Pension plans/retirement

[simFox]

What plans have you got for retirement? I'm looking to start investing but I don't know where to start. I've only got a cash ISA so I'm going to change it to a stocks and shares. Overpay on the mortgage etc. But I'd like to start a private pension for both me and the wife and but a rental property in her name.

 

Company pension is ticking along ok. Just looking at other options.

 

What are you lot doing?

 

I'm 41 so starting to give it some serious thought.

[Izzy]

I’m mid 40’s and often thinking about this. I’ve got 12 years worth of contributions to an old company final salary pension and that’s it. Should be enough to pay the bills when I retire but nothing earth shattering.

 

I’ve got savings but nervous to tie them into a pension in case I get ill again and need them for a rainy day (self employed) and I also have two young kids that are expensive. 

 

It’s a difficult one for me to balance the here and now vs who knows what the future holds. I over paid my mortgage last year but it didn’t make much of a dent in it. Wish I hadn’t bothered now as it means no fancy holiday this year. 

 

Fvck money. I hate all the complications and decisions that go with it....

 

[Countryfox]

10 minutes ago, simFox said:

What plans have you got for retirement? I'm looking to start investing but I don't know where to start. I've only got a cash ISA so I'm going to change it to a stocks and shares. Overpay on the mortgage etc. But I'd like to start a private pension for both me and the wife and but a rental property in her name.

 

Company pension is ticking along ok. Just looking at other options.

 

What are you lot doing?

 

I'm 41 so starting to give it some serious thought.

 

Mine was ticking along ..   but not doing much ...  so I took it out and asked a financial adviser to really be a bit daring and go for it ...    lost a bit on the transfer but over the last few years it has doubled.   I have taken a slightly risky approach but it worked for me.   I'm not suggesting you take any risks but just leaving them 'cus its a pension' is not a good idea ...   imo.   

[Rob1742]

If I started from scratch again now, I would:

 

1. Over pay mortgage, as paying debts is the most important thing. 

 

2. Pay as much as possible into a pension as it’s tax efficient.

 

 

[LestaAl]

I am 56  and made sure I put as much as I  could into my pension during my 40's.   The pot grew well as most have done over the long term.

Was grateful as ill health for an extended period meant I was unemployed and had  used up all my savings  but was able to dip into the pension pot  at 55  and clear the remnants of the mortgage and have some money to survive until I am back on my feet.

 

The moral is keep saving as much as you can into a share Isa or a pension as you never know whats round the corner and retirement may last longer than you think. 

[Rogstanley]

32 minutes ago, simFox said:

What plans have you got for retirement? I'm looking to start investing but I don't know where to start. I've only got a cash ISA so I'm going to change it to a stocks and shares. Overpay on the mortgage etc. But I'd like to start a private pension for both me and the wife and but a rental property in her name.

 

Company pension is ticking along ok. Just looking at other options.

 

What are you lot doing?

 

I'm 41 so starting to give it some serious thought.

If you're talking relatively small sums then either putting more into your company pension (if you definitely aren't going to need it until retirement and are ok with the prospect of the government changing withdrawal rules), or a stocks and shares ISA (if you want more control and to be able to withdraw whenever you want) would be fine. I don't see the point in starting a separate pension personally. In terms of investments the simplest approach is to hold a single global multi-asset fund, which will return you broadly whatever the global market returns.

 

If you're talking larger sums then either commit to spending a good couple of years learning before you do anything drastic, or hire a financial advisor.

Edited 27 January 2018 by Rogstanley

[Dr The Singh]

Thinking about marrying g a rich old woman and inheriting the money

 

[simFox]

Thought about financial advisors but they just seem to be after your cash like any other person earning a living. I don't know anyone I trust.

 

Nothing huge sums wise, but I do ok.

 

The wife doesn't work so it makes sense to use her tax allowance to our benefit. Also if she does get bored of me, she'll have her own pot!

[VLC86]

My plan is to send the other half over to China to work .

 

In all seriousness paying the mortgage off as soon as you can is the best place to start. Cash ISAs aren’t all that any more now savings are tax free (for standard rate tax payers who earn less than £1000 interest every year).

 

Bit dubious about property as all it takes is a price crash and you will lose a fair bit of money.

[Bellend Sebastian]

Full State Pension as things stand for most on here will be £159.55 a week, so that's your starting point.

 

There's two parts to bear in mind with pensions. First is the tax position - you get tax relief on personal contributions - effectively free money, so even if your pension contributions sit in a cash fund yielding next to nothing you've still had a return of at least 20% depending on your tax position. 25% of it coming out is tax free, the remainder taxable as income, but those with full state pension will still have some personal allowance left.

 

Secondly, the investment side is very easy to get wrong.  Equity investments have generally done well over the last few years but returns will be harder to come by going forward. I know it doesn't sit well with everyone but it is well worth paying for advice.

 

I'm a big believer in pensions and I think it's a shame that the average punter has so little understanding of them

[simFox]

12 minutes ago, Bellend Sebastian said:

Full State Pension as things stand for most on here will be £159.55 a week, so that's your starting point.

 

There's two parts to bear in mind with pensions. First is the tax position - you get tax relief on personal contributions - effectively free money, so even if your pension contributions sit in a cash fund yielding next to nothing you've still had a return of at least 20% depending on your tax position. 25% of it coming out is tax free, the remainder taxable as income, but those with full state pension will still have some personal allowance left.

 

Secondly, the investment side is very easy to get wrong.  Equity investments have generally done well over the last few years but returns will be harder to come by going forward. I know it doesn't sit well with everyone but it is well worth paying for advice.

 

I'm a big believer in pensions and I think it's a shame that the average punter has so little understanding of them

Are you a financial advisor? Not taking the piss, you sound like you know a bit about it

Edited 27 January 2018 by simFox

[Strokes]

I just pay into my pension. if I get any bonuses or private work a percentage of it will go onto overpaying on the mortgage. It’s pretty rare these days as I’m a bit lazy and demotivated.

[RODNEY FERNIO]

I work in the financial sector but still don't understand mortgages.

I've got one but never really understood the point of paying it.

As long as you've got sufficient equity in your house why do you

need to pay it off as long as you service the interest,.

The lender will have enough money to pay off your loan when you pop your clogs. 

[Rogstanley]

39 minutes ago, Bellend Sebastian said:

Full State Pension as things stand for most on here will be £159.55 a week, so that's your starting point.

 

There's two parts to bear in mind with pensions. First is the tax position - you get tax relief on personal contributions - effectively free money, so even if your pension contributions sit in a cash fund yielding next to nothing you've still had a return of at least 20% depending on your tax position. 25% of it coming out is tax free, the remainder taxable as income, but those with full state pension will still have some personal allowance left.

 

Secondly, the investment side is very easy to get wrong.  Equity investments have generally done well over the last few years but returns will be harder to come by going forward. I know it doesn't sit well with everyone but it is well worth paying for advice.

 

I'm a big believer in pensions and I think it's a shame that the average punter has so little understanding of them

My only problem with pensions is that the government can change the withdrawal rules on a whim. I’d be pig sick to put lots of money in to get the tax relief only for the government to then decide they are going to increase the tax on withdrawals or increase the age at which you can withdraw. That’s why I put no more into my pension than is necessary to max employer contributions.

[Izzy]

47 minutes ago, Bellend Sebastian said:

Full State Pension as things stand for most on here will be £159.55 a week, so that's your starting point.

 

There's two parts to bear in mind with pensions. First is the tax position - you get tax relief on personal contributions - effectively free money, so even if your pension contributions sit in a cash fund yielding next to nothing you've still had a return of at least 20% depending on your tax position. 25% of it coming out is tax free, the remainder taxable as income, but those with full state pension will still have some personal allowance left.

 

Secondly, the investment side is very easy to get wrong.  Equity investments have generally done well over the last few years but returns will be harder to come by going forward. I know it doesn't sit well with everyone but it is well worth paying for advice.

 

I'm a big believer in pensions and I think it's a shame that the average punter has so little understanding of them

A noddy question from me if I may, who doesn't really understand all this stuff...

 

What's the difference between me setting up a long term investment plan that I'd pay into monthly (e.g. stocks & shares ISA?) vs a 'pension' with the benefits you've mentioned above?

 

What exactly is the difference between a personal pension and a long term savings/investment plan?

 

P.S. I'm self employed so this wouldn't have anything to do with a works pension if you catch my drift?

Edited 27 January 2018 by Izzy Muzzett

[Bellend Sebastian]

38 minutes ago, simFox said:

Are you a financial advisor? Not taking the piss, you sound like you know a bit about it

No, but I'm in that sector and have been for longer than I care to remember

[FoxesDeb]

3 hours ago, simFox said:

What plans have you got for retirement? I'm looking to start investing but I don't know where to start. I've only got a cash ISA so I'm going to change it to a stocks and shares. Overpay on the mortgage etc. But I'd like to start a private pension for both me and the wife and but a rental property in her name.

 

Company pension is ticking along ok. Just looking at other options.

 

What are you lot doing?

 

I'm 41 so starting to give it some serious thought.

Final salary pension 

[grobyfox1990]

42 minutes ago, RODNEY FERNIO said:

I work in the financial sector but still don't understand mortgages.

I've got one but never really understood the point of paying it.

As long as you've got sufficient equity in your house why do you

need to pay it off as long as you service the interest,.

The lender will have enough money to pay off your loan when you pop your clogs. 

Overpay your mtg and you pay less interest, you're saving money. If you pay off your mtg 3 or 4 years early (for example) you've saved thousands,on interest payments to the bank. 

 

I'd stick my spare money in a bog-standard equity tracker for the next year or so. Easy, cheap and equities are only expected to keep going up in the next year or so.

[simFox]

2 minutes ago, grobyfox1990 said:

Overpay your mtg and you pay less interest, you're saving money. If you pay off your mtg 3 or 4 years early (for example) you've saved thousands,on interest payments to the bank. 

 

I'd stick my spare money in a bog-standard equity tracker for the next year or so. Easy, cheap and equities are only expected to keep going up in the next year or so.

My mortgage is 1.74% though, it's not exactly crippling. Inflation pays it down to some extent, so not worth paying it off. I'm overpaying just incase in goes up in future, but I'm sure there are better things to do with my cash.

[VLC86]

3 minutes ago, simFox said:

My mortgage is 1.74% though, it's not exactly crippling. Inflation pays it down to some extent, so not worth paying it off. I'm overpaying just incase in goes up in future, but I'm sure there are better things to do with my cash.

Will still work out to be a lot of money you save if like he said you knock a few years off it.

[grobyfox1990]

5 minutes ago, simFox said:

My mortgage is 1.74% though, it's not exactly crippling. Inflation pays it down to some extent, so not worth paying it off. I'm overpaying just incase in goes up in future, but I'm sure there are better things to do with my cash.

I agree it's not crippling at today's rates at all, but if you can afford to, i always think why not pay it off. Personally speaking i would rather overpay and spend the saved interest money on myself, rather than pay the wages of the staff at the bank in interest payments i do not need to make.

[Rogstanley]

9 minutes ago, simFox said:

My mortgage is 1.74% though, it's not exactly crippling. Inflation pays it down to some extent, so not worth paying it off. I'm overpaying just incase in goes up in future, but I'm sure there are better things to do with my cash.

 

5 minutes ago, Costock_Fox said:

Will still work out to be a lot of money you save if like he said you knock a few years off it.

All he needs to do is beat 1.74% with his savings/investments and he’s better off not overpaying. Getting your mortgage paid off is a psychological benefit, but doesn’t make much financial sense at the moment with rates so low.

[VLC86]

2 minutes ago, Rogstanley said:

 

All he needs to do is beat 1.74% with his savings/investments and he’s better off not overpaying. Getting your mortgage paid off is a psychological benefit, but doesn’t make much financial sense at the moment with rates so low.

I get your point but kind of contradicted yourself, rates are so low it’s a struggle to get 1.74% on any considerable amount of savings.

[RODNEY FERNIO]

49 minutes ago, Izzy Muzzett said:

A noddy question from me if I may, who doesn't really understand all this stuff...

 

What's the difference between me setting up a long term investment plan that I'd pay into monthly (e.g. stocks & shares ISA?) vs a 'pension' with the benefits you've mentioned above?

 

What exactly is the difference between a personal pension and a long term savings/investment plan?

 

P.S. I'm self employed so this wouldn't have anything to do with a works pension if you catch my drift?

You get tax relief when you pay into a personal pension plan ... you don't with a savings plan. 

[Bellend Sebastian]

1 hour ago, Rogstanley said:

My only problem with pensions is that the government can change the withdrawal rules on a whim. I’d be pig sick to put lots of money in to get the tax relief only for the government to then decide they are going to increase the tax on withdrawals or increase the age at which you can withdraw. That’s why I put no more into my pension than is necessary to max employer contributions.

It's a legitimate concern; for example, the minimum age at which you can access pensions is already set to increase from 55 to 57 (I think in 2028) so it's still 10 years earlier than the State Pension age. 

 

In recent years the rules have moved massively in favour of pension holders - look up 'pensions freedom' for details of the most significant changes.

 

There's been all sorts of threats to do away with tax relief, tax free cash etc over the years but I actually think pensions are less vulnerable to negative political interference than some other areas, the property market, for example.-After all, it's in government's interests to ensure people think it's worth saving for retirement