Pensions - Are we paying in enough? Should we be doing more?
Discussion
A little background, I'm 29, wife is 27, we earn £48k pa between us. I've been paying in to my pension since around 19, I pay around 3% and so does my employer, so around £220 a month paid in to the pension. My wife has only just started a private pension, no company scheme, just set up by us, paying in £80 a month. £300 a month between us total.
Our only other form of saving is £100 a month each in to the company share scheme (after 3 years company matches amount, and after 5 years tax free withdrawal), effectively +-£250 each a month after 5 years. I have around £9k in so far, just over 3 years 3 months since starting, and my wife has just started.
I've just been reviewing our financial situation a bit and realised after reading up on pensions on MSE etc, and it doesn't seem like we're paying in anywhere near enough to our pensions! Using MSE's spreadsheet I've calculated our spending and after going out, fuel, food, clothes, everything basically, we seem to have around £900 a month spare cash which is currently spent in fits and spurts on home improvements, holidays, gadgets etc. It looks like some of this would be more wisely spent saving for retirement.
Should I increase our pension input? Should we save into an ISA instead and leave it until retirement? (We don't have any ISAs). Should we not touch the shares until retirement? (This was going to be my Porsche fund in a few years!)
Any input or advice greatly appreciated.
Our only other form of saving is £100 a month each in to the company share scheme (after 3 years company matches amount, and after 5 years tax free withdrawal), effectively +-£250 each a month after 5 years. I have around £9k in so far, just over 3 years 3 months since starting, and my wife has just started.
I've just been reviewing our financial situation a bit and realised after reading up on pensions on MSE etc, and it doesn't seem like we're paying in anywhere near enough to our pensions! Using MSE's spreadsheet I've calculated our spending and after going out, fuel, food, clothes, everything basically, we seem to have around £900 a month spare cash which is currently spent in fits and spurts on home improvements, holidays, gadgets etc. It looks like some of this would be more wisely spent saving for retirement.
Should I increase our pension input? Should we save into an ISA instead and leave it until retirement? (We don't have any ISAs). Should we not touch the shares until retirement? (This was going to be my Porsche fund in a few years!)
Any input or advice greatly appreciated.
Thanks for all the replies guys, very helpful and it looks like as suspected there aren't any hard and fast rules!
As far as mortgage goes, we recently re-fixed for 5 years. Our remaining term was 26 years but we knocked that down to 20. Unfortunately our Post Office/Bank of Ireland mortgage is rather pants in terms of overpayment, you can overpay but all it does is reduce your monthly payments from that point, so no reduction in term length, rather pointless. Should have thought about that more at the time I guess but we will have to review it in 5 years and not make that mistake again. At least we have kind of forced ourselves to overypay by reducing the term by 6 years.
Going forward I think the point about equalising our pensions is a good one, so perhaps another £150 a month in to my wifes pension would be a good idea? I think I will keep mine as is for the moment as I am matching the max. employer contribution. In addition, I think we should start an ISA and pay £250 a month in to this, just as another savings pot for retirement. If we combine this with the share scheme of +-£500 a month after 5 years, how would that sound?
I take your point CoolHands about the shares, there is a definite risk of our £200 a month disappearing at some point, but I think the return will be worth it. Our company is a reasonably diverse FTSE250 multi disciplinary consultancy, so nothing too small and therefore more risky?! The Kodak point is a good one though, it could all go tits up!
As far as mortgage goes, we recently re-fixed for 5 years. Our remaining term was 26 years but we knocked that down to 20. Unfortunately our Post Office/Bank of Ireland mortgage is rather pants in terms of overpayment, you can overpay but all it does is reduce your monthly payments from that point, so no reduction in term length, rather pointless. Should have thought about that more at the time I guess but we will have to review it in 5 years and not make that mistake again. At least we have kind of forced ourselves to overypay by reducing the term by 6 years.
Going forward I think the point about equalising our pensions is a good one, so perhaps another £150 a month in to my wifes pension would be a good idea? I think I will keep mine as is for the moment as I am matching the max. employer contribution. In addition, I think we should start an ISA and pay £250 a month in to this, just as another savings pot for retirement. If we combine this with the share scheme of +-£500 a month after 5 years, how would that sound?
I take your point CoolHands about the shares, there is a definite risk of our £200 a month disappearing at some point, but I think the return will be worth it. Our company is a reasonably diverse FTSE250 multi disciplinary consultancy, so nothing too small and therefore more risky?! The Kodak point is a good one though, it could all go tits up!
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