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Am I balancing pension saving and plans to upsize sensibly?

43 replies

starstar84 · 25/04/2026 23:21

I’m really struggling to know if I’ve got this right and would love some objective views.
For context:

  • 41, one baby (under 1)
  • Live in London (zone 3/4-ish), currently in a 2-bed which feels tight long-term, my daughter is in a box room and I also want to move to a new area - probably in Kent
  • Planning to move in the next 1–2 years to a 3–4 bed (~£550–600k budget ideally)
  • Commute 2 days a week into London Bridge, when we move this will be from further in Kent but I’ll only go to office twice a week.
Income:
  • Me: ~£95k
  • Partner: ~£38–40k (training to be a teacher soon, so income will hopefully increase from 2027)
Assets / debts:
  • House worth ~£465k, mortgage left ~£310k - I got on the property ladder 5 years ago
  • ~£50k in Premium Bonds
  • ~£210k pension (I contribute quite heavily – ~£1.7–2k/month salary sacrifice plus company cont of £700 so roughly £2.6k in total) - we are hoping to retire early so I am saving for the both of us whilst partner maxes take home pay
  • Partner will have pension of about £20k at 67 before state pension with current job
  • ~£8k credit card debt (0%)

Monthly:
Take home between the two of us roughly £6750

  • Mortgage: ~£1,600
  • Household bills including insurance and pets: ~£700
  • Therapy - much needed at the Mo £300 - will likely end in a couple of months
  • Food including eating out and groceries £1000
  • Family and house stuff £300
  • Holidays £300
  • Hobbies / health £100
  • Transport including commuting costs and car £400
  • Miscellaneous £200 - including repairs, gifts etc
  • Childcare £250
  • £90 on credit card debt at 0%
  • Savings for child £100
  • Personal spends between us £400
  • Any extra was being put in maternity leave fund but now it will go towards overpaying mortgage - roughly £1k a month

Future plan:

  • Upsize house (this will increase mortgage + costs) - likely closer to £2700 mortgage and bills
  • Long-term goal: retire ~57–58
  • Maybe think about possibility of getting bigger house then downsizing in retirement? Or pay mortgage off with the big tax free lump sum available at 57?

What I’m unsure about:

  • Am I over-prioritising pension vs present-day quality of life/ bigger mortgage payments so we can get a bigger house?
  • Is it mad to upsize given current costs?
  • Or am I actually under-saving for the future given age/income?
I think what I’m really asking is: does this look like a sensible balance?
OP posts:
Campingkit · 26/04/2026 05:26

Presumably the Premium Bonds money is your emergency cash? I would move 20k into an ISA for a start and divert some of your long-term savings towards it.

It's good to be building up your pension but that money is blocked for 16-17 years. An ISA could grow well over time (especially S&S) and you can withdraw money if needed (cash ISA best for this) unlike your pension.

Your food & grocery bill seems very high for two adults and a baby, unless you eat out a lot.

Unless you plan on having a second child a box room is adequate for another few years yet. Would you be better off paying another few years off your current mortgage more aggressively and building more equity where you are before moving? Depends on market where you are and where you plan to move to I suppose.

I would be trying to throw another £500 per month towards it now by tightening your belt elsewhere as £1600 to £2700 is a big jump in one go.

And not quite sure about your dp's salary. You mention 38-40k now, increasing from 2027 when qualified as a teacher. But are you sure there will be that much of an increase? Wouldn't that mean extra responsibilities which may not be possible to take on right away? The first years after qualifying are pretty intense by all accounts.

ComeOnJ · 26/04/2026 07:30

Partner will have pension of about £20k at 67 before state pension with current job

Do you mean a DC pot of £20k or a DB annual pension of £20k- is he in the TPS?

ComeOnJ · 26/04/2026 07:46

Overall you sound like you are doing really well. If you carry on putting money into your pension at this rate you may well have over a million (real terms) by 58 (Nb your SPA will be 68 not 67, so the earliest you will be able to access your pension will be 58).

It seems to me that you can afford to upsize pretty easily- the cost will be covered by the extra you are currently using to overpay.

Agree with PP that the premium bonds don't necessarily make the most sense. How much do you need to keep in cash? £25k would more than cover 3 months' expenses and you could have that in a high interest account which would likely do better than premium bonds. (Not sure how much you and your partner share money but if you split it between you you can use both savings allowances and pay no tax). The rest can go into S&S ISAs (£20k max per person, so either split it between you or put £20k in now and more next tax year).

starstar84 · 26/04/2026 11:39

Campingkit · 26/04/2026 05:26

Presumably the Premium Bonds money is your emergency cash? I would move 20k into an ISA for a start and divert some of your long-term savings towards it.

It's good to be building up your pension but that money is blocked for 16-17 years. An ISA could grow well over time (especially S&S) and you can withdraw money if needed (cash ISA best for this) unlike your pension.

Your food & grocery bill seems very high for two adults and a baby, unless you eat out a lot.

Unless you plan on having a second child a box room is adequate for another few years yet. Would you be better off paying another few years off your current mortgage more aggressively and building more equity where you are before moving? Depends on market where you are and where you plan to move to I suppose.

I would be trying to throw another £500 per month towards it now by tightening your belt elsewhere as £1600 to £2700 is a big jump in one go.

And not quite sure about your dp's salary. You mention 38-40k now, increasing from 2027 when qualified as a teacher. But are you sure there will be that much of an increase? Wouldn't that mean extra responsibilities which may not be possible to take on right away? The first years after qualifying are pretty intense by all accounts.

Edited

Yea to be fair, there probably will be a decrease for a while when he does teachers training and also in his early career. So the total amount will go down. I think in that case we would end up tightening our belts / potentially putting less in my pension for a bit. It does make me nervous having such a difference between our earnings for a while as it puts even more pressure on me, but I would say I’m pretty employable so would hopefully find a job quite quickly if I lost mine. Would also get around £20k in redundancy.

I forgot to say as well, I earn around £10k a year in a side hustle. I’m planning on starting to just put it all in pension so that I can get more take home pay when needed.

@ComeOnJ Partners pension is a mix of different kinds - his employer has changed their terms about 3 times in the 20 years he’s worked for them! He is not a teacher yet. If : when he becomes one he would be on their scheme. The 20k was based on his current job.

yes the 50k is a rainy day fund, altho it also might have to cover ivf if we want another baby (thinking about that now). I conceived this one naturally but am getting on. Would keep around 12k for that (I have frozen eggs so would just be for a few transfers etc)

@ComeOnJ I’m not actually sure how savings allowances work, thanks for the tip - I will read up and see if better to split some cash between me and partner.

@Campingkit the plan with the extra £1k left over is to put it in the mortgage - before maternity leave (which I’m on now) I was putting this much away to cover me for the year. So i will build a bit more equity but only about £12-24k more over 1 to 2 years. At current rate I am paying off about £600 of the loan every month out of £1600, bit depressing! So over two years would get it down by about £36k.

my area is actually quite stagnant in SE London price wise at the mo, but I’ve made anything from £20k to £40k from owning the house for 5 years. We would move to a village of Tunbridge wells I think (at the moment) which holds value well and isn’t that cheap, but certainly cheaper than London.

we are also considering buying a less expensive 3 bed with a big garden and having a garden room for an office as less expensive than buying a four bed. And maybe going for something less pretty so we don’t stretch past 500. I feel like with AI / economic climate etc I’m quite nervous about future economy and employability! My industry is quite vulnerable to AI although I am senior and probably quite hard to replace in some ways as I hold client relationships.

should say as well, I own the house. My partner pays me £1k a month at the mo for contributions to rent, bills and baby, but we are moving towards a more joint model ie me saving for our early retirement, partner taking out more take home pay and not putting extra into his pension. We are doing a joint budget at the moment and any extra we put into mortgage I would like to treat as 50:50 when we buy a house together. Also am thinking of converting what he’s paid in rent towards the capital of the house for 4 years into equity for him. It probs only works out at £250 a month but would be a nice start for him as he doesn’t have much in the way of savings (hes actually quite good with money but his commute costs are high and I think he sometimes over stretches to keep up with me on holidays etc even tho I don’t ask him to)

OP posts:
starstar84 · 26/04/2026 11:44

Campingkit · 26/04/2026 05:26

Presumably the Premium Bonds money is your emergency cash? I would move 20k into an ISA for a start and divert some of your long-term savings towards it.

It's good to be building up your pension but that money is blocked for 16-17 years. An ISA could grow well over time (especially S&S) and you can withdraw money if needed (cash ISA best for this) unlike your pension.

Your food & grocery bill seems very high for two adults and a baby, unless you eat out a lot.

Unless you plan on having a second child a box room is adequate for another few years yet. Would you be better off paying another few years off your current mortgage more aggressively and building more equity where you are before moving? Depends on market where you are and where you plan to move to I suppose.

I would be trying to throw another £500 per month towards it now by tightening your belt elsewhere as £1600 to £2700 is a big jump in one go.

And not quite sure about your dp's salary. You mention 38-40k now, increasing from 2027 when qualified as a teacher. But are you sure there will be that much of an increase? Wouldn't that mean extra responsibilities which may not be possible to take on right away? The first years after qualifying are pretty intense by all accounts.

Edited

Food and groceries is high, we don’t spend that much on groceries but my partner’s job is on the move all day and he has to get up at 5 and has a long day so he struggles to make himself lunch. He also has nowhere to make tea or coffee etc so that builds up. And I’ve spent half of my mat leave in cafes! So that has been a much bigger chunk.

when I go back to work it will be different and I really want to get this down. We are quite time poor and sometimes struggle to cook from scratch which means we can rely on more expensive things. But I want to get out of this habit. And give up my coffee habit!

what do you reckon is reasonable for a couple and a baby in London?

OP posts:
ArtAngel · 26/04/2026 11:48

Is your Dp's £20k pension the size of the pot or the expected income p.a? (assuming what age draw down?)

starstar84 · 26/04/2026 11:50

ArtAngel · 26/04/2026 11:48

Is your Dp's £20k pension the size of the pot or the expected income p.a? (assuming what age draw down?)

Yes expected size. And it’s 67 drawdown! Hence me saving for us both.

OP posts:
ArtAngel · 26/04/2026 11:50

WRT your retirement plans - have you allowed for supporting your Dc through Uni? It's a lot!!

starstar84 · 26/04/2026 11:53

ArtAngel · 26/04/2026 11:50

WRT your retirement plans - have you allowed for supporting your Dc through Uni? It's a lot!!

I hadn’t thought specifically of this, I guess because I just got the max loan and paid it off over 15 years.

we are saving £100 a month for her in an s&s isa, I think projected income for when she’s 18 is anything from £24-60k. So could use that?

Will also think about putting in lump sums on bdays and Christmas - ie £,200, 500

OP posts:
ComeOnJ · 26/04/2026 11:53

Partners pension is a mix of different kinds - his employer has changed their terms about 3 times in the 20 years he’s worked for them! He is not a teacher yet. If : when he becomes one he would be on their scheme. The 20k was based on his current job.

TPS will be a complete game-changer for your plans.

User88765 · 26/04/2026 11:55

Get that money out of premium bonds asap. It's ridiculous to have your money in premium bonds rather than an isa.

I don't understand why people use them. Premium bonds do not pay interest. They might (with emphasis on the might) result in you winning a small prize occasionally. In the meantime your money is losing value due to inflation and you're missing out on interest/stock market growth.

Buy a lottery ticket if you're looking to gamble.

starstar84 · 26/04/2026 11:55

ComeOnJ · 26/04/2026 11:53

Partners pension is a mix of different kinds - his employer has changed their terms about 3 times in the 20 years he’s worked for them! He is not a teacher yet. If : when he becomes one he would be on their scheme. The 20k was based on his current job.

TPS will be a complete game-changer for your plans.

I will look into it! Had heard it was good but no idea what the terms are

OP posts:
starstar84 · 26/04/2026 11:56

User88765 · 26/04/2026 11:55

Get that money out of premium bonds asap. It's ridiculous to have your money in premium bonds rather than an isa.

I don't understand why people use them. Premium bonds do not pay interest. They might (with emphasis on the might) result in you winning a small prize occasionally. In the meantime your money is losing value due to inflation and you're missing out on interest/stock market growth.

Buy a lottery ticket if you're looking to gamble.

Thank you. I do win most months, which I like. Anything from £25 to £250 (mostly around £125). I also won £6k two years ago! So I probably have a rosy view

OP posts:
User88765 · 26/04/2026 11:57

starstar84 · 26/04/2026 11:56

Thank you. I do win most months, which I like. Anything from £25 to £250 (mostly around £125). I also won £6k two years ago! So I probably have a rosy view

But it's pure luck. You do realise that. You've been lucky and its kept you in the game but £50k invested in a S&S isa would have been far more sensible.

starstar84 · 26/04/2026 11:59

User88765 · 26/04/2026 11:57

But it's pure luck. You do realise that. You've been lucky and its kept you in the game but £50k invested in a S&S isa would have been far more sensible.

The premium bonds are slightly more complex in that around £12k is mine and the rest my companies - so I would draw down if I lost my job at a lower tax rate but keep it in there because accountant advised it’s a good way to do something with money that’s just sitting there. I will see if I can invest through my limited company

OP posts:
somburd · 26/04/2026 12:05

You will be lucky to get a property in Kent for the price you are looking at.

ClaireValley · 26/04/2026 12:08

starstar84 · 26/04/2026 11:55

I will look into it! Had heard it was good but no idea what the terms are

19 years full time service = £14k a year from age 60, £45k lump sum at 60

starstar84 · 26/04/2026 12:08

somburd · 26/04/2026 12:05

You will be lucky to get a property in Kent for the price you are looking at.

Seem to be quite a few in the village we are looking at!

OP posts:
User88765 · 26/04/2026 12:08

starstar84 · 26/04/2026 11:59

The premium bonds are slightly more complex in that around £12k is mine and the rest my companies - so I would draw down if I lost my job at a lower tax rate but keep it in there because accountant advised it’s a good way to do something with money that’s just sitting there. I will see if I can invest through my limited company

You'd surely be better off switching to a business banking account that pays interest on the business balance.

It also surely means that you are paying corporation tax on any "winnings" or do you pay the winnings into a personal account?

User88765 · 26/04/2026 12:09

But in any event you can't hold premium bonds in the name of a company?

LittlePinkWeed · 26/04/2026 12:10

User88765 · 26/04/2026 11:55

Get that money out of premium bonds asap. It's ridiculous to have your money in premium bonds rather than an isa.

I don't understand why people use them. Premium bonds do not pay interest. They might (with emphasis on the might) result in you winning a small prize occasionally. In the meantime your money is losing value due to inflation and you're missing out on interest/stock market growth.

Buy a lottery ticket if you're looking to gamble.

On full holdings you probably win something nearly every month, not "occasionally". It's likely multiple small wins at a time but would total over £1k a year.

You still have the original capital, which you don't retain when buying a lottery ticket.

User88765 · 26/04/2026 12:12

LittlePinkWeed · 26/04/2026 12:10

On full holdings you probably win something nearly every month, not "occasionally". It's likely multiple small wins at a time but would total over £1k a year.

You still have the original capital, which you don't retain when buying a lottery ticket.

Look I have premium bonds. In fact we have two lots of full holdings. But the only reason we have them is that we both have maxed out pensions, maxed out isas, other shares to use our CGT allowances and a lot in savings.

The rate of return on premium bonds is below the rate the OP would get if her money was in an ISA. Ideally S&S but even a cash isa is far better than premium bonds.

starstar84 · 26/04/2026 12:15

User88765 · 26/04/2026 12:08

You'd surely be better off switching to a business banking account that pays interest on the business balance.

It also surely means that you are paying corporation tax on any "winnings" or do you pay the winnings into a personal account?

I tell my accountant my winnings so yes I guess they treat this as ‘interest’

OP posts:
Madcats · 26/04/2026 12:15

Not an issue for you at the moment, but are you likely to be getting payrises/promotions? The upper threshold for free childcare is £100k (but it is based on adjusted net income, so it takes account of your pension contributions).

You might wish to focus on using your ISA allowances (and junior ISA to help fund uni costs) in preference to your pension for a few years. It will give you a fighting fund/bigger deposit for when/if you move.

1apenny2apenny · 26/04/2026 12:27

I would sit tight and see what happens re the economy and house prices. They have dropped in some areas and I think we have difficult times ahead although if of course your house will drop as well!

Agree with others re PB, make use of tax free ISA allowance.

i would be trying to save more than £100 for my child in your position.

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