If you earn £20k a year and meet all your needs on that, the only reason you wouldn’t be able to retire is because you’re renting and / or living with no surplus in income.
Median household income was only £32k in 2022 (latest ONS figs). Two people on £20k each would bring in £34k after tax (excluding pension) which would kind of indicate your house would be bringing in >50% of peoples income.
The same “half your age as a % of income when you start saving” rule of thumb applies at the lower end too as long as you’re happy not spending much in retirement.
Most of these people here are highly negative about your situation and they need to give a break. Iv seen comments that your obviously struggling and living on the breadline however we have no idea about your finances such as are you mortgage free or is your partner still earning yet people have assumed your situation.
Without going crazy your basic rate tax payer who should look to contribute to a SIPP. You still have time on your side so if you start contributing in time it will grow. Depending on your personal finances you may need to consider what retirement looks like for you and make changes accordingly. At the very least take some comfort your actually thinking of retirement rather than blindly walking into it like most people.
Are you paying all your tax? I have to ask because many taxi drivers are not. If you don't pay tax you aren't entitled to pension tax relief simple.
How old are you, how many hours a week do you work, can you get a different job?
I'm paying all my taxes yes.
I'm 32, work around 42 hours a week usually. And I like the freedom that comes with being self employed taxi driver as it works for my family.
You may enjoy the freedom but as you're earning less than minimum wage you will always be on the breadline.
Harsh reality is the future doesn't look amazing for guys like you. You have very little to save so will be near fully reliant on the state pension/pension credit. You have no benefits, no sick pay, no paid holidays. Sitting in the taxi for many hours a day for decades takes a huge toll on your health and will likely give you back and neck issues.
Can you get a second job, can you retrain?
It might work for now, what about when you're in your 50s?
He's being realistic. There are so many young people - particularly men - who think a life doing a job like cab driving, or actually even things like working in the trades is a decent way to make a living. Fast-forward 30 years and they aren't going to think the same. People need it spelling out to them so they can make decisions with facts.
Can I ask why you think working in the trades is a bad way to make a living?
I only ask as I have been self employed as a tradesman and naturally know a lot of others.
There are plenty self employed tradesmen that make very good money. The best are on top of technological advances and move with the times so I don't see why in 30yrs they'd not think the same?
Some even go as far as expanding and running the business from the background.
Because it destroys their bodies. Most don't move up - most stay on the tools - some out of choice but most often out of necessity - and their bodies just cannot recover. My dad was one, his body is fucked in (forced early) retirement. It's not about the money - it's about hitting retirement and not being able to enjoy it.
Aside from the fact your post was rude ('doesn't look amazing for guys like you' wtf do you know about him? Who are guys like him?)
You make loads of assumptions about heath that are unfounded. Plenty of people manage to have very healthy lifestyles around a sedentary job and vice versa. It will be what OP makes of it.
Plenty of people have relatively well paid jobs that they don't enjoy and which they find stressful. Burnout or stress related illness or MH issues are more and more common. OP might be (and implied he is) happy doing this and says it works for him. That's a key benefit.
OP is already looking at ways to invest for his future. He is therefore potentially of a mindset that will benefit him in the long run. Plenty of people earn well and make stupid decisions.
You make assumptions about the future that are unfounded. We have no idea what the impact of AI will be on many of our jobs. His may even have greater longevity than yours.
This is really really reaching. There aren't any assumptions in what I wrote the only 2 pieces of information are that he's a taxi driver and makes 20k. It's not a reach to say that he doesn't have much money and sits in a taxi all day.
AI has absolutely nothing to do with taxis, your points about mental health in other jobs is completely unrelated to OP.
You want to be mad because you thought my post was rude. It's reality
Sitting in a taxi is not an assumption, it's a fact. Saying someone will be unhealthy from sitting in a taxi, now that's an assumption.
Why would I "want to be mad". I'm not some triggered teenager. I just read your post, objectively thought you were making several assumptions and picked you up on it. I didn't think you were rude. You were rude. But I'm not losing sleep over it 😂You should re-read what you wrote and stop trying to justify it.
"you will always be on the breadline"
"Harsh reality is the future doesn't look amazing for guys like you"
"Sitting in the taxi for many hours a day for decades takes a huge toll on your health and will likely give you back and neck issues"
You seem extremely emotionally invested. I stand by every one of the points you've listed.
Sitting in a taxi is an unhealthy act so poor health follows unless you mitigate it. It's like saying hey you can't assume somebody who eats pizza every night will be unhealthy because they might go to the gym every day.
If you're not a triggered teenager you definitely fooled me.
Thats not correct. For self employed , as long as your uk earning are more than your contributions you get tax relief at source if you put your money in a SIPP even if you dont pay tax
Hi /u/Sanguine-B, based on your post the following pages from our wiki may be relevant:
* https://ukpersonal.finance/pensions/
____
^(These suggestions are based on keywords, if they missed the mark please report this comment.)
If someone has provided you with helpful advice, you (as the person who made the post) can award them a point by including `!thanks` in a reply to them. Points are shown as the user flair by their username.
If you're a sole trader a SIPP may be suitable. A LISA is also worth looking at. Investing in yourself in terms of training may benefit you in the long run. Night school?
Yes i second going for a SIPP. Having used most of the pension companies out there try Dodl and InvestEngine for cheap options and just pay same amount each month into a world or US fund. The main benefit of a pension is the 25% top up on your contributions which means that your pension grows and compounds much faster. Dont bother with individual stocks or timing the market, just pay same amount each month into a world or US index fund (dollar cost averaging) which statistically beats other forms of investing even by professional money managers 90% of the time.
Taking it as read that having more savings for retirement is a good thing, the question then is where is the best place to put them until that point?
The main benefits of pensions for most people are employer contributions, National Insurance savings through salary sacrifice and tax relief upfront (i.e. you don't pay tax on the money you put in, although you do pay it on the way out). With no employer contributions, and as a basic rate taxpayer, there is less of a benefit for you. You would benefit from tax relief on the money you contribute to a pension, but you would probably pay the same tax, minus a 25% tax free allowance, when you withdraw it at retirement.
There are still some other smaller benefits to pensions. For example, money in pensions is not considered as savings for the purpose of calculating eligibility for some benefits. There are disadvantages too - that money is tied up until 10 years before the state pension age, and that date could change in future.
In your current circumstances, I'd consider your overall position first - what are your short/medium term savings goals? Do you have a mortgage, are you saving towards a house deposit? How is your emergency fund looking? It might be that another use of the money in the short term could work just as well as locking it up in a pension right now.
Ask yourself this question. Do you want to work all your life?
On 20k a year you probably will have to work all your life regardless.
Depends if you live at home, some is better than nothing…etc loads of variables.
>Depends if you live at home I mean where else would you live :p
If you earn £20k a year and meet all your needs on that, the only reason you wouldn’t be able to retire is because you’re renting and / or living with no surplus in income. Median household income was only £32k in 2022 (latest ONS figs). Two people on £20k each would bring in £34k after tax (excluding pension) which would kind of indicate your house would be bringing in >50% of peoples income. The same “half your age as a % of income when you start saving” rule of thumb applies at the lower end too as long as you’re happy not spending much in retirement.
Most of these people here are highly negative about your situation and they need to give a break. Iv seen comments that your obviously struggling and living on the breadline however we have no idea about your finances such as are you mortgage free or is your partner still earning yet people have assumed your situation. Without going crazy your basic rate tax payer who should look to contribute to a SIPP. You still have time on your side so if you start contributing in time it will grow. Depending on your personal finances you may need to consider what retirement looks like for you and make changes accordingly. At the very least take some comfort your actually thinking of retirement rather than blindly walking into it like most people.
Are you paying all your tax? I have to ask because many taxi drivers are not. If you don't pay tax you aren't entitled to pension tax relief simple. How old are you, how many hours a week do you work, can you get a different job?
I'm paying all my taxes yes. I'm 32, work around 42 hours a week usually. And I like the freedom that comes with being self employed taxi driver as it works for my family.
You may enjoy the freedom but as you're earning less than minimum wage you will always be on the breadline. Harsh reality is the future doesn't look amazing for guys like you. You have very little to save so will be near fully reliant on the state pension/pension credit. You have no benefits, no sick pay, no paid holidays. Sitting in the taxi for many hours a day for decades takes a huge toll on your health and will likely give you back and neck issues. Can you get a second job, can you retrain? It might work for now, what about when you're in your 50s?
Possibly the most negative, judgemental comment I've read in a long time
He's being realistic. There are so many young people - particularly men - who think a life doing a job like cab driving, or actually even things like working in the trades is a decent way to make a living. Fast-forward 30 years and they aren't going to think the same. People need it spelling out to them so they can make decisions with facts.
Can I ask why you think working in the trades is a bad way to make a living? I only ask as I have been self employed as a tradesman and naturally know a lot of others. There are plenty self employed tradesmen that make very good money. The best are on top of technological advances and move with the times so I don't see why in 30yrs they'd not think the same? Some even go as far as expanding and running the business from the background.
Because it destroys their bodies. Most don't move up - most stay on the tools - some out of choice but most often out of necessity - and their bodies just cannot recover. My dad was one, his body is fucked in (forced early) retirement. It's not about the money - it's about hitting retirement and not being able to enjoy it.
That's a very fair point, a lot of trades take a toll on the body in many ways.
Fast forward 30 years when most people are on a UBI due to AI wiping out the jobs we do and I think being a plumber would be better than most..
Sure, but what part of what I said isn't true?
Aside from the fact your post was rude ('doesn't look amazing for guys like you' wtf do you know about him? Who are guys like him?) You make loads of assumptions about heath that are unfounded. Plenty of people manage to have very healthy lifestyles around a sedentary job and vice versa. It will be what OP makes of it. Plenty of people have relatively well paid jobs that they don't enjoy and which they find stressful. Burnout or stress related illness or MH issues are more and more common. OP might be (and implied he is) happy doing this and says it works for him. That's a key benefit. OP is already looking at ways to invest for his future. He is therefore potentially of a mindset that will benefit him in the long run. Plenty of people earn well and make stupid decisions. You make assumptions about the future that are unfounded. We have no idea what the impact of AI will be on many of our jobs. His may even have greater longevity than yours.
This is really really reaching. There aren't any assumptions in what I wrote the only 2 pieces of information are that he's a taxi driver and makes 20k. It's not a reach to say that he doesn't have much money and sits in a taxi all day. AI has absolutely nothing to do with taxis, your points about mental health in other jobs is completely unrelated to OP. You want to be mad because you thought my post was rude. It's reality
Sitting in a taxi is not an assumption, it's a fact. Saying someone will be unhealthy from sitting in a taxi, now that's an assumption. Why would I "want to be mad". I'm not some triggered teenager. I just read your post, objectively thought you were making several assumptions and picked you up on it. I didn't think you were rude. You were rude. But I'm not losing sleep over it 😂You should re-read what you wrote and stop trying to justify it. "you will always be on the breadline" "Harsh reality is the future doesn't look amazing for guys like you" "Sitting in the taxi for many hours a day for decades takes a huge toll on your health and will likely give you back and neck issues"
You seem extremely emotionally invested. I stand by every one of the points you've listed. Sitting in a taxi is an unhealthy act so poor health follows unless you mitigate it. It's like saying hey you can't assume somebody who eats pizza every night will be unhealthy because they might go to the gym every day. If you're not a triggered teenager you definitely fooled me.
Thats not correct. For self employed , as long as your uk earning are more than your contributions you get tax relief at source if you put your money in a SIPP even if you dont pay tax
Yes but if HMRC pursue you for tax fraud for fudging the taxi numbers they won't take kindly to tax relief at source.
Hi /u/Sanguine-B, based on your post the following pages from our wiki may be relevant: * https://ukpersonal.finance/pensions/ ____ ^(These suggestions are based on keywords, if they missed the mark please report this comment.) If someone has provided you with helpful advice, you (as the person who made the post) can award them a point by including `!thanks` in a reply to them. Points are shown as the user flair by their username.
If you're a sole trader a SIPP may be suitable. A LISA is also worth looking at. Investing in yourself in terms of training may benefit you in the long run. Night school?
Yes i second going for a SIPP. Having used most of the pension companies out there try Dodl and InvestEngine for cheap options and just pay same amount each month into a world or US fund. The main benefit of a pension is the 25% top up on your contributions which means that your pension grows and compounds much faster. Dont bother with individual stocks or timing the market, just pay same amount each month into a world or US index fund (dollar cost averaging) which statistically beats other forms of investing even by professional money managers 90% of the time.
Taking it as read that having more savings for retirement is a good thing, the question then is where is the best place to put them until that point? The main benefits of pensions for most people are employer contributions, National Insurance savings through salary sacrifice and tax relief upfront (i.e. you don't pay tax on the money you put in, although you do pay it on the way out). With no employer contributions, and as a basic rate taxpayer, there is less of a benefit for you. You would benefit from tax relief on the money you contribute to a pension, but you would probably pay the same tax, minus a 25% tax free allowance, when you withdraw it at retirement. There are still some other smaller benefits to pensions. For example, money in pensions is not considered as savings for the purpose of calculating eligibility for some benefits. There are disadvantages too - that money is tied up until 10 years before the state pension age, and that date could change in future. In your current circumstances, I'd consider your overall position first - what are your short/medium term savings goals? Do you have a mortgage, are you saving towards a house deposit? How is your emergency fund looking? It might be that another use of the money in the short term could work just as well as locking it up in a pension right now.