I'm about to turn 31 I have a wife & child and own my own house.
I have no pension or plans for future income.
what's the best thing to do?
buy a house to rent out long term?
cheers
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No pension - what to do???
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Posted 4 months ago #
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get a pension? tax efficient and far less hassle than managing a rental
(just go see an ifa and take their advice)Posted 4 months ago # -
I would go with the pension especially if you are a higher rate tax payer
Posted 4 months ago # -
Eat the rich?
Posted 4 months ago # -
Get a pension, or sell a kidney.
But seriously, you do need to make some plans, your faimily will be counting on it.
Posted 4 months ago # -
you need to put a lot of money into a pension to make it worthwhile though - i'd go have a chat with someone who can give you some good professional advice
Posted 4 months ago # -
Professional advice would be a good place to start, or at least some googling. These kind of basic financial stuff are often written about in the personal finance section of broadsheet newspapers.
I'd look into an employer pension if they offer it. People criticise the fees and returns etc. but compared to merely saving you will get tax relief and often an employer contribution. I put in 5% and my employer puts in 10% so that a great return right there.
You might also want to consider life insurance if you don't already have it so that your familly can survive if you keel over.
Posted 4 months ago # -
The tax benefits of putting money into a pension mean it is usually a better way of investing for the future, to a point. A rental income can be another investment but, IME, is a lot more risky (what if the tenants don't pay up? What if they wreck the place - you need spare capital to both maintain and invest in it). At your age, it is definately not too late to start a pension. As long as you are prepared to start saving for the future even if it means cutting your current spending - and this is the case whether you invest in cash, shares, property, fine arts or a pension scheme. You still have near 40 years to save. If your employer has a scheme, sign into it, as their contribution can be worth a lot. It not, a personal SIPP is still worthwhile and depending how money savvy you are, you have more say over what investments to make (funds, individual shares etc.) If you aren't comfortable with making those decisions, get the advise of IFAs and go with low risk, steady investments (funds that invest in the bigger companies). An IFA is a good idea as they should talk you through just how much money you need at the start of retirement in your pension pot for a given income, and it will probably seem quite scary! (around £100,000 at present day i.e. ignoring inflation gives an income of around £6000-7000 per year. To take home £18000-20000 per year equivalent at todays prices, you need to have around £300,000 in a pot at retirement, which ignoring inflation but allowing for the tax contribution from HMRC and a bit of growth on the stock exchange is still a big chunk of your salary every year*). But I would emphasise, at least with a pension, you buy a guaranteed annuity which will pay out until you die (and afterwards to your wife if you chose such an annuity) whereas property income can be unreliable.
(* I checked these numbers a few years ago and so they may be inaccurate - go see an IFA and do some internet reading!)
Posted 4 months ago # -
what's the best thing to do?
Talk to an IFA.
Posted 4 months ago # -
thanks guys, sounds like I need to speak to the pros' then
I have life & critical illness cover.
Posted 4 months ago # -
Why not educate yourself about financial matters rather than relying on an ifa? Then manage your money yourself in a SIPP - you'll probably do just as well as the so called professionals, it'll be cheaper and you'll have nobody else to blame.
Posted 4 months ago # -
Don't worry about the future, in about 20 years the oil wars will start, and the world will devolve into a fiery ball of death
Posted 4 months ago # -
I might buy loads of Orange 5's and sell them second hand for ridiculous money in a few years?
thats a plan!
as for managing things my self I dont even have a clue what a "SIPP" is!
Posted 4 months ago # -
as for managing things my self I dont even have a clue what a "SIPP" is!
Like I said start educating yourself - even if you don't manage your money to start off with it's something you can work towards.
Posted 4 months ago # -
Don't worry about the future, in about 20 years the oil wars will start, and the world will devolve into a fiery ball of death
This.
Posted 4 months ago # -
(around £100,000 at present day i.e. ignoring inflation gives an income of around £6000-7000 per year. To take home £18000-20000 per year equivalent at todays prices, you need to have around £300,000 in a pot at retirement
I heard something about this on the Money Programme recently - check iPlayer if you're interested. Those figures are still more or less correct, but if you're looking for an index-linked income paying from 65 onwards then your £100k will buy you about £3k pa.
It's still income and so is taxable, so konagirl's unindexed income of £18-20k from a pot of £300k will be before tax, not take-home.
Posted 4 months ago # -
You could always get a job in the public sector
Posted 4 months ago # -
Yes come and join in the public sector gravy train where 700,000 people are loosing their job, pay increase have been frozen for 4 years min and they want us to work till we are so old only the nursing home will collect our pension.
I pay £200 a month towards my pesnion, i would think thats the min amount you want to be looking at. Might give you £150k or so in todays money which would buy you about £5k a year. Or about £100 a week. On top of that you will get you state pension which is about £150 a week so that £250 a week in todays money. Not a huge amount but you could probably get on ok with it assuming you have no mortgage or kids to support.Want my advice buy shares in the big oil companies as over the next 30 years that where the money will be, that and small arms, home defence stuff.
Posted 4 months ago # -
sefton, for an alternative point of view (not advice)
We are doing the opposite to the advice here. We are buying a second home and using it for ours and our family's pleasure. I'm using my pension pot to do this. Our view is enjoy the money now while we are young enough and our kids are here and then spend our old age grumpy as **** and chuntering on about having no money.
Pensions are investments, they can go up or down or the company holding can go bust. Which has happened with Equitable life. Houses are bricks, their value can go up and down but you still have bricks. I think your attitude to later life should dictate what you do, we live in the present as the future usually takes care of itself (for us anyway).
Posted 4 months ago # -
"buy land because they aren't making any more of it"
can't remeber who said it, but it's true. i don't think you'll ever loose if you buy land/property.
obviously property has running costs which you'll have to budget for. whereas land is land. sell it on when you need the money (or have planning permission granted) and in the meantime build a pump track.
i think it is only worth considering if you have the money upfront. otherwise most of what you are "investing" is simply paying off the bank - i.e. interest.
a SIPP is a "Self Invested Private Pension". the government give you 20p for every £1 you invest (pls correct me if i'm wrong) so it's a good deal. your money isn't with the government. you invest it into a private pension scheme. have a look at the likes of Hargreaves and Lansdown.
as a rough guide your pot should double every ten years. so if you invested 10k now it'd be worth 20k, but on top of that you've got the contributions that you have been making over the last 10 years.Posted 4 months ago # -
Property has always been the best long term investment.
Posted 4 months ago # -
"buy land because they aren't making any more of it"
Land sat around is mostly tied up money, and you can rarely get a mortgage on land. A property you can rent out at a profit is working for you, esp. if 80% is mortgaged
Posted 4 months ago # -
I agree with MSP,except i don't think it will take as long as 20 years!
Posted 4 months ago # -
Posted 4 months ago #
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Took an hr or so before get a PS job. things must be slipping here.
I pay £300 month into my pension, still waiting to see outcome of our reform package. Yeah so join the PS and get a gold plated pension.
Better still become an MP as they seem untouchable at the moment.
Posted 4 months ago # -
Id say employers pension scheme is the way to go if possible. Mine match any contributions by me and add another 3-15% dependant on age. This is also self-managed and you can choose a range of services from 100% equity investments to 100% cash based.
Posted 4 months ago # -
Armed robbery in your 70's, whichever way it goes, you'll be taken care of... thinking about it, armed robbery's a bit old school, drug dealing or smuggling?
Posted 4 months ago # -
Agree with what konagirl and johnners said up there. You will need about £300k lump sum to get an annuity of £18-20k pa at current rates. You will be entitled to state pension at 67(or more) which is currently ~£5k per year. Talk of going to £7k in a couple of years.
So how are you going to raise that sort of money over the next 30-40 years?
Educate yourself as above and see an IFA. At least you will know what (s)he is on about so you can ask questions. Possible decisions are different based on weather you are higher or basic rate tax payer. Company pension schemes that are being contributed to are a great start.
I invested in the stock market and bought a buy-to-let property as well as company pension. Another tip - Don't put all your eggs in one basket - caused some of my colleagues a big problem 10 years ago. For instance if you work for a company and you are also in a share scheme with them, if it all goes wrong you lose your job and your savings!
Having your house paid at 31 is a god start though, well done.
Posted 4 months ago # -
At your age you'd need to put around 18% into a pension in order to get half your current salary (in today's terms) when you retire at 65. Employer contributions will reduce your contributions - does your work offer a pension scheme?
Posted 4 months ago # -
Euromillions
Posted 4 months ago # -
Speak to a professional advisor, everyone is different, has different needs and can afford to invest in different initiatives.
For security a balanced portfolio is what you want, i.e. a spread of
Cash
Stock
Pension
PropertyProperty wise you need to at least be in the position that you have paid off your mortgage by the time you retire. Having no rent or mortgage payments is a must to an easier retirement.
The rest you can split as you see fit, but based on recent events don't over-extend in shares.
I have my savings for retirement currently split somewhere along the lines of
12% pension (plus 10% from employer)
20% cash
25% stocks
remainder going into property.Posted 4 months ago # -
Kill yourself when you retire.
Not only will this reduce the load on the already crippled NHS and government pension but it will give your wife the opportunity to cash in your life insurance and go on a cruise of the caribbean sucking off big black men before coming home and finding a sensible bloke who planned ahead.
HTH.
Posted 4 months ago # -
It's always a good idea to marry someone a lot younger than you as they'll stay earning well into your retirement.
HTH
Posted 4 months ago # -
At your age you'd need to put around 18% into a pension in order to get half your current salary
you are assuming that the pension managers you choose aren't going to mismanage the fund and lose sh1t loads of money on it, as has happened to a lot of peoples funds recently.
Pay upfront for advice if you go and see someone, don't let them get paid by commission on your new pension as the effect of it on the fund will be large.
Posted 4 months ago # -
Samuri,
Kill yourself when you retire ... it will give your wife the opportunity to cash in your life insurance
Sorry to burst your bubble but life insurance won't pay out for suicide, homicide or drinking yourself to death. Mudshark's proposal is more likely to be successful!
Posted 4 months ago #
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