comments about what it I or my wife died. I have thought about this, but if one of us died the other would receive work life insurance and pension
Yup that's the point of life insurance - does your employer also provide for you in the event of serious one-off or sustained illness?
Alex0 -
Wee one unfortunately is ill today and sleeping on the sofa, which has given me some time I wasn't expecting to look into the works pension.
I am in the USS pension scheme at work
Employer contribution is 18% of salary
Employee contribution is 8%
"Your benefits at retirement are based on a formula that takes account of your salary each year, and takes account of inflation"
I've found out that there is what they call a 'match', where if I increase my contribution by 1% my employer matches this. I presume this is a no brainer so will add this on.
Regarding additional contributions, are additional pension contributions typically the most effective investment over the other options available? My understanding is that pensions are taken from gross salary so reduce the amount of tax I pay, so with this in mind it sounds like it would be hard for another investment option to beat?
According to the illustrator it says that if I continue as is I would be likely to get a lump sum of £60k and £20k p.a. pension. That appears not to account for inflation though.
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Is there an option to take a higher pension and no lump sum? If so that might be a better option, depending on how much extra pension that you are getting by giving up the lump sum. If for example with no lump sum, you got only an extra £3k per year pension the £60k seems quite a good lump sum. However if you were to get at least an extra £5k per annum pension for no lump sum, then probably better to go for the higher pension and no lump sum.According to the illustrator it says that if I continue as is I would be likely to get a lump sum of £60k and £20k p.a. pension. That appears not to account for inflation though.
Edit: however that is just an option to be considered nearer the time you are about to take the pension. In the meantime best to increase contributions if you can.0 -
Is there an option to take a higher pension and no lump sum? If so that might be a better option, depending on how much extra pension that you are getting by giving up the lump sum. If for example with no lump sum, you got only an extra £3k per year pension the £60k seems quite a good lump sum. However if you were to get at least an extra £5k per annum pension for no lump sum, then probably better to go for the higher pension and no lump sum.
Edit: however that is just an option to be considered nearer the time you are about to take the pension. In the meantime best to increase contributions if you can.
Even if possible it may not be the most prudent move. The lump sum is tax free, an increased pension would not be.0
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