Investing in your mid 50s

[itsmytimenow]

I'm 54, divorced and planning for retirement.

With the markets as they are, I'm wondering if now is a good time to start investing? I have an old S&S ISA worth £19k and about 6 months cash savings. Mortgage paid off now.

I'm thinking of starting a Vanguard Global All Caps, or ISA as fees are low. Not sure what's best or even if I should just put everything in pension for the tax benefits (salary sacrifice)?

As I can start taking pension soon (though hope to work a few more years), is pension the best way to invest? I'm a lower rate tax payer with full state pension credits.

Have a look at Pete Matthews vlogs and podcasts. There’s also a free pension advice organisation funded by the government.

Thanks. I'll take look. I did use the pension advise service when I got divorced and it was really useful!

Cash ISAs are good at the moment for interest rates.

Take a look at Martin Lewis's website. He tells you the best choices for homes for your money.

What are your current pension arrangements (other than the State pension) ?
Do you have pension provision through your employer? If so - is it a Defined Contribution or Defined Benefit pension? There may well be advantages to boosting this, if you have one, rather than starting a new one.

Second this. His podcast (Meaningful Money) last week talked about strategies for drawdown, which is taking money out of your pension to live on. He explained a system where you take chunks of money out of investments into cash eg fixed and instant access savings to use over the next year or two and leave the rest invested.

This reduces the risk of having to take money out of a fund when the value is down. You then leave the rest invested and hopefully will regain losses that the funds might currently be suffering.

Two very important points that I think get lost in the 'only invest for the longer term as you could lose out due to market volatility' warning is that, you won't need to spend all your retirement pot shortly after you retire, you'll be able to leave a lot of it invested for (hopefully) at least a couple of decades and also historically (although past performance is not a guarantee of what will happen in the future of course) market dips have been short lived and investments have recovered and outperformed cash in the medium to long term.

Watching

One of his recent podcasts has also talked through the 'pension or ISA' question.

meaningfulmoney.tv/2022/03/23/pension-or-isa/

I've been listening for about a year or so after seeing a recommendation on here and have learned so much and found the confidence to invest - I only wish I'd done it earlier than now.

Thanks everyone. I've been a little concerned that I have little savings, although my pension is reasonably healthy (a DC pot of around 550k and an old DB scheme that will pay around 2.5k a year from age 60).
I'm quite frugal, so I feel this could be enough.
The pension v ISA video was good, but I don't think I can afford to save much more.
I now put 25% in my pension atm and my employer adds 10%.
The meaningful money podcasts are helping me to think about how to draw on my pension in a tax efficient way.

A couple of things to consider about withdrawing pension in a tax efficient way (from my own experience...I'm not a financial adviser).

If you have a full state pension, plus DB pension of 2.5K pa, this is likely to take you close to the current threshold for paying income tax once you reach state pension age.
If you stop working before then, it might be worth investigating the advantages of accessing the 25% tax free lump sum on the DC pension, plus additional withdrawals from it up to the income tax threshold, to invest in an S&S ISA to avoid tax further down the line. I'm not a tax expert though so do your own research on this.
Another possibility is to keep an eye on pension annuity rates, which have been dire in recent years, but with rising interest rates are starting to look more promising. It is possible to purchase a fixed term annuity for a set time frame to tide you up to your state pension.

If you have additional savings, there's also the option of an immediate vesting pension once you decide to retire. It's a little complex on the rules, but basically savings are paid into a personal pension to gain the 20% tax relief, and then immediately accessed to utilise the 25% tax free lump sum allowance, and the income below the annual income tax threshold. There are limits to the amounts allowed for this purpose, I think, but worth looking into.

If you are considering retiring early, one thing I found - a large ISA savings buffer enabled me to reduce working to very low part-time hours whilst supplementing income from ISA savings. This meant I wasn't retired for tax purposes, and so could continue to contribute to a pension, and receive employer contributions. Although it was a small amount, I did also receive the other associated benefits of the scheme.

Thanks. Lots of good ideas there. I had discounted annuities, but if the rate was decent, it would be worth considering.
Also, paying in to a pension once retired, sounds a good way to maximise tax benefits (I know the rules mean I couldn't invest much once taking a pension).
I plan to retire in 2 to 3 years, depending on my job security and the economic recovery.
I could pay £600 a month into ISAs now, but only if I reduce my pension contributions. But salary sacrificing £1000 to my pension, only costs my less than £600, so this is why I'm torn.
I could of course take a cash lump sum on retirement and put in a mix of cash and s&s ISAs. Then draw a combination on that and my tax free allowance. That might keep me going until my state pension kicks in at 67.