Small additional retirement saving. Pension vs S&S ISA
Discussion
I am enrolled in a pension scheme through my employer which at the moment makes up the majority of the monthly contribution to my retirement plan. I put 8% in via salary sacrifice and my employer 10%.
I also have a small private pension pot as well as a stocks and shares ISA. The ISA has a combined purpose of being an emergency fund which will be rolled into retirement planning should there not be too many emergencies over its lifetime.
I currently pay around £200 a month into the ISA, but I’m starting to wonder if there’s already enough in that pot (circa £30k) and whether I would now be better to pay the money into my private pension instead and receive the tax relief.
For reference I’m a basic rate tax payer, (but only by a couple of hundred pounds, so this is likely to change soon), I’m 42, we have no kids, no non mortgage debt, the mortgage is fixed long term, and we have a modest amount of cash savings that would cover things like appliance / car repairs etc.
I also have a small private pension pot as well as a stocks and shares ISA. The ISA has a combined purpose of being an emergency fund which will be rolled into retirement planning should there not be too many emergencies over its lifetime.
I currently pay around £200 a month into the ISA, but I’m starting to wonder if there’s already enough in that pot (circa £30k) and whether I would now be better to pay the money into my private pension instead and receive the tax relief.
For reference I’m a basic rate tax payer, (but only by a couple of hundred pounds, so this is likely to change soon), I’m 42, we have no kids, no non mortgage debt, the mortgage is fixed long term, and we have a modest amount of cash savings that would cover things like appliance / car repairs etc.
Probably the biggest liability would be being out of work for a longish period, the 30k would be used to cover cover the bills for that time.
Hopefully I’d find something before the money ran out.
Mrs works full time and has a similar income to me, so there’s potential we may not have to dip into it.
Other than that I’m just thinking of things that may cost a few thousand to fix such as boilers, cars etc going pop
If im correct in thinking that the earliest I could access my pension would be 55, then I haven’t got plans to access it before that.
Hopefully I’d find something before the money ran out.
Mrs works full time and has a similar income to me, so there’s potential we may not have to dip into it.
Other than that I’m just thinking of things that may cost a few thousand to fix such as boilers, cars etc going pop
If im correct in thinking that the earliest I could access my pension would be 55, then I haven’t got plans to access it before that.
Hi OP. I am 42 and in a very similar situation with one child and minimal levels of debt.
I decided after a lot of research to start a SIPP with Vanguard and bring together three small previous employer pensions (not my current workplace pension) into the SIPP. I am now paying a fixed amount each month the day after payday into my SIPP which also adds 20% (tax reclaimed) without doing anything. I am also paying into my workplace pension in roughly the same percentages that you are.
Be aware that money in pensions is taxable when it comes out... money from ISA's is not taxable when it comes out.
The dream is to retire at 60.
I decided after a lot of research to start a SIPP with Vanguard and bring together three small previous employer pensions (not my current workplace pension) into the SIPP. I am now paying a fixed amount each month the day after payday into my SIPP which also adds 20% (tax reclaimed) without doing anything. I am also paying into my workplace pension in roughly the same percentages that you are.
Be aware that money in pensions is taxable when it comes out... money from ISA's is not taxable when it comes out.
The dream is to retire at 60.
Jeffmaniac said:
Hi OP. I am 42 and in a very similar situation with one child and minimal levels of debt.
I decided after a lot of research to start a SIPP with Vanguard and bring together three small previous employer pensions (not my current workplace pension) into the SIPP. I am now paying a fixed amount each month the day after payday into my SIPP which also adds 20% (tax reclaimed) without doing anything. I am also paying into my workplace pension in roughly the same percentages that you are.
Be aware that money in pensions is taxable when it comes out... money from ISA's is not taxable when it comes out.
The dream is to retire at 60.
The first 25% is tax free. I decided after a lot of research to start a SIPP with Vanguard and bring together three small previous employer pensions (not my current workplace pension) into the SIPP. I am now paying a fixed amount each month the day after payday into my SIPP which also adds 20% (tax reclaimed) without doing anything. I am also paying into my workplace pension in roughly the same percentages that you are.
Be aware that money in pensions is taxable when it comes out... money from ISA's is not taxable when it comes out.
The dream is to retire at 60.
Then you have your £12570 personal allowance.
So you could take £16760 out without paying tax - £4190 tax free lump sum and the rest covered by your allowance
BAMoFo said:
If you are 42 years old at the moment the soonest that you will be able to start withdrawing your pension is when you are 57 years old. This comes into effect in 2028 and may change again at some point in the future.
Not all pension schemes follow the government increasing pension age, mine doesn’t. It’s called ‘protected pension age’. I can still go at 55 after 2028 if I choose to.
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