Need perspective on money situation for a 54 year old

[Moneysitu]

Would love opinions please on where I’m at financially. I have friends who are far better off (and boast!) but I feel ok.

house worth about £330k, mortgage £28k
savings £21k
shares worth £9k
car worth £3k

I am a 54 year old female, no dependents as my kids have left home.

At 54 this is one of most important questions!
funny how she missed it off🤦‍♀️
Op, save into your pension as much as possible at your age. Government currently gives tax incentives that’ll outweigh overpaying mortgage for instance.

£900 per month for pension is crap. Sorry but it is. you’ll not be able to retire early on that and will have to wait for 67-69 and state pension . or you’ll be retiring early and using state benefits to top up to a livable income. No one can live on £10800per year- it’s less than a state pension where people struggle.

If it’s a final salary pension think very hard about taking lump sum tax free - it may well be better to forgo that for defined pension paid month with inflationary increments - lump sums can be eroded with inflation or poor stock market performances. A pot of £70k put in a bank will give you around an additional £2500-£3000 per year give or take depending on economics. Once your income goes above personal allowance (which after a few years it will unless next government does away with quantitative easing) It will be taxed on interest till you get it into ISA. if you invest it in share it’ll be also subject to capital gains and dividends tax until you get it into ISAs. You need to do all the maths .

but I think you’re massively under estimating what you need to live on

do you actually have a budget of what you spend for the year? Of so how does that stack up on £10800

Hang on, a lot of drip feed shit going on here.

Whybother posting if you’re going to say oh, I’m married and not living on my own (which I took first message to mean), and I’m on an income of £5k per month aka £60k salary at higher rate tax band

pay more into your pension- even over paying your mortgage is not going to get you 40% return the government will give you in tax return. Build up pension pot fast with with tax relief whilst it’s still available (before labour reduce to 20%?) and then take as lump sum on retirement to pay off mortgage. The mortgage you’re paying on taxed income at 5-7% (?). Just doesn’t stack up now at your age. Use pension tax benefits whilst they’re still a thing.

I don’t think it sounds bad at all but I think what I’d be doing in your situation is work out what income you’ll need/ want going into retirement (including bills, expenses, holidays etc) and then make a plan to achieve that. Otherwise you might find that the drop in income as and when you do retire is quite drastic. If you save now (maybe think about reducing holidays) maybe you could, for example, buy an investment property and supplement your income then?

I also think you need to think about your new partner and his plans to retire early- it sounds sensible given his job but what will his income be? And will he be able to make an equal financial contribution going forward, or will you basically be paying for his holidays etc for the rest of your lives? Quite apart from the finances is he going to be occupied and busy when he retires too?

Just to add a touch of balance, I'm retired, similar sort of age, and typing this from my little house in Spain where I spend half the year. We're having an absolute blast, thanks for caring. 🌴🌞😊

Dartwarbler A lot of advice there, some of which I don't understand. I've never really understood my pension. My friend is a financial advisor, and I had planned to make an appointment with her when I turned 55. I'm wondering whether I should maybe do that sooner rather than later? I'm not even sure whether I can make payments into my Pension? I was in a job for 27 years, which I left when I was 43. That's who my pension is with. I haven't paid anything into my pension since then. Kind of wishing I had now, but honestly there was no spare money for a long time. I could have afforded to, for the last 5 years or so, but didn't.

So you haven't been paying into a pension for over a decade?

What sort of pension is it? Defined benefit or defined contribution?

What you need to know is what your pension will be when you retire, so at say 65.

If you are employed then your employer is legally required to automatically enrol you into a pension and make contributions.

You really need to start trying to make more contributions now

Just fyi St James Place are not independent and are generally not recommend on here by people in the industry.

This.

How are you getting your 5000 monthly income? If it is via paid employment, your employer is required to auto-enrol you into a pension unless you opted out. Pension is one of the most tax efficient ways to save.

I agree. SJP have high fees that eat into your returns and a not very transparent charging structure. Generally stay away.

It's hard to comment because it's all relative...
I'm your age and DH and I each earn less than £30k a year. Three adult kids have moved away. Rented house, no assets or savings, and half a dozen shabby pensions that need to be combined but which won't allow me to retire.
So in comparison to me and anyone in my situation, it looks like you're well set up.... But then against folks earning daft money it's a different matter. I'd feel a lot more confident in your position!

A single person needs about £14000 a year for a minimum level of comfort in retirement.

https://www.retirementlivingstandards.org.uk/

The lump sum can be used to increase income for the years before state pension kicks in.
I'm hoping to retire at 60 and that's what I am planning to do.

If you are self employed you can open up a person pension straight away, I have one with Hargreaves Lansdown.Even if you keep it all in cash instead of shares, you'll not have to pay tax on the money that goes in so it's an instant 40% savings and due to your age, it's pretty flexible when you want to take it out.

Looks like it!!

It’s not a bad position, but your pension is really poor. Surely you’ll need a lot more than that a month? I’d focus on building up your pension as much as you can, especially if you want to retire early.

Comments like this just make you look very childish. This is a forum for adults. People should be able to come on and discuss money, finances, pensions and investments without it being a race to the bottom.

So, if I leave the pension until I'm 65, it pays out £18k per annum (£1300 pm), plus a lump sum of £122k. Or obviously more per annum if I don't take the lump sum. Is that bad? I thought it was really good! Bear in mind I will have savings and no mortgage. Outgoings would be £1k plus food. DH's pension about £1000 per month, I think.

I'm self employed. Yeah, not paid into pension for the last 11 years. Feel a bit silly about that, but there was no spare cash until maybe 3 years ago, due to clearing debt, putting kids through Uni etc.

18k plus state pension plus money for big items ( new bathroom , stairlift, help around the home ) is fine

So what is your question / issue???

You have a spare £3k a MONTH!?

Various online

www.wesleyan.co.uk/pensions-and-retirement/how-much-to-retire#:~:text=The%20latest%20figures%20show%20that,year%20for%20a%20comfortable%20retirement

amp.theguardian.com/money/2023/apr/15/uk-pensions-how-much-retire-cost-of-living-inflation-income

@ Moneysitu could you live on 18k now?

I assume you will have a state pension at 67

Agree!

Yes agree- how would your life be on 18k a year (plus state pension now). I’d be doing a proper budget to work out how much is going to go on essentials and then whether you have “extra” to pay for things like holidays, days out etc. Petsonally I don’t think it’s bad but I do imagine that your life will perhaps be quite different?

Also what are you going to do with your lump sum- around me if you invested that in a property you could generate a rental income of maybe £800 a month and the value of the property is likely to rise but if you do that and don’t have other savings what would you do if you needed a new car, or boiler etc?