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I'm putting 12% of my income into my pension, I'm saving for a house, and have a Stocks and Shares ISA. What else can I do?

22 December 2021

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Question by Melody

I'm 44, do not own a home, and only started a pension 2 years ago. I'm saving aggressively with 12% going into the fund until I can afford more. I've got a stocks and shares ISA that is only 6 months old, and trying to collect as much of a deposit for a small house as possible. What else should I do? A SIPP? Or a plain personal pension? Or something else?

Answered by Andrew Neligan

Hello Melody,

It sounds like you are doing a lot of the right things. The more you save the better but you need to balance your short-term needs (house deposit) with longer-term needs (saving for retirement).

For short-term needs you really want to be saving into a low-risk savings account because you don't want a stock market fall to coincide with the time you want to buy a house (and therefore have a lower deposit due to market losses).

For longer-term investing you can take more stock market risk because you afford the short-term losses in order to generate higher long-term returns, which will generate a higher pension to fund your retirement.

These two videos may help further:

'What is 'better'? a pension or ISA?'

'Do I need a SIPP?'

In terms of other things you can do:
-You can try to find ways to save more if that is possible (there may be regular purchases that you don't value as much so can forgo), - if/when you get a payrise save at least 50% of it because you are used to living on a smaller income,
- Your employer may offer salary exchange (also known as salary sacrifice), this is where you take a lower salary in exchange for higher company pension contributions. Despite having a lower salary your take-home pay can remain the same because your tax and NI will be lower.
-Also look at protecting your income in case you can't work for a prolonged period due to an accident or illness. Depending upon your employment it might be available through your employer or you can set it up privately. Critical Illness policies also provide a valuable lump sum in the event you get a diagnosis for certain diseases or illnesses such as cancer, heart attack, strokes, blindness etc.

I hope this helps.


Answered by

Andrew Neligan

Chartered & Certified Financial Planner

Typically, I work with individuals and couples who have got to the point in their lives that they have important questions about money they want answering. They may be thinking about retirement in the next 5 to 10 years but they are worried they won’t have enough so they want to make sensible decisions now. Or, they really want to retire sooner, but either they don’t know if they can afford to, or they are afraid they will make decisions that they may later regret.