Should I worry re pension

[thisisasurvivor]

Hello all

Would love your feedback on my finances and any ideas

I have my house paid for thankfully

Got 60k of outstanding loans that I'm planning on paying for over the next few years

I am self employed and no pension

I'm 42 and I'm starting to think I will just need to keep working and not retire

I love my job thankfully and get a decent wage from two days work per week

I have not looked into any private pensions etc
Should I?

Also I have two girls aged 4 and 6 so will need to try to help them with uni etc hence why I see myself working beyond 70

Any ideas please

(Grew up poor and realise just how lucky I am to have NO mortgage )

Can you work more hours to get the loans paid back quicker?

What are the loans for?

I wouldn’t bank on having 30 more years happily working away as you are now, your health might not be as good at 70 as it is now.

Exactly

Good point

The loans are for home improvements and a car

So maybe try to get them shifted in two to theee years

Then save for the next ten years ?!!

Can you be sure that the ‘decent wage’ on 2 days per week will last indefinitely? What is the decent wage?

Personally I’d continue to live on the 2 day earnings as you currently are, and then work 2-3 more days if possible while kids are in school. I’d first pay off the loan & start a pension, once the loan is paid bump up the amount going to pension. And start a high interest savings account for DC.

Are you only working 2 days a week now? I'd work more and get the loans paid off quicker and put money into a pension.

Are you a lone/single parent with just one household income?
If so, I would do the following before investing in a private pension:

-Save a rainy day fund equivalent to about 3 months of your basic household expenses, in case disaster strikes and you are unable to work for a period of time or some major urgent repairs crop up. This will give you some short term financial security and help prevent a building up of further debt.

-Check you are receiving NI credits whilst you are raising your children. This will build your entitlement to a state pension (assuming you are in UK).

-Make a Will if you don't already have one. Appoint guardians for your DC, and consider taking out Life Insurance that will provide for them in the worst eventuality. At age 42 if you are in good health, this can be done quite cheaply for a very modest monthly payment (compare providers for best prices and always choose one that tailors it to your age, health and circumstances as this will be cheaper than an off the shelf product).
-Pay off all debts.

-In addition to your rainy day fund, start putting aside savings for expected expenses in the future - a replacement car, regular home maintenance and repairs, replacement large appliances, school trips.

-Ensure you have a regular household monthly budget to track income and expenditure.

After all the above is secure, then calculate precisely your monthly surplus income (if any) that you might realistically have available to invest after all expenses are accounted for. .

Work - why only two days a week. Maximise that. You presumably have three days a week at home not earning when your dcs are at school - that's a luxury you cannot afford.

Pension - take one out asap. Preferably with work as they will also contribute. You get tax relief on contributions and have a lot of years of no contributions to try and make up so prioritise this.

Loans - what interest rate are you paying? I'd bet far higher than the equivalent rate you'd get if you remortgaged to pay them off, so look into that.

HTH

What @cupofstrongtea said, also I would look into a 10 or 15 year mortgage to cover the loans. Mortgages are often a better deal compared to most unsecured loans though may not be so easy to get if you're self employed. Are you planning to increase your hours when your children are a bit older? I would do that to build up longer term savings for university, pension etc.

Yes and @AmaryllisNightAndDay so true

Thank you

The interest rates are not too bad thankfully but
Up my hours
Get them sorted

Look into private pension

Def

Ok just jotting all this down

So so helpful

Thank you

Great tips thank you all

I earn 600-700 per day after tax

So do two days most weeks

No excuse to not clear this debt sooner

15 k on credit cards that I somehow forgot to mention

These need to go my plan is to get rid by end of Oct as I did extra work this month to shred them

I will up my hours in sept

It depends to some extent on the interest on the loans. It's always good to have some savings, even at the expense of some extra interest, but in general pay off your loans as quickly as you can if their interest is more than you will get from savings. A mortgage may well be cheaper, but there is the risk of you losing your house.

I regret not having saved more, and you absolutely need to start saving - probably in a pension. Equities are higher risk, but unless you take that risk, you aren't likely to beat inflation on your savings. Over 25 years, you should benefit.

Also consider setting up an ISA each year. Once it's set up and you are paying into every month, you won't notice it as much, and your future self will be very grateful. The first couple of years might be eaten up by charges, which is something to consider.

To add

I realise I am very lucky

We grew up with no money
Fled d v
Living in my sisters sitting room with two kids for quite some time

Just very clueless re pensions etc

Fab ideas

Sorry what charges with ISAs ??

I daren’t ask what line of work you are in…

You have 20 years to save into a pension: it will serve you well!

Are the 2 days in addition to your self employed work? Is your 2 day employer paying into a workplace pension for you?

You can make a difference to your future OP: I didn’t start a pension until I was 40.

Psychology

Great ok time to get moving

No workplace pension

Self employed

How does one find. The best pension?

I would up the days you work: doesn’t have to be full time. Can be 4 days and on £700 a day clear off the debt then start paying a large chunk in to a private pension.

Yes that's the way forward

Single pension

Worry I won't have savings for D D x2 for uni

But we will manage

My parents had zero and we some how managed

What's your field OP? If its educational or clinical a day a week working for a local government or NHS would provide an easy start pension base and a means to tax free avcs. Might be worth looking into if a decent pension is your primary aim

Please don't rush into investing in a pension straight away!

First establish a more stable financial position with paying off debt, building your savings and developing your monthly household budget effectively (re my previous post or something similar).

Then pause and do your research - lots of research. Never invest in something you don't understand, or that you don't know the risks and costs involved.

For research about pensions I would investigate thoroughly -

What is a personal pension - it's benefits and drawbacks.
What is an investment - how does it differ from savings? How does it grow in value? What are the risks involved in investing?
Why are investments usually preferable to savings for long-term growth and wealth-building?
Which platforms are best suited for your situation - in terms of the range of products they offer, past performance of investments, their charges, ease of use of their website, minimum investment amounts offered.
The difference between actively managed, and passive funds and trackers.
The difference between risk and volatility (usually lumped together but they are not the same, particularly over a longer time frame).

If you can put some time into researching these themes, you will greatly develop your confidence in assessing financial products, platforms, charges and risks. You will be in a much better position to ensure your money works for you in the most advantageous possible way.

See a financial advisor and they will help you understand what's best for your situation and help you set up a private pension.

I would personally stop worrying about pension and just clear your debts and get some savings behind you. I didn't actually start paying into a pension until I was 46 and then was just because I'd qualified as NHS HCP and was automatic with my job. Been through some dire financial times, (eg mortgage up to 17% in the 90s and having to downsize to clear debts plus becoming single parent). I'm now on state pension with small nhs pension, still do some part time work but I manage fine on income of about £20k per annum. Don't wish to be morbid but I know so many people that didn't even reach state pension age that I wonder why so many people worry about pensions😳 just get yourself financially stable and your kids sorted out, the rest will sort itself out eventually.🌻

When you say you have no mortgage, do you mean you own a property outright that you can continue to live in, or you have free accommodation provided now, but that might or might not be available in the future?

you seem to have £75k of debt which needs paying off. That seems a staggering amount for home improvements and a car. If I were you I’d go full time and get all that debt paid off in just over a year. Then I’d prioritise some short term emergency savings and some longer term savings/pension. At the moment, you’re not in a position to help your daughters with university, though if you keep earning at that rate then you might be able to in 10 years.

in terms of a pension, you need to be thinking of circa £300k of capital to generate £10k a year of income. If you stay full time you can easily be putting £50kpa into a pension or stocks and shares ISA which will build to a healthy pot over the next 20 years. The sooner you start the sooner you get the benefit of compound growth.