60k child benefit + pension salary sacrifice

[GoatGetter]

Hey everyone

I earn 77k, DP 30k, would you salary sacrifice to get under 60k to keep the £173 child benefit and bump up my pension.

this means I sacrifice about £500 but the blows softened by keeping the £173, thing is moneys tight enough with 1 at nursery full time but it’s doable

I also am not a big fan of my industry so would like to retire late 50s and I’am early 40s now.

DP is of attitude to live for today etc so not sure what to do

thanks
GG

Can you do somewhere in the middle? You lose child benefit on a gradual sliding scale between 60k and 80k so eg you could salary sacrifice 12k down to 65k which would be a decent pension contribution and a bit more cash to make life now a bit easier

I earn similar and put £18k into my pension to bring my salary under £60k, DH earns £68k and does the same - our incomes are a lot closer together compared to you though and we still get c£6.5k after tax, NI and student loans.
At some point I guess we will need the extra money but at the moment we still have a low mortgage rate and hopefully when this goes up we won’t be paying as much in nursery costs. I know we won’t be able to live on £60k forever whilst making larger and larger pension payments.

If you can afford it, do it. If you want to retire in your 50s, anything you are able to do as you go along will all help.

Yes that’s what I’d do

DH earns 80k, he salary sacrifices 30k so his taxable salary is 50k and therefore below the 40% tax bracket. If you have student loans you’re basically paying 50% tax on anything over 50k. It’s worth noting you can take 25% out of your pension tax free at age 57. This is what we plan to do and pay off the mortgage at that point. We can afford to live off the 50k with my salary too. It depends on your monthly costs, but we’ll do this for as long as it’s affordable. Our student loans will also be wiped around that age too. Win win!

Surely you are already paying into your pension? If not, you really should. So if your salary is 77k, and you are already paying a percentage to pension, you only need to sacrifice the difference.

Definitely do it if you can afford it. Your marginal tax rate is at least 45% (40% tax and the effect of receiving more CB, not sure if NI and student loan repayments are also reduced) so you're nearly doubling your money by putting it into a pension, plus you should see investment growth over time.

If money is tight on a gross income of over £100k then you could probably also benefit from reviewing your budget to make sure that where possible you're not leaking money away on things that don't bring joy to your life. Eg if you have a weekly takeaway that costs £30 but is a bit meh, you could swap for a supermarket meal deal for less than half the cost.

Don't fall into the trap of tying yourself to an industry that you're not a big fan of so your low earning DP has the luxury of living for today. What is he doing to increase his standard of living? Or is he doing the majority of childcare and other domestic work?

If at all possible I would. Your marginal tax rate at the moment will be shite, and it would help with your long term goal.

Hi, yes I put in 7% my company puts in 14%

Thanks for your reply it’s helpful, money is tight mainly due to childcare but paying off some other debt until next year . Credit card from home improvements etc

great point about budget I’m dialled in , will be cutting Sky loose in 5 months and saving £80 a month then

i stick with my industry as much as I can as it offers a great pension, take your point about DP they are trying to get a better paid job

Are you claiming all the tax free childcare you can as well? That will also reduce your taxable income/income used to determine CB. But absolutely put as much as you can into your pension, particularly when you benefit now and in the future.

Yes we are things will get easier as we qualify for extra help