pension options

[mrdonuts]

how to build a pension of £25k a year when contracting is likely to have gone the way of the dodo in the next 18 months so need to build it with contractor earnings in this period

the stock market has been essentially flat for the last 12 years so is investing into a SIPP worthwhile?

do you instead try and start/fund a plan b

do you stash the cash and then try and move somewhere with a low cost of living upon retirement

get some BTL leverage and hope the arse doesnt fall out of the property market

whats the best option/mix or are there some options i have overlooked

[MarillionFan]

how to build a pension of £25k a year when contracting is likely to have gone the way of the dodo in the next 18 months so need to build it with contractor earnings in this period

the stock market has been essentially flat for the last 12 years so is investing into a SIPP worthwhile?

do you instead try and start/fund a plan b

do you stash the cash and then try and move somewhere with a low cost of living upon retirement

get some BTL leverage and hope the arse doesnt fall out of the property market

whats the best option/mix or are there some options i have overlooked

1) Trade the stock market up to your capital gains allowance.
2) Set up a few little Plan B's - Web Business/Sell Online/Mail Orders/IT Services
3) Put cash in high paying bonds and use up your ISA allowance each year
4) Buy a BTL property
5) Carry on contracting.

Piece of pish.

[milanbenes]

question is, firstly the fundamentals

1, sit down and write down what your operating costs would be per year when you retire, that means, house - heating - lighting - insurance (assuming mortgage paid), car payments/depteciation + running costs, food, holidays, clothes, children etc, plus extra-ordinary costs

this is a very interesting exercise, I did it 18 months ago, once you've got the yearly costs on paper, then you can play with the numbers and see which item is the highest percentage of the total etc and where if needed you could shave extra costs

for my exercise I did a very conservative estimate ie with higher costs, eg new (decent) car every 5 years, decent family holidays 2 x a year etc, budgeted a lot for diesel etc

so immediately, I could see cost reduction potentials with the car etc

so as a result of item #1 you know your best prediction of annual running costs

then,

2, calculate the total £££ needed for retirement fund


dependency,


you need to know when you want to retire

so if we say you want to retire at 55, and you expect to live until 90 then you will
need....

90 - 55 * (the answer from item #1) = Something To Chew On

good luck

I've done mine


Milan.

[mrdonuts]

thanks milan thats where the £25k pa comes from

[SimonMac]

I don't think there is a hard and fast answer, my opinion is its probably best to do a little of most of the options you suggested to give a balanced portfolio, with low and high risk. I am fortunate that I bought a house just before the housing boom so even with a massive crash and the time till I retire I think its the best option to throw as much money into paying off what's left of the mortgage and going the letting route

[milanbenes]

I don't think there is a hard and fast answer, my opinion is its probably best to do a little of most of the options you suggested to give a balanced portfolio, with low and high risk. I am fortunate that I bought a house just before the housing boom so even with a massive crash and the time till I retire I think its the best option to throw as much money into paying off what's left of the mortgage and going the letting route

do you mean your pension fund will be to sell your house and live in rented accomodation and spend / live off the difference ?

Milan.

[MarillionFan]

Print

And when is the expected age at which to retire these days?

[milanbenes]

from your calculations when will you be in a position to choose how you spend your days ?

Milan.

[swamp]

... contracting is likely to have gone the way of the dodo in the next 18 months

What makes you say this?

[nomadd]

how to build a pension of £25k a year when contracting is likely to have gone the way of the dodo in the next 18 months so need to build it with contractor earnings in this period

So if you expect contracting to be dead in 18 months, why lock away £25k you just might need? I expect contracting to at least be around another 5 years (so I can retire. ) Or maybe you meant years?

the stock market has been essentially flat for the last 12 years so is investing into a SIPP worthwhile?

Yes. For the tax breaks. And companies still pay dividends, even if share prices are static. But such investments should be viewed as long term. I'm in a spread of low cost index trackers.

do you instead try and start/fund a plan b

Your call. But if done badly, you could lose your cash far faster than the stock market.

do you stash the cash and then try and move somewhere with a low cost of living upon retirement

You need a mixed investment strategy. Including the SIPP. You really do need to research your options and match them to your risk profile, timescales, and eventual aims. BTW, a pension of £25k a year would need a "pot" of roughly half a million pounds with current annuity rates (and even then we are talking rates for a 60-65 year old, not a 50 year old.) I've not got enough time left to build that, so I'm just "saving" a lot outside my pension. EDIT: And planning to retire somewhere much cheaper than London, where I presently live.

get some BTL leverage and hope the arse doesnt fall out of the property market

Very, very risky strategy in the current market. Opinions vary. Mine is: avoid.

whats the best option/mix or are there some options i have overlooked

A huge number of options. But, as has been posted: SIPP, ISA, ready cash in decent accounts, leave some in the company account, and maybe feed a little into a Plan B. Above all, don't lose sight of the fact that contracting is still easy money - so keep you skills up-to-date and at least some of your fingers in that pie.