Financial health recce
Discussion
I'd appreciate your view points on my financial health...
I'm in my early 40s, no kids, single
Employed and earn circa £100-110k a year / £5200 pm net
No debts/credit cards/loans other than mortgage
Mortgage debt - £175k (I overpay £300 per month too)
House value - £295k
26 years left on the mortgage - I took a longer term than needed but overpay
Stocks and shares ISA - £62k
Lifetime ISA - £17k
SIPP - £38k
Company pension - £62k
Personal and employer pension combined contribution is around £700 pm
My income has really taken off in the last 3 or 4 years. As it increased, I prioritised in clearing down all my debts (a small unsecured loan), completed a high end refurb to the house (kitchen, bathroom, floors, new boiler etc etc) - a modest semi-detached albeit in a lovely, affluent market town, so no further expenditure needed there, and no desire to move further up the property ladder. I've tracked my spending to the penny on what and where the money's gone each month, as in the past I'd been a bit carefree with spends, and this has kept me on track. I've managed to built some savings with the stocks and shares ISA/LISA, and also started the SIPP.
I even sold my soul and went for a salary sacrifice car scheme at work which saves me £300-400 a month in fuel as a I can charge for free, having sold a modest hot hatch.
Whilst it's great to know I owe nothing to anyone, other than on the house, I can't help but worry about retirement. On the other hand, being so prudent is bit wearing. I miss my petrol car and enjoyed doing trips around Europe - it's still possible in an electric car but not quite the same! Life's short, I guess, and perhaps I'm looking for some validation in spending some money on a second, fun car!
I've a 'spare' £2k or so a month after the fixed outgoing including mortgage overpayment, which partially goes on the SIPP and stocks and shares ISA.
Anyhow, carry on as I am now, or balance it out and get a £20k Elise on the drive? What'd you do in my shoes?
I'm in my early 40s, no kids, single
Employed and earn circa £100-110k a year / £5200 pm net
No debts/credit cards/loans other than mortgage
Mortgage debt - £175k (I overpay £300 per month too)
House value - £295k
26 years left on the mortgage - I took a longer term than needed but overpay
Stocks and shares ISA - £62k
Lifetime ISA - £17k
SIPP - £38k
Company pension - £62k
Personal and employer pension combined contribution is around £700 pm
My income has really taken off in the last 3 or 4 years. As it increased, I prioritised in clearing down all my debts (a small unsecured loan), completed a high end refurb to the house (kitchen, bathroom, floors, new boiler etc etc) - a modest semi-detached albeit in a lovely, affluent market town, so no further expenditure needed there, and no desire to move further up the property ladder. I've tracked my spending to the penny on what and where the money's gone each month, as in the past I'd been a bit carefree with spends, and this has kept me on track. I've managed to built some savings with the stocks and shares ISA/LISA, and also started the SIPP.
I even sold my soul and went for a salary sacrifice car scheme at work which saves me £300-400 a month in fuel as a I can charge for free, having sold a modest hot hatch.
Whilst it's great to know I owe nothing to anyone, other than on the house, I can't help but worry about retirement. On the other hand, being so prudent is bit wearing. I miss my petrol car and enjoyed doing trips around Europe - it's still possible in an electric car but not quite the same! Life's short, I guess, and perhaps I'm looking for some validation in spending some money on a second, fun car!
I've a 'spare' £2k or so a month after the fixed outgoing including mortgage overpayment, which partially goes on the SIPP and stocks and shares ISA.
Anyhow, carry on as I am now, or balance it out and get a £20k Elise on the drive? What'd you do in my shoes?
It’s usually easier to come at this from the other way - often around how long you want to keep working for, carrying on as you are there is likely fine if you want to work for another 15 or so years, but you have the income and relatively low outgoings to drastically change that number if you make changes to your contributions and where you’re putting it.
My initial thought is the numbers all look fairly light for your income and age, noting that you said the higher salary is relatively recent. £700 into your pension isn’t much at that level of income, assume you’re at least getting your contributions to a point just below £100k if you earn £110k..? Or you’re paying a lot of tax on that portion which would better serve you in a pension.
My initial thought is the numbers all look fairly light for your income and age, noting that you said the higher salary is relatively recent. £700 into your pension isn’t much at that level of income, assume you’re at least getting your contributions to a point just below £100k if you earn £110k..? Or you’re paying a lot of tax on that portion which would better serve you in a pension.
Thank you.
I'd like to retire around 60, maybe late 50s if possible. I'm happy with a modest retirement income given how I'm living now - I'm hardly extravagant so I'd not be giving up much in the way of lifestyle.
My basic and car allowance are just over £100k combined, and my pension contributions - I think 5% and 5% employer/employee - are based on that.
Part of my issue is self-confidence and imposter's syndrome. I can't help but catastrophise based on 'what if they realise I'm s
t / lose my job and I end up on £40k a year', and have ended up basing my outgoings on that!
My pension pot is definitely lighter than I'd like but now aim to add £750 plus tax relief into it a month.
My thoughts were to use the LISA/ISA money to pay off a huge chunk of the mortgage in the year or so.
I'd like to retire around 60, maybe late 50s if possible. I'm happy with a modest retirement income given how I'm living now - I'm hardly extravagant so I'd not be giving up much in the way of lifestyle.
My basic and car allowance are just over £100k combined, and my pension contributions - I think 5% and 5% employer/employee - are based on that.
Part of my issue is self-confidence and imposter's syndrome. I can't help but catastrophise based on 'what if they realise I'm s
t / lose my job and I end up on £40k a year', and have ended up basing my outgoings on that!My pension pot is definitely lighter than I'd like but now aim to add £750 plus tax relief into it a month.
My thoughts were to use the LISA/ISA money to pay off a huge chunk of the mortgage in the year or so.
thenortherner said:
Thanks.
To get myself out of the 60% trap, is this only possible by upping work pension contributions or can I achieve the same via a SIPP?
The money you pay into a sipp is post tax and national insurance. You claim back the tax, not the NI.To get myself out of the 60% trap, is this only possible by upping work pension contributions or can I achieve the same via a SIPP?
If you can up work contributions you save the NI.
But, what is the work scheme? What flexibility do you have compared to the SIPP, as in drawdown age, and what is it invested in?
That having been said, you're a prime candidate for FIRE, as in financial independence, retire early, if it is something you know or have heard about. If you're happy to live at your current level and basically save £2k pcm, if that was invested there's a good chance you could exit the rest race well before usual retirement age. Well worth a thought at least...
macron said:
thenortherner said:
Thanks.
To get myself out of the 60% trap, is this only possible by upping work pension contributions or can I achieve the same via a SIPP?
The money you pay into a sipp is post tax and national insurance. You claim back the tax, not the NI.To get myself out of the 60% trap, is this only possible by upping work pension contributions or can I achieve the same via a SIPP?
If you can up work contributions you save the NI.
But, what is the work scheme? What flexibility do you have compared to the SIPP, as in drawdown age, and what is it invested in?
That having been said, you're a prime candidate for FIRE, as in financial independence, retire early, if it is something you know or have heard about. If you're happy to live at your current level and basically save £2k pcm, if that was invested there's a good chance you could exit the rest race well before usual retirement age. Well worth a thought at least...
1. Do you have any easy access savings you can call upon in an emergency? They usually suggest 6 months salary but in your case could be 3 months. Maybe the ISA can fulfil this role but I don’t know.
2. Maybe you’ve left it off the Fixed outgoings list as it’s variable but you don’t seem to buy much or do anything fun. Unless it’s on CC and wisely clear it every month as you should. Maybe enjoy life a bit more as you can do.
3. I think you’ve headroom to buy a fun car and do trips. Nice article on PistonHeads of young lads doing just that and sounded like a blast. Alternatively you could maybe fly to somewhere and hire a LHD 911 or Ferrari etc for your trip with no hassles, fly home.
CubanPete said:
Buy the Elise, but also double your pension contribution.
This.Your financial position allow you to do both given your modest needs.
The Elise is a limited volume car, so price should remain pretty stable, and it can be sold for emergencies.
You can always re-assess your options 5 years down the line i.e. continue to climb the corporate ladder, exchange the Elise to something else, travel more while still healthy, or plan an early exit strategy etc..
you have (ideally) 15 years of pension contributions left.
Don't pay the 60% marginal rate at all. if you drop 1kpm to SIPP, after 15 years that's £225k of contribs after basic relief, plus growth. reclaim the 40% and put that in ISA for another £75k or so, plus growth.
If that seems like sufficient, added to your current pots plus overall growth, and you can afford the car - buy the elise.
sounds like ballpark 500k of pots, plus a bunch of growth, with no mortgage, not a terrible place. up to you how much you need to thrive post retirement.
alternatively, ignore all of the above and buy the elise - because when you're 60 and retired you'll wish 40yo you owned that elise for a few years.
Don't pay the 60% marginal rate at all. if you drop 1kpm to SIPP, after 15 years that's £225k of contribs after basic relief, plus growth. reclaim the 40% and put that in ISA for another £75k or so, plus growth.
If that seems like sufficient, added to your current pots plus overall growth, and you can afford the car - buy the elise.
sounds like ballpark 500k of pots, plus a bunch of growth, with no mortgage, not a terrible place. up to you how much you need to thrive post retirement.
alternatively, ignore all of the above and buy the elise - because when you're 60 and retired you'll wish 40yo you owned that elise for a few years.
Pit Pony said:
CubanPete said:
Buy the Elise, but also double your pension contribution.
This. I say this as a 58 year old who wishes he'd put mote into pension earlier, who makes sure he doesn't pay tax at 40% (because 27% of his income goes into pension) but who also doesn't have a lotus. 100% buy the Elise. You can afford it - chances are that in 18months or so you'd probably have scratched the itch and can sell it at that point.
I'm speaking from experience after deciding to buy a Vantage in April 2024. I could have thought about it long and hard (and decided not to) but worked through the list and realised I was overpaying the mortgage, making sizeable pension contributions, had no debt other than a mortgage and cash/ S&S ISAs.
The mantra has to be to live for the day but keep one eye on the future (i.e. do keep an emergency fund and contribute to your pension).
Couple of suggestions I would make is, given you're a higher rate taxpayer and already own a home, put money into your SIPP (rather than the LISA) and check the fees/ what fund the company pension is invested in and decide whether it's better to transfer to the SIPP if you can. Absolutely not advice but by managing my own SIPP (AJ Bell) and mostly using Vanguard funds I save a lot of "leakage" in fees.
I'm speaking from experience after deciding to buy a Vantage in April 2024. I could have thought about it long and hard (and decided not to) but worked through the list and realised I was overpaying the mortgage, making sizeable pension contributions, had no debt other than a mortgage and cash/ S&S ISAs.
The mantra has to be to live for the day but keep one eye on the future (i.e. do keep an emergency fund and contribute to your pension).
Couple of suggestions I would make is, given you're a higher rate taxpayer and already own a home, put money into your SIPP (rather than the LISA) and check the fees/ what fund the company pension is invested in and decide whether it's better to transfer to the SIPP if you can. Absolutely not advice but by managing my own SIPP (AJ Bell) and mostly using Vanguard funds I save a lot of "leakage" in fees.
I reckon it’s easier to get to your planned retirement age and find out you need to work an extra year or two than reach your planned retirement age and wish you’d bought an Elise while you could still actually climb in one!
And considering all the guys and girls who never make it to retirement age and I’m definitely in the camp of enjoying life while you can. Get the Elise (but try and put 1/3 away into pensions and savings).
And considering all the guys and girls who never make it to retirement age and I’m definitely in the camp of enjoying life while you can. Get the Elise (but try and put 1/3 away into pensions and savings).
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