Pension plans/retirement

[Milo]

Like most people on here of a certain age, I recently realised that my retirement might not be the permanent Barbados holidays and leisurely days on the golf course I had once imagined!

 

Company pensions are going down the toilet and the state pension is minimal - It’s highly recommend to take matters into your own hands. 

 

A mate of mine is an independent financial advisor and I had a chat with him a while back on exactly this subject. It’s truly astonishing and a bit scary How ignorant I was/am!!

 

Worth having a chat chat with one even if it’s just to understand what options you have. 

 

Happy to recommend mine if anyone wants to pm me. Even if it’s just for an informal chat. 

[UpTheLeagueFox]

Always been pretty sensible with money and was lucky enough to pay off my mortgage when I was 42. Been paying into a private pension since I was about 20 on my folks advice. Got a good mate who's a financial advisor, went to see him last week and my figures are looking alright ie pension has doubled in value in past seven years. @Izzy Muzzett - if you want his details I can put you in touch.

[Izzy]

2 minutes ago, UpTheLeagueFox said:

Always been pretty sensible with money and was lucky enough to pay off my mortgage when I was 42. Been paying into a private pension since I was about 20 on my folks advice. Got a good mate who's a financial advisor, went to see him last week and my figures are looking alright ie pension has doubled in value in past seven years. @Izzy Muzzett - if you want his details I can put you in touch.

Cheers mate, I’ll send you a PM 

 

You always were a bit shrewd and smarter than the average bear so I’m not surprised you’ve got your finances and pension sorted mate.

 

And maybe not being weighed down half your life by a wife and two kids also helps 

[UpTheLeagueFox]

48 minutes ago, Izzy Muzzett said:

And maybe not being weighed down half your life by a wife and two kids also helps 

That has definitely helped !!!!

[Babylon]

Pay off any debts first and foremost, wipe clean any credit cards and overpay as much as you can afford on your mortgage. I had a 25 year mortgage, I paid it off within 5 years and have saved something like £180,000 compared to what it would have cost more over the full term.

 

I pay into the company pension, it's only a small company so I've only been enrolled in that since it was compulsory about 7 months ago. But I've also had a private pension since I was about 25 that I've drip fed into.

 

I've got money spread around all over the place. I've put money into Zopa, where you lend others your money and get about 4-5% in return.  I've got a few bonds that give 3% interest. I've got a stocks and shares ISA that I put money into each money (I like a dabble on a few shares and not just funds, so it's as much as a hobby as it is saving). I then also put aside money into a standard easy access saving account.

 

Having an equal spread of investments keeps me feeling a bit more secure about not having all my eggs in one basket.

 

Even if you started now and just put £50 in pension, £50 in Stocks and shares ISA, £50 cash saving, £50 overpay on the mortgage. it soon builds up and you can up the amount you're paying if you can afford it.

[CollinsLCFC]

On 27/01/2018 at 21:08, Izzy Muzzett said:

 

 

Cheers fella's 

 

I've done a bit of research and I think a Stakeholder Pension might be the best option for someone like me. I like the idea of being able to change the amount each month and 'top it up' as and when.

 

SIPP looks a bit high risk for me CF! I haven't got a scooby when it comes to all this but a Stakeholder Pension seemed a bit less risky?

 

I obviously need to speak to a proper pensions adviser next I guess..

 

Thanks 

A SIPP can he as high risk or low risk as you like. 

Predominantly they can be high risk as it's a 'self invested', it's an investment vehicle that can hold a higher range and more complex investments, including unregulated investments which are high risk.

 

I work in the SIPP industry, I highly recommend you only take one up through the advice of a financial adviser, they are very complicated and I see many people open a sipp and wonder why it's not performing and don't have a clue about it. 

 

As aforementioned, it's self invested, says it in the name. You choose the investments. And they can be pricey. 

 

They are used a lot to accommodate investments you can't purchase in your everyday pension plans, including commercial property, so they suit different people. 

[UpTheLeagueFox]

1 hour ago, Babylon said:

I've got money spread around all over the place. Having an equal spread of investments keeps me feeling a bit more secure about not having all my eggs in one basket.

Very wise, me too.

[DANGEROUS TIGER]

On ‎27‎/‎01‎/‎2018 at 15:55, 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.

I put my money into a port folio with Aviva, after the banks advisor pointed me there. Nice and solid with a good yield.

[Rob1742]

On 27/01/2018 at 19:35, 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 don’t think so as the rate could go up and you have a mortgage to pay at a then New higher rate. 

 

Still best to pay off your debts first. 

[Jon the Hat]

Make sure you take into account any matching your company offers on pensions.  Also the tax impact.  I’m very fortunate with my work pension that the pay in double what I do, but they match 1:1 even junior roles. You would need a very lucky investment to get close to that.

[simFox]

3 hours ago, Rob1742 said:

I don’t think so as the rate could go up and you have a mortgage to pay at a then New higher rate. 

 

Still best to pay off your debts first. 

I'm over-paying £100/wk and reducing the term, not the payment. This seems to give me the best compromise. It's weird, if I paid £300, it doesn't seem to pay it off 3x quicker according to my spreadsheet.

 

Besides, I could save upto £100k across various accounts, merry-go-round the minium payment and direct debit interest free credit cards to make the minimum requirements and still beat the 1.74 on average, so it really isn't worth putting too much effort into paying it off.

 

I'm quite sure a pension fund will beat my mortgage rate, if I didn't think it would, then of course I'd pay it off.

[ozleicester]

Buy loads and loads of Bitcoin 

[DennisNedry]

I know a few people in their 50s who have next to no savings at all and pitiful pensions (the auto entrol 1% employer/employee crap), and they just spend their money on luxuries (holidays, cars etc). 

 

They're of the opinion that the state will fund their care if they can't afford it when they're old, and that they won't be able to enjoy themselves at 70 like they still can now, so why bother saving? 

 

I'm only 24 so haven't given it any thought at all really, but I am and always have been a saver, and I'm a member of the LGPS (local government pension scheme) and I'm told that's a good scheme to be a member of (even though it's not final salary like it used to be pre-2014).

[DJ Barry Hammond]

On 27/01/2018 at 19:46, 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.

 

You shouldn’t forget overpaying also goes to owning an asset outright rather than shared between you and the bank - meaning the sellable value is more flexible in your favour. 

[DJ Barry Hammond]

On 29/01/2018 at 13:46, UpTheLeagueFox said:

Always been pretty sensible with money and was lucky enough to pay off my mortgage when I was 42. Been paying into a private pension since I was about 20 on my folks advice. Got a good mate who's a financial advisor, went to see him last week and my figures are looking alright ie pension has doubled in value in past seven years. @Izzy Muzzett - if you want his details I can put you in touch.

 

It should have done, if not performed better - for example, FTSE has performed pretty well over that time and at your age you should be invested in more agressive funds at this point. 

 

The best way to judge is to look at the yearly yield - 7/8% + is what you’d want as a minimum.

[DJ Barry Hammond]

On 27/01/2018 at 18:42, 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. 

 

It depends on whether you want to actually own your house or not.

 

Paying the interest only on the mortgage would mean you never own any of the house you live in - making it a strange way of effectively renting - but with the bigger danger that if the value of the house falls below your mortgage debt, you end up in what is classed as negative equity (not a nice position). 

 

The other thing to consider - if you chip away at the capital part of the debt, it also reduces the amount you pay in interest and becomes a beneficial cycle. Paying interest only only leaves you at a bigger risk should there by interest rate rises (or less attractive offer once you come out of the initial offer period*).

 

*But something tells me you’re probably on your mortgage providers standard variable rate.

[UpTheLeagueFox]

52 minutes ago, DJ Barry Hammond said:

At your age you should be invested in more agressive funds at this point. 

I'm a low-medium risk kinda guy, Baz. I'm ticking over okay and should be fine in later years (if I make it that long, obviously and hopefully)

[fuchsntf]

On 27.1.2018 at 17:08, Izzy Muzzett said:

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....

 

You could Go missing and Join Mahrez..

[Carl the Llama]

Interestingly I've just this week received a letter through the door from Scottish Widows informing me of my workplace pension plan that I had no idea about.  Never been in a situation to think about one before so it makes a pleasant little surprise, the way things are going though I think I'll be relying more on what's left in the mattress after the impending self-destruction of human civilisation tbh.

Edited 4 February 2018 by Carl the Llama

[Buce]

10 minutes ago, Carl the Llama said:

Interestingly I've just this week received a letter through the door from Scottish Widows informing me of my workplace pension plan that I had no idea about.  Never been in a situation to think about one before so it makes a pleasant little surprise, the way things are going though I think I'll be relying more on what's left in the mattress after the impending self-destruction of human civilisation tbh.

 

Biscuit crumbs and stale pizza won't sustain you for long, Carl...

[Carl the Llama]

2 minutes ago, Buce said:

 

Biscuit crumbs and stale pizza won't sustain you for long, Carl...

Should be a good source of protein though  

[Great Boos Up]

Started my first pension at 20; Maxwell took that. My second at 30 and they went bust. My third at 40 and guess what!

If only I'd worked for the NHS (bitterness overload)

Any spare money I have I bury it in the garden. (joke). Now I just concentrate on my mortgage and hope to pay it off before I weaken.

 

 

[RODNEY FERNIO]

6 hours ago, DJ Barry Hammond said:

 

It depends on whether you want to actually own your house or not.

 

Paying the interest only on the mortgage would mean you never own any of the house you live in - making it a strange way of effectively renting - but with the bigger danger that if the value of the house falls below your mortgage debt, you end up in what is classed as negative equity (not a nice position). 

 

The other thing to consider - if you chip away at the capital part of the debt, it also reduces the amount you pay in interest and becomes a beneficial cycle. Paying interest only only leaves you at a bigger risk should there by interest rate rises (or less attractive offer once you come out of the initial offer period*).

 

*But something tells me you’re probably on your mortgage providers standard variable rate.

Don't think you've quite grasped my point.

 

Once you get your mortgage to below £80k say there is no danger of negative equity even factoring in an unlikely property collapse .

So the only bill you get for living in your  property ( apart from utility bills )

is the interest on your mortgage. On an £80k mortgage( at present interest rates ) you should not be

paying more than £250 per month ... compare this to the £600 per month minimum you'd be paying in rent/mortgage.

 

Your comparison to the interest only mortgage completely misses the point that you've got to do the hard

work first and get your mortgage down to a level where negative equity is not going to be a problem.

Once the lender has sufficient comfort that any outstanding debt will be covered on your demise ... I can't see any issue with this.

Edited 4 February 2018 by RODNEY FERNIO

[ozleicester]

Just remember, your private superanuation/pension is not safe, it is invested in the stock market, if that crashes and burns (eg loses 4.5% last night!) your money crashes with it!

[m4DD0gg]

Private pension 5 and 5 with employer and property portfolio.