On Track?
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Zola.
Posts: 2,204 Forumite
Currently reviewing pension contributions. I am 33, married with our first kid on the way.
My pension balance at present probably isn't great, sitting at £23,000. In recent months I have upped my pension considerably, now paying in 17% (11% from me, 6% employer). This is done via salary sacrifice, so I am now putting a total of around £450 into my pension fund each month.
I have a S&S ISA that my wife and I put a few hundred in every month, its around £8500 so far.
Her works pension pays the bare minimum, she is only putting in 5% at this stage, but she also has her own S&S ISA and puts in £150 a month or so into that for now. Both totalling probably about £7k
She will be going off work in a few weeks time, and she will be on SMP from September really, £595 a month.
I am planning to pause all mortgage overpayments while she is off but keep investing in our ISAs. Just wanted to gauge thoughts, to see if I should be considering another tactic... e.g. stop investing in the ISA as much and do more pension contributions.
I know she will have to up her pension contributions but wont be doing that until she is back at work this time next year.
My pension balance at present probably isn't great, sitting at £23,000. In recent months I have upped my pension considerably, now paying in 17% (11% from me, 6% employer). This is done via salary sacrifice, so I am now putting a total of around £450 into my pension fund each month.
I have a S&S ISA that my wife and I put a few hundred in every month, its around £8500 so far.
Her works pension pays the bare minimum, she is only putting in 5% at this stage, but she also has her own S&S ISA and puts in £150 a month or so into that for now. Both totalling probably about £7k
She will be going off work in a few weeks time, and she will be on SMP from September really, £595 a month.
I am planning to pause all mortgage overpayments while she is off but keep investing in our ISAs. Just wanted to gauge thoughts, to see if I should be considering another tactic... e.g. stop investing in the ISA as much and do more pension contributions.
I know she will have to up her pension contributions but wont be doing that until she is back at work this time next year.
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Comments
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Hi,Currently reviewing pension contributions..
Hard to be conclusively on track or off track at your young age, but you certainly seem to have the right attitude.
With child on the way, you possibly need to build plenty of flexibility into future cash flow, just in case. So maybe less emphasis on pension and more on accessible cash, or near cash assets.
You didn't comment much about current interest rates or growth rates achieved, nor on any interest bearing debts you might have. I'd just say to (continue to) make it a way of life to avoid paying interest rates higher than the rates you can get on savings. An almost impossible goal, of course, but the odd car loan or interest bearing borrowing of any kind can make all your wise savings come to nothing. And then, make the most of tax reliefs and even of any benefits you and spouse might qualify for.0 -
Cheers Jenny, we keep around 8-12 months expenses in our current account in general. May need to try to keep that as high as possible while my wife is off on maternity.
We have a small amount of £900 left on a car loan, so cant wait to get that knocked out. Should be paid off by the end of July. After that our only debt is the mortgage really.
Our mortgage interest rate is 3.09%, we are just over 3 years into a 5 year fix. Have around £115,000 left on the mortgage.0 -
Maybe try to make some of that 8-12 months money earn a little something. Personally, I have just a few £k in Ratesetter rolling market earning about 2.7% and only locked in for a month. (Technically it COULD get locked in for 5 years, but hasn't happened in Ratesetter history.)Cheers Jenny, we keep around 8-12 months expenses in our current account in general. May need to try to keep that as high as possible while my wife is off on maternity.
We have a small amount of £900 left on a car loan, so cant wait to get that knocked out. Should be paid off by the end of July. After that our only debt is the mortgage really.
Our mortgage interest rate is 3.09%, we are just over 3 years into a 5 year fix. Have around £115,000 left on the mortgage.0 -
Cheers Jenny, we keep around 8-12 months expenses in our current account in general.
It sounds as if you arent getting interest on this? So try high rate current accts.
And once car loan is paid off, open a regualr saver for the same amt per month and use this for a new car when needed?0 -
I am 33, married with our first kid on the way.
It's not advice about your pensions and investments, but try not to make the mistake most 1st time parents do and buy lots of stuff that never gets used. Our little boy is 3, and we spent far too much money at the start buying things that we never used. If I could do it again then I could probably save a couple of thousand pounds quite easily!
I've sold everything on Ebay to recoup some of the money but still could have saved a lot by waiting until it was needed before buying it, or realising that it wasn't needed at all! We've bought/sold sets of barely worn clothes on Ebay, and also bought pushchairs from there to save a lot of money. I've also bought most toys second hand and most look brand new - I've then sold them for the same or more 6/12 months later.0 -
Maybe try to make some of that 8-12 months money earn a little something. Personally, I have just a few £k in Ratesetter rolling market earning about 2.7% and only locked in for a month. (Technically it COULD get locked in for 5 years, but hasn't happened in Ratesetter history.)
I have never done any P2P lending, always thought it was fairly risky, although I admit that I know little about it to be honest.It sounds as if you arent getting interest on this? So try high rate current accts.
And once car loan is paid off, open a regualr saver for the same amt per month and use this for a new car when needed?
This is all held in our 123 Current account, pays 1.5% which isnt great but the rates in general are terrible in most places at the moment. It also gets us cashback on bills, which is something.It's not advice about your pensions and investments, but try not to make the mistake most 1st time parents do and buy lots of stuff that never gets used. Our little boy is 3, and we spent far too much money at the start buying things that we never used. If I could do it again then I could probably save a couple of thousand pounds quite easily!
I've sold everything on Ebay to recoup some of the money but still could have saved a lot by waiting until it was needed before buying it, or realising that it wasn't needed at all! We've bought/sold sets of barely worn clothes on Ebay, and also bought pushchairs from there to save a lot of money. I've also bought most toys second hand and most look brand new - I've then sold them for the same or more 6/12 months later.
Thanks for the advice, all our friends and family are urging the same. We are fortunate that we have been given a lot of key starter things, like the pram, car seat etc.0 -
On track? What are your goals. Short, medium and long.
The earlier you save and invest. The bigger impact compounding will have on your ultimate return. It is this that performs the heavy lifting in the latter years.0 -
On track for a comfortable retirement. Ideally by mid 50s onwards.
Short term is build wealth
Mid term is keep building
Long term is have fun and have little financial worries0 -
I haven't crunched any numbers but my gut feel on the above numbers is that a comfortable retirement from mid 50s seems very optimistic.
Have you tried doing a spreadsheet projecting your contributions forward over the next 20 to 25 years assuming a couple of percent investment growth above inflation and fees?
Do you each have target pot sizes to generate the income you would want in retirement?
Alex0 -
I have played around with numbers via a compound interest calculator, although I know its just speculation at best
I have used a base of around £30,000, and the set amount we are putting away now as a total number (just under £1100), with an average return of 5% a year for 30 years, works out at over £1M.
Thats assuming we stay in our current jobs for 30 years and don't get a pay rise, and / or are lucky enough not to lose jobs along the way.0
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