Personal pensions/retirement planning with no dependants

413x

413x

413x

Caporegime
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For a while I've had it in back of my mind "what do you do with end of life money if you don't plan on kids"

This thread assumes (maybe incorrectly :D) I won't die with nothing!

Obviously the perfect (impossible) situation would be to die as you spend your last penny.
With kids you simply leave what you have. Which for me would be charity. But obviously don't want to die with a load of unused wealth.

Now breaching the higher rate tax band and seeing the tax relief on pension contributions and being behind in pension contributions through life I need to consider personal pensio.

You get the tax relief on it, but I'm not sure how pensions really work at retirement (how much you get for how long with X amount in the pot) and whether the tax relief is worth it vs something more flexible (isa, property, living for the moment)


I understand diversity, (S&S ISA, cash isa, pension, property etc) is best and I do have diversity here. But I do think I should properly think about this now rather than just ambling through.
I certainly dont want to save everything and just live to save and miss out on experiences. Especially if health deteriorates.
Obviously I contribute max to my company matched pension and this would be after that.

I know this is a high earner demographic (Gucci corner sofa for some!) so thought this would be a good place for a starter.



FYI I'm able to save after pension probably 1k a month at least. This excludes savings for luxuries like holidays, home improvements, hobbies which I use regular saver accounts for.
 
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See an IFA .. but I'd say max out the tax free stuff like ISA's first, then whatever maxes the matching contributions from your employment. Money put into a pension is essentially locked down until you retire so you don't want all your money there even though those matching contributions and tax savings are "free" money.

I'm also highly skeptical the tax benefits will be there long term. Pensions are too tempting a target for the government not to want to raid them.
 
Whatever funds and property we have left when the one of us dies will be split equally between our daughters as per our will.

Our pensions are to keep us, not to provide for anyone else.
 
peterwalkley said:
See an IFA .. but I'd say max out the tax free stuff like ISA's first, then whatever maxes the matching contributions from your employment. Money put into a pension is essentially locked down until you retire so you don't want all your money there even though those matching contributions and tax savings are "free" money.

I'm also highly skeptical the tax benefits will be there long term. Pensions are too tempting a target for the government not to want to raid them.
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Yeah this is what I was wondering. Having it locked away means you can't jump on a property crash (let's say) should it be the best option at the time some time in the future.

At least with an isa, even a S&S ISA you can get money out in a few days. If needed.

This will be the first year of maxing out my ISA allowance.
 
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I put about 60:40 into ISA:SIPP each month. It's hard to turn down the free money from the SIPP tax savings....and a chunk of it you get back in your tax return which you can then bang into your ISA if you want to.

Really need to speak to an IFA though for long term, I know I should do. I know bugger all about annuities and the like! For now I'm happy just putting the cash away.
 
I have a sipp but I am an old git and can already draw down if I needed to ,it's in vanguard ETFs that also return a 4% dividend ,not sure what annuity rates are I ought to check but have under 100k
 
413x said:
You get the tax relief on it, but I'm not sure how pensions really work at retirement (how much you get for how long with X amount in the pot) and whether the tax relief is worth it vs something more flexible (isa, property, living for the moment)
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What you're describing there is an annuity. Most of these questions are very much a how long is a piece of string. You've got what 30+ years of work left, you won't have any rough idea how much your pot will be until closer to the time. You might guage it roughly based on contributions and typical growth, but as you've seen the last couple of years market growth can get hit hard.
 
Are you married, or do you intend to be? If so, think about how they would be left after you're gone. Would you they need help paying mortgage/rent/bills?

If it was just me and I had no family, then I'd only put a small amount into my pension (enough to make it your life livable, but not lavish*) , and put the rest in a S+S ISA with the aim to keep it in there long term and supplement your pension, but if something comes up in life that's too good to pass up (nice house, holidays, emigration etc) then you can go for it. Life's too short and all that.

If you had a family to support, then I'd lean more heavily on the tax benefits of a pension. But if your single then you've just got to live your life.


*No, I have no idea how to calculate this, but I'll be watching this thread in case someone else does! I've got no idea how you can plan for something 30 years off - the world is going to be a very different place.
 
I'd start by watching all the James Shack videos on this on YT

Overall my philosophy is:
  • Estimate what level of income you'll need in retirement
  • Create an investment plan to enable this using conservative assumptions (i.e. assume poor-mid returns rather than good)
  • If all goes well, conservative return estimates mean early retirement
  • If all doesn't go well, should still be OK
Married without kids but would be happy to make some others in my family happy when the time comes. I'd rather that than risk running out.
 
peterwalkley said:
See an IFA .. but I'd say max out the tax free stuff like ISA's first, then whatever maxes the matching contributions from your employment. Money put into a pension is essentially locked down until you retire so you don't want all your money there even though those matching contributions and tax savings are "free" money.

I'm also highly skeptical the tax benefits will be there long term. Pensions are too tempting a target for the government not to want to raid them.
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Pretty poor advice IMO. Why would you max out ISAs before maxing out pension contribution match from employer? It's not like you usually need to contribute more than a single digit percentage to get full matching.
 
EvilRob said:
Pretty poor advice IMO. Why would you max out ISAs before maxing out pension contribution match from employer? It's not like you usually need to contribute more than a single digit percentage to get full matching.
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To be fair, could have meant life time ISA. No brainer if you have the funds.

@413x If youre starting a new role, check out your new employer scheme. As above, matching contributions etc.

Other then that, SIPPs, regular buying on tracker based funds? Lots of good reading on HL about it :)
 
tlrBeta said:
To be fair, could have meant life time ISA. No brainer if you have the funds.
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Not really. Making the most of employer contribution matching is almost always the best thing to do first.
I'm not a fan of the LISA anyway unless using it to purchase first property - don't think it's very attractive vs making additional pension contributions.
 
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Maximising employer matched pension contributions should be the first thing you do in almost all cases. Always shocks me when I hear of people literally turning down free money
 
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Do all you can in your life. You can never expect what will be and what will come to pass. I have seen people in their 20s reduced to less than 10 days to live. We are all going to die.
Be kind. Be good. Mortality is never expected.
 
£55k mortgage started in Sep 2006.

It is now 2022 and I have 9 years left. I fixed it in 2016 at 2.79% until September 2026. So I'm throwing as much into the pot as possible.

As long as I keep it up, the mortgage term will only have 18 months left after the fix finishes, meaning that I can finish the mortgage in Feb 2028 instead of Aug 2021.

Then I'll stick the house in my will.
 
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