Getting wobbles at 45

[SueEllen]

Can someone pass him a bigger spade so he can keep digging please?

Nah.

Just sit back relax

and...

[Whorty]

Honestly, he’s 45 and shouldn’t be worrying about his pension, especially since I’ve just demonstrated how he could fund it in around four years.

As you lot keep telling me how much cleverer you are than me you should be able to do it even quicker.

What a bunch of Negative Nellies!

To even write that you either know nothing about saving for your retirement the most tax efficient way, or you are trolling.

Plus, if the OP had the day rate to do this, do you not think he'd be doing it already and be mortgage free?

Nothing negative fella .... just good financial planning.

[Gibbon]

Hi all, first time poster. I’ve been contracting as a software engineer for the last 14 years with back to back long contracts so successfully I’d say. Only in the recent few years have I started to get the bigger rates and as such only just starting to be able to afford to save and put proper money into my pension. Having stretched myself probably too far in younger life with big mortgage and kids, plus a low earning wife. My plan was always to get the mortgage done which will be in 7 years and then really ramp up pension etc until 60s (65 more than likely). But I’m getting anxious as to if this was a massive mistake, is the idea of contracting on similar rates for the next 15-20 years a sensible plan. Or should I look for a sunset permie job and reorganise finances to afford the rate drop? Must be an age things as losing my bottle a bit.

Don't panic, there's no need at the moment. First some house keeping. Is your wife up to date with her own NI if not pay it up. Is she in a pension however small? If not get her to opt in. Every little helps, 2K a year is 2K to spend on treats.

If you're both up to date with NI then currently your joint state pension is worth @ 19K. To have a moderate retirement you need @33K as a couple. Doesn't look so bad now does it?

The other thing to remember is you will spend less as you age so you can front load the amount you take from whatever you have saved.

As for contracting, well I'm 55 and having a bit of a renaissance, my client effectively reskilled and tooled me during Covid as I couldn't go on site due to been CEV (Corporate rules not national). Gone from deep embedded to GUI space invaders! You don't know what's around the corner, as they say adapt and survive.

Keep your nerve!

If— by Rudyard Kipling | Poetry Foundation

[hugebrain]

To even write that you either know nothing about saving for your retirement the most tax efficient way

Is it to wait until you are forced into an “inside” / permie job and then pile whatever you’re allowed into your pension via salary sacrifice - stopping when it looks like you will hit the lifetime limit?

Not clear if you can get tax relief on your whole salary, on half of it, or 120,000. One of you geniuses can no doubt enlighten me.

[Whorty]

Is it to wait until you are forced into an “inside” / permie job and then pile whatever you’re allowed into your pension via salary sacrifice - stopping when it looks like you will hit the lifetime limit?

Not clear if you can get tax relief on your whole salary, on half of it, or 120,000. One of you geniuses can no doubt enlighten me.

If you don't now what you're talking about, why are you trying to advise someone with total rubbish?

We don't even know the day rate the OP is on, so why do you keep saying to drop 120k into a pension each year? You're somehow thinking he has this 'spare' after all his normal spending (and tax etc) when clearly he spends to his limit already.

Or are you just being an idiot on purpose?

[hugebrain]

If you don't now what you're talking about, why are you trying to advise someone with total rubbish?

We don't even know the day rate the OP is on, so why do you keep saying to drop 120k into a pension each year? You're somehow thinking he has this 'spare' after all his normal spending (and tax etc) when clearly he spends to his limit already.

Or are you just being an idiot on purpose?

Not each year, just if he screws up and has to take an inside IR35 contract for a while. He’s already said he’s getting higher rates and has spare money. This will tide him over while he’s forced to slap some money in his pension to stop the public sector scummers from stealing it.

He’s on a good rate and making extra money from the negative real interest rate he’s paying on his mortgage.

No problems at all.

[hobnob]

The point is that "higher rates" and "a good rate" are subjective. E.g. if you're currently on £200/day, going up to £400/day would be amazing. If you're currently on £800/day, going down to £400/day would be disappointing.

[Whorty]

The point is that "higher rates" and "a good rate" are subjective. E.g. if you're currently on £200/day, going up to £400/day would be amazing. If you're currently on £800/day, going down to £400/day would be disappointing.

Don't confuse him ... he thinks everyone is on £2000 a day, just like he is

[Whorty]

.. just if he screws up and has to take an inside IR35 contract for a while.

Why is an inside contract necessarily a screw up? Without knowing the rates we can't make that judgement

He’s already said he’s getting higher rates and has spare money.

Isn't everyone getting higher rates? Is his rate increase higher than inflation?

How much spare money does he have? £10 a week? £1000 a week?

This will tide him over while he’s forced to slap some money in his pension to stop the public sector scummers from stealing it.

Dropping money into the pension pot is always a good idea. You get free money off the government. Up to 40% free money. Everyone really should be doing this from the first job until the last. Unless you don't like free money?

He’s on a good rate and making extra money from the negative real interest rate he’s paying on his mortgage.

You don't know this. You have no idea what his day rate is. You have no idea what his monthly spend commitments are. You don't know the size of his mortgage. You don't know the type of mortgage he has or the interest rates he is paying.

At the moment yes, his mortgage interest is lower than inflation, but if he's not doing anything productive with that extra cash (if he has much, we don't know) then the cash will just be losing value sitting in the bank.

No problems at all.

I think I've highlighted your problems above fella. Lack of thinking.

[Whorty]

Is it to wait until you are forced into an “inside” / permie job and then pile whatever you’re allowed into your pension via salary sacrifice - stopping when it looks like you will hit the lifetime limit?

Not clear if you can get tax relief on your whole salary, on half of it, or 120,000. One of you geniuses can no doubt enlighten me.

Use Google. It's very clear what the annual allowance is. Clue, it's nowhere near 120k