Do you think I’m in a poor position?

[Pogodogo18]

Here’s my situation. I’m a 50 yr old single parent with one still young child (10)

I’ve got a reasonable job that earns me £48k pa and I get £6k child maintenance a year.

But my outgoings are high and I can barely afford to save anything. Less than £100 a month usually. I have a mortgage of 200k on a house worth 460k but 18 years to go 😔😔

No pension to speak of. About £5k in cash savings. Old car but okay for now.

I’m very fortunate in some ways (don’t mean that in any boasty way at all, just grateful for what I have). But I wake up at night and I think I’m in a pretty precarious position financially. The lack of pension scares me the most.

I’ve worked bloody hard to reinvent myself career wise after my divorce, and I spent years married to a careless spender, which has taken me a long time to recover from. Despite all the graft, it all feels too late to catch up.

I live in an expensive area and wonder if my view is clouded by seeing lots of people better off than me. But however I cut it, I feel very vulnerable financially. Am I?

Why is your expenditure so high?

Big mortgage. Still pay childcare costs so I can work. No real debt though. We eat well but I’m not extravagant. The opposite actually.

OK so some of those costs ie childcare won't last much longer.

I'd expect with a monthly income of around 3.5k that you should be able to save more tbh.

I'd do a spreadsheet of a month's spending, monitor every penny and see if anything is being wasted.

I don't think you are in a precarious position yet but you could be in the future -- however you have time to do something about it.
Whatever pension you do have, you could start making additional voluntary contributions to it. With some employer schemes your employer also puts in extra.
Perhaps you could check this out to see if it's possible for you.
Either way you could take advice from an independent financial advisor.
And also think about a savings or pension scheme with a life assurance element.

But I presume you will have a good 15+ years before you retire and AVCs are a tax efficient way to save, so it should boost your pension on retirement.

I’d have a really in depth forensic look at your outgoings to prioritise pension savings ASAP, would your employer match?

Can you sell and downsize to scrap the mortgage altogether? It would obviously mean a move which is difficult to think about but if you’re going to do it your DD is at at great age to adapt before she’s older and settled into a secondary school.

Thanks SlerpingStandingUp. Yes, that can’t do any harm. I’m pretty careful though - always cancel DDs on time, shop around, monitor spend, meal plan etc.

It just seems very difficult to carve out any spare cash. I’d like put more into my pension but I don’t have it spare. I’m aware this will cause me real difficulty in just a few years

As my son is so young, I think I won’t get any kind of break - by the time he hopefully goes to uni, I’ll be 58 and at the end of my useful career years. I’m in a youngish industry and with the best will in the world, the job is unlikely to last past then.

Personally, I think the mortgage might be an issue as you get older. Depends how much you love your job and how well you will be able to do it as you age? You have a lot of equity so that is a safety net for you. If you needed to in future, you would be able to downsize, so that should help. You are on a decent wage but the lack of pension is not perfect. Have you gone through your spending? It's amazing what can be reduced if you want to. You should congratulate yourself on all you've achieved and when the childcare bills reduce, maybe add to your pension then if you can't do it now. Check your state pension forecast on gov.uk

I should add that obviously I’ll have to work past 58, but I can’t see it being a career job if that makes sense.

Right now, I’m focusing on paying any little bit eg £50 over on my mortgage. If I carry on doing this for the next 8 years, I was thinking I’d downsize so hopefully no mortgage. But then no pension either.

I can’t make it add up.

It would be helpful for you to list your essential monthly spends here, so people with experience ~and you~ can see where it goes.
People here are REALLY good at saving cash.
I think a key might be the bit where you 'eat well'. You can get a lot of meat, beans, cereals & veggies for one adult and one ten yr old for not very much money.

You must have 2k per month after your mortgage? Do a full expenditure breakdown. Look at what you are overpaying on and what you can negotiate.

I would suggest paying any spare cash into a pension (particularly if your employer will match but even if not). Mortgage interest rates are so low, it isn't worth paying that down in priority to building up your pension which has significant tax advantages

I think your mortgage is an issue too. It’s too expensive if you can’t save more than £100/pm. Where we are you can’t really get a mortgage if your monthly repayment is more than 33% of your income.. is your property likely to shoot up in value in the next 10-15 years? If not Id consider moving now so you can prioritise savings/pension. You aren’t on a cliff edge but I think a budget reorganisation might be in order to prepare for the future xo

So a net income of approx £2400 pcm + maintenance.
What are your outgoings and costs - particularly childcare & mortgage each month.

Would you consider taking in a languages student/ some sort of lodger to help if have space?
I think this will all feel better when child care less crucial /school covers it if you still need it fairly full time as you can put that money into a pension instead ?

Sounds alright to me
You have equity, a good salary and some savings. Not sure why you think you are badly off.

Your issue is lack of pension and low savings.

Your income is above average for one earner and your home is above national average value. So your overall picture is better than many.

You should speak to someone about what you could achieve pension-wise from your starting point.

How much money do you have left after taking out mortgage, council tax and childcare?

So, realistically with £48k income and no pension, and presumably no student loans, you should take home about £3k per month, plus CM of £500.

A £200k mortgage now is useful information from an overall balance sheet perspective but doesn't make immediate sense of why your costs are so high. My usual recommendation is to do a "statement of affairs" which there's usually a good load of help on the MSE forums with.

www.lemonfool.co.uk/financecalculators/soa.php

Because childcare and mortgage payments are going to be making a massive difference here.

Can you list your monthly expenditure here then you can get tips.

I'd expect a £200k mortgage to be no more than £900pcm. If it's more I'd look at switching. Are you on a reduced rate?
Can your 10yo be home alone at all? Even then after school care should be no more than £20pd/£100 pwk. Do you pay a lot for holiday clubs? No one to help babysit? No ex? No one you could do babysitting swaps with?

If it's just you and a 10yo you only need a 2 bed flat rather than a bigger house so I'd downsize if possible. Or if space rent a room to a student.

If your supermarket bill is over £100 pwk you could definitely save on that.

Do you have lots of insurances? They often come up on these types of threads.

Expensive hobbies?

Are you getting good deals on car insurance/repairs?

Holidays?

Presents?

Do you go out a lot?

I'd expect quite an extravagant lifestyle on that income tbh!

Prioritise clearing that mortgage over a pension. You are unlikely to be able to pay what you pay now at 68. That is quite a worry.

Then buy an annuity with your house sale equity.

@Dallasdays

I would suggest paying any spare cash into a pension (particularly if your employer will match but even if not). Mortgage interest rates are so low, it isn't worth paying that down in priority to building up your pension which has significant tax advantages

This. Plus your childcare costs shouldn't be that much, wraparound, before and afterschool clubs? Do you get tax free childcare? And they'll stop when DC goes to secondary school in a year or two, which should boost your finances a little.

Have a look at the Moneysavingexpert money makeover and do everything that is relevant.

www.moneysavingexpert.com/family/money-help/

You say you have 'no pension to speak of' but auto enrolment has been in place for nearly 10 years now, so you must have something in place? Plus you have nearly 20 years to keep saving and by your mid sixties you will own a very expensive property outright, which can release a significant amount of money by moving somewhere smaller and in a less expensive location. You're in a much better position than a lot of people.

In your position I'd downsize now and try to be mortgage free. Then put what would have been your mortgage payment into a pension.

A mortgage is still a loan which costs you money. Putting your money straight into a pension would maximise your returns (and stop the sleepless nights).

Hmmm its not the worst but it isn't great.
I would def be looking at how to cut outgoings.ultimtely you need to control your own budget, strangers cant do that as they dont know your circs.
I also think you should at least be paying the minimum matched into a pension.

Check out FIRE principles and reddit fire uk group it may give you some helpful tips.

As you get older you can downsize- sounds like you have a sizeable chunk of equity in the house already.

You need a plan A, B and c

What do you do with the £100 savings?

Do you have a work pension you can buy extra pension? For each £100 you put in you’ll only see roughly £70 less in your pay packet as a 20% tax payer

Do you have spare bedroom? Can you let the bedroom to increase savings pot

Have you scrutinised your outgoings? What do you really need to be spending money on?

Honestly, once the childcare costs end (and that's in sight now if he's 10), you'll be in a far better position to save.
I know you're in an expensive area, but is there an option to downsize (or even relocate)? This will make an immediate difference. I feel your pain

You aren’t in a terrible position. I’d consider refinancing lower your mortgage payment, then sock the savings into your pension over the next 10 years.

Don’t sell the house, it’s your best asset right now and it provides you with stability.

You can catch up on your pension so much in 5-10 years if you figure out how max out your payments. You won’t miss it as much as you think. Take advantage of any matching schemes from your employer and you’ll be surprised at how fast it can grow.