Should I be more concerned about our financial future?

[Aabbaas]

I never discuss these topics in real life so would like to understand what other people’s views and situations are like.

We are 40, with a joint income of £120K. We live in London and only been home ownera for the past 2 years. It’s a small 2 bed property so hoping to upgrade to a slightly larger home in 3-4 years time, however, that will mean £££££ as we live in an expensive area.
1 school aged DC, nursery fees behind us thank god but we do pay for wrap around care.
We both have private pensions but they are not great as we only started when we were 30 and also our salaries have mainly increased in the past 2-3 years.
Our parents are home ownera but modest homes and low prices so we won’t inherit a huge amount (homes are abroad and we have siblings) in the future.

We live a comfortable life, try to build our savings back after buying a place and going through a redundancy. We also want to travel more in the future and generally enjoy the little things in life as well so can’t say we are overly frugal (but don’t live above our means, for example drive an old small car, workout at home, try to cook meals to take to work etc).

Are we doing enough? Sometimes I worry a lot. I don’t think our jobs will see us working until our 70s (private sector, a bit of an ageits industry)

in your situation I would focus on long term saving rather than getting a bigger house, given you don’t think you’ll be employed into your 60s. I would consider stocks and shares ISAs as well as pensions, which will give you more flex about when you take income from them.

I don't think anyone can say without knowing the exact figures.

However, everyone ideally needs an emergency fund of 3-6 months salary/expenses before anything else.

And then assuming you will be mortgage free by retirement age, how much will your outgoings likely to be? If you continue this rate of pension contributions until retirement will you be able to afford your outgoings. If you started at 30, you might struggle a little if you are making low contributions.

The big thing that stands out to me, is that you are going to take out quite a large mortgage in the next few years, with a relatively short time to repay before drawing a pension. That could really scupper your retirement planning.

Once my emergency fund was topped up, I'd ensure that I was driving more money into my pension making the most of tax relief and employer contributions. Once my pension was a bit healthier I'd then review the move and whether it makes sense finacially.

Assume you don’t intend to have more DC - maximize pensions and enjoying your life.

Why get as bigger house only to downsize later.

We are doing more and worry...

You are doing enough to be sensibly prepared. You need to enjoy life for now too, otherwise that could also be your biggest regret.

You’ve got a 2 bedroom and 1 child. Is upsizing really necessary or is it just nice to have. Ie have you really considered how thin you will spread yourself now and future self financially in that process. Are you willing to sacrifice holidays for it?

If you receive an annual pay rise, try putting an additional 1% every year into your pensions. This way it doesn't feel too painful but over time the cumulative benefits increase.

Have a look for the Financial Flow Chart, I can’t do links but it is easily found.
It starts with emergency fund of a few months expenses and gives steps to follow.

It is quite common on here for high earners to find themselves in a pickle as they spend all their income, thinking they can easily save next months salary, but of course it is already committed.

And MSE is always worth a look, their forums have very knowledgeable contributors who share this very freely

Re the bigger house: our home is very small and there are aspects of it that we can’t change that bother us. It was always meant to be a comprimise for a few years. We will need some more space as DD gets older. I am not saying a huge house, just some wxtra living space as it’s really, really tiny.

I haven’t included bonuses in the figures, these arw about £10K a year pre tax and itMs usually what we use to cover holidays (we are not from the UK so we also travel back hone frequently to visit elderly parents).

This is also what I think. We are not extravagant. I buy most of my clothes on vinted, we drive a very old car, I workout at home. But I also want us to enjoy our life a bit so (modest) holidays, family days out and eating quality food for example are areas in which we spend more.

We have an emergency fund that covers us for about 3-4 months of total expenses. We are working on rebuilding that as our savings are lower due to the fact that we have bought this place, redecorated it and a few months later one of us went through redundancy sadly.

Yes. I have just got a £5K payrise and once we have revamped our savings I aim to increase pension contributions