So one of my favourite monthly rituals is now adding manually to my SIPP... I've got a couple of direct debits going out every month too, but sometime every month I have a look at my monies and decide how much extra I can put in, usually it's only £80 or so after everything else, but it is in addition.....
One thing I really love is seeing that 20% extra being added on: the UK govt. adds 20% to any SIPP vests up to your annual salary, capped at £60K - I'm never gonna have to worry about that cap!
So if I pay in £80 - I get £100 added into my SIPP, if I pay in £10K I get £2K if I pay in £100K, I get £20K - so it's no small change, over the years we're looking at half a year's salary for most people if you can get to that £100K number!
It's not necessarily a major contributor to my overall retirement pot but it's very nice to see this going in...
The year before draw down... BOOST IT!
I figure that sometime in the year before I draw down from the fund, and take my 25% amount tax free, I may as well PUMP it, even if that means taking a short-term loan, it probably won't come to that as I should be able to manage this via a short-term cash transfer...
Effectively live off my savings and pump the future salary and savings if I've got them into the fund....
I mean imagine say £10K going into it in the final year, that's £2K extra, I get 20% of that back the very next year tax free as part of the lump sum, so that's a near instant £400 gain from every £10K I pump in.
- £20K = £800
- £60K = £2400
NB that's just for transferring money, almost 0 risk!
Given my finances I don't think I'm gonna have the assets to worry about transferring more than £60K a year in one go so I don't think the cap would affect me, but if that were the case, I'd just have to transfer the rest 13 months before I draw down, even more, 25 months before draw down, and so on.
The only downside to the above is the risk of transferring cash into stocks for a few months, or 13 months and so on, risk exposure goes up with every chunk of course...
If I can manage to do this with £60K a few days before draw down, then that could well be the easiest £2400 I ever earned...
I guess one other thing to factor in is any transfer costs, losing ISA benefits.... but it's certainly worth pumping in something extra shortly before retirement...