Pension- Ltd Company Contractor, where to start
Discussion
ok, so I've turned 30 and realised I need to start a bit more long term planning for the future and ideally pensions.
I worked in construction and have a few years of a private pension from a previous employer, then bounced around for a few more years, short term work, smaller places, no pensions blah blah blah.... now I find myself working on a contract basis under my own limited company. I'm just starting year 3 of this and really need to turn my attention to the end game. Am I better off jacking in the contracting and going staff with a good pension?
my folks are coming up for retirement age, so I guess thats whats got me thinking of this. Now I know that the age for state pension (if there even is one) will be ridiculously high, but I want to start planning now so I'm not having to consider working until I'm 75.
At the moment I currently rent, no massive debts (only car on finance, nothing on cards etc...) and saving for house deposit with a view to looking for property next year. So able to save a decent amount just now, would rather save as much as possible to help with house deposit, but know I need to start looking at pensions/ investments for the future asap.
I'm going to talk to my accountant when we go over accounts for this year, but I like to have a bit of knowledge before I start. So talk to me PH finance guru's, where do I realistically start? Do I just look at private pensions, shares, property, mixture of all.......
TLDR- Ltd company contractor aged 30, needs to start pension, want to retire as early as possible, where do i start?
I worked in construction and have a few years of a private pension from a previous employer, then bounced around for a few more years, short term work, smaller places, no pensions blah blah blah.... now I find myself working on a contract basis under my own limited company. I'm just starting year 3 of this and really need to turn my attention to the end game. Am I better off jacking in the contracting and going staff with a good pension?
my folks are coming up for retirement age, so I guess thats whats got me thinking of this. Now I know that the age for state pension (if there even is one) will be ridiculously high, but I want to start planning now so I'm not having to consider working until I'm 75.
At the moment I currently rent, no massive debts (only car on finance, nothing on cards etc...) and saving for house deposit with a view to looking for property next year. So able to save a decent amount just now, would rather save as much as possible to help with house deposit, but know I need to start looking at pensions/ investments for the future asap.
I'm going to talk to my accountant when we go over accounts for this year, but I like to have a bit of knowledge before I start. So talk to me PH finance guru's, where do I realistically start? Do I just look at private pensions, shares, property, mixture of all.......
TLDR- Ltd company contractor aged 30, needs to start pension, want to retire as early as possible, where do i start?
I'm in a similar position myself as a 34 year old with 8 years of contracting under the belt but no real retirement plan.
I did a little bit of research and then opened a SIPP and a Stocks and Shares ISA for both myself and my wife each, transferred the contributions I had from 2 employer's schemes from 10 years ago into my SIPP, and now make gross contributions to both SIPPs directly from the limited company and save some net income into both of the ISAs. Everything is invested in a range of funds and a few shares. I'm going to plough everything I can afford into these four accounts, keep doing as much investment research as possible and see what happens over the next 10+ years.
I did a little bit of research and then opened a SIPP and a Stocks and Shares ISA for both myself and my wife each, transferred the contributions I had from 2 employer's schemes from 10 years ago into my SIPP, and now make gross contributions to both SIPPs directly from the limited company and save some net income into both of the ISAs. Everything is invested in a range of funds and a few shares. I'm going to plough everything I can afford into these four accounts, keep doing as much investment research as possible and see what happens over the next 10+ years.
theboss said:
I'm in a similar position myself as a 34 year old with 8 years of contracting under the belt but no real retirement plan.
I did a little bit of research and then opened a SIPP and a Stocks and Shares ISA for both myself and my wife each, transferred the contributions I had from 2 employer's schemes from 10 years ago into my SIPP, and now make gross contributions to both SIPPs directly from the limited company and save some net income into both of the ISAs. Everything is invested in a range of funds and a few shares. I'm going to plough everything I can afford into these four accounts, keep doing as much investment research as possible and see what happens over the next 10+ years.
Pretty much the same for me. I transferred all of my old pensions into a SIPP that I have with HL and I pay a monthly amount (£250 at the minute) directly from the business into that account. I then pick and chose what to do with that money. I did a little bit of research and then opened a SIPP and a Stocks and Shares ISA for both myself and my wife each, transferred the contributions I had from 2 employer's schemes from 10 years ago into my SIPP, and now make gross contributions to both SIPPs directly from the limited company and save some net income into both of the ISAs. Everything is invested in a range of funds and a few shares. I'm going to plough everything I can afford into these four accounts, keep doing as much investment research as possible and see what happens over the next 10+ years.
Admittedly because I see it as future money that I don't need right now I have been more likely to take higher risks than I would if it was accessible cash funds. I've now changed my mindset on that and have started picking out safer funds and the like instead of small cap aim shares (never again).
Ginge R said:
First things first, protect your cash flow. If you're a one man band Limited company, protect yourself with suitable insurance in the event you can't work.
^This.You would not believe the amount of Self-Employed people I deal with who have minimal savings, zero provisions for if they can't work, a dependent family and are looking to take out a large mortgage based on their income but don't see the value in protecting that income stream.......
Sarnie said:
^This.
You would not believe the amount of Self-Employed people I deal with who have minimal savings, zero provisions for if they can't work, a dependent family and are looking to take out a large mortgage based on their income but don't see the value in protecting that income stream.......
The problem is when I looked into critical illness cover or income protection most didn't kick in for 3 months, only covered you for a year, didn't really pay enough to cover my living costs and the quotes I was getting were ludicrous. On a cost benefit\basis, the figures just didn't work. So now I just make sure I have plenty left in the company warchest to cover me for at least 6 months should the worst happen because lets face it, if you are off work for longer than that you probably have bigger issues to worry about.You would not believe the amount of Self-Employed people I deal with who have minimal savings, zero provisions for if they can't work, a dependent family and are looking to take out a large mortgage based on their income but don't see the value in protecting that income stream.......
As for the SIPP I take it they are easy to setup but what about fees and how easy is it to move your investments around? Also I'm not a finance expert so how do know what funds to pick? I am about to start a pension but will probably leave it to the experts to look after it for me. It might cost me a little more in fees but as long as you pick the right IFA\Pension advisor it should be easier then DIY which is effectively what a SIPP is I believe.
Guvernator said:
The problem is when I looked into critical illness cover or income protection most didn't kick in for 3 months, only covered you for a year, didn't really pay enough to cover my living costs and the quotes I was getting were ludicrous. On a cost benefit\basis, the figures just didn't work. So now I just make sure I have plenty left in the company warchest to cover me for at least 6 months should the worst happen because lets face it, if you are off work for longer than that you probably have bigger issues to worry about.
As for the SIPP I take it they are easy to setup but what about fees and how easy is it to move your investments around? Also I'm not a finance expert so how do know what funds to pick? I am about to start a pension but will probably leave it to the experts to look after it for me. It might cost me a little more in fees but as long as you pick the right IFA\Pension advisor it should be easier then DIY which is effectively what a SIPP is I believe.
Critical Illness cover is a lump sum payment so no issue with deferred periods etc.As for the SIPP I take it they are easy to setup but what about fees and how easy is it to move your investments around? Also I'm not a finance expert so how do know what funds to pick? I am about to start a pension but will probably leave it to the experts to look after it for me. It might cost me a little more in fees but as long as you pick the right IFA\Pension advisor it should be easier then DIY which is effectively what a SIPP is I believe.
With regards to your warchest, thats great of course, most people could probably tighten their belts and last it out six months, it's beyond that where the risk is.
One of my male clients had a Stroke last September aged 34 and he worked as an IT Contractor and did about 25k miles a year....I'm not sure if he's ever going to be able to drive again let alone return to anything like his previous employment......
thanks for the input, I did worry that my initial post was a bit too vague/ covered a lot of ground, but the advice is definitely a good start.
I'll be honest and say I didnt even think about the critical illness/ protecting my income as I didnt know that existed in this line of work. As you say, breaking a leg and having 2/3months out would be rubbish, but you could absorb it, however being diagnosed with something terminal/ long term sickness, I dont know how I would or even could cope with that. Going to look into this as I see me sticking with contracting for a while.
The SIPP stuff is a good starter and going to do more research into this field. I think I'd be going down the route of a managed product as I'm not sure I have the knowledge or skills to make the right decisions about my future savings. Theres some things in life I'm happy to wing it and others I'm much happier taking advice
I'll be honest and say I didnt even think about the critical illness/ protecting my income as I didnt know that existed in this line of work. As you say, breaking a leg and having 2/3months out would be rubbish, but you could absorb it, however being diagnosed with something terminal/ long term sickness, I dont know how I would or even could cope with that. Going to look into this as I see me sticking with contracting for a while.
The SIPP stuff is a good starter and going to do more research into this field. I think I'd be going down the route of a managed product as I'm not sure I have the knowledge or skills to make the right decisions about my future savings. Theres some things in life I'm happy to wing it and others I'm much happier taking advice
If any life or CIC/SIC cover as a lump sum is too pricy, look at getting it as an income benefit (this isn't the same as Income Protection). The amount that you are covered for each month is scheduled to finish when the contract does, but let's face it, do you really want £x,000 to pay out to you, to cover lost income, the day before you retire? It's cheaper and for many (not all) people, it can sit well within a protection strategy.
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