The Vault with Financielle - UNLOCKED: Why you're overthinking pensions, PLUS how to retire early

Episode Date: May 25, 2025

Send us a textWelcome to The Vault with Financielle.This week, we dive into Pensions - why we’re overthinking them; what to think about if you’d like to retire early and looking at the state pension a little too!🐝 Thanks to our partner PensionBee. They’re a leading online pension provider on a mission to build pension confidence so that you can enjoy a happy retirement.Pension saving is made simple with PensionBee - you can combine, contribute and withdraw online or from the palm of your hand with their easy-to-use app. Their retirement planning tools - like their Pension Calculator - blogs, videos and podcast - all aim to help you take control of your pension and build a better financial future. 🐝---------Connect with our Partners🫶🏼 Protect yourself and loved ones with our friends at Lifesearch✍🏼 Write a will that is tailored to you with Octopus Legacy🏡 Meet our Financielle approved Mortgage Brokers here💸 Commission-free investing with Trading 212 (capital at risk)🛒 Cashback on your shopping with Jam Doughnut (use code FINC)🐝 Consolidate your pensions with PensionBee (capital at risk)*The above are tracked links, which tells our partners we sent you and may in future result in a payment or benefit to our site.*The Vault is an entertaining yet thought provoking podcast that answers our community’s dilemmas and confessions surrounding women and money.Visit https://www.financielle.com to download our app.Listen to the podcast on:▶︎ Spotify - [https://open.spotify.com/show/73mv8JnNRNqyDRQVXxcsEN]▶︎ Apple Podcasts - [https://podcasts.apple.com/us/podcast/the-vault-with-financielle/id1732683163]▶︎ Amazon Podcasts - https://open.spotify.com/show/73mv8JnNRNqyDRQVXxcsEN]Follow Financielle for more:▶︎ Facebook - [https://www.facebook.com/financielle]▶︎ Instagram - [https://www.instagram.com/financielle/]▶︎ LinkedIn - [https://www.linkedin.com/company/financielleThe Vault is an entertaining yet thought provoking podcast that answers our community’s dilemmas and confessions surrounding women and money.Visit https://www.financielle.com to download our app.Watch the podcast on YouTube.Follow Financielle for more:▶︎ TikTok▶︎ InstagramAbout Financielle:Financielle is a female focussed finance app helping women to take back control of their money, ditch debt, increase savings and invest in their future.Recorded and Produced by Liverpool Podcast Studios▶︎ Web ▶︎ Instagram▶︎ LinkedIn

Welcome to The Vault Unlocked by Fran and Cheryl. This episode is brought to you in partnership with our friends at Pension Bee. We're going to jump straight in and I'm going to tell you that you're overthinking pensions. Lots of people do, so you're not alone, but you are absolutely overthinking pensions. And I'm not surprised because the world is shrouded in mystery, there's lots of jargon, there's lots of stress, there's lots of calculations, there's so much to think about. But one of the problems that we have found at Financial is where people overthink, they don't take action. They literally take action

because they don't know absolutely everything and they've not got absolutely everything figured out. Now it's absolutely wise to have caution. We are talking about your hard earned money. This is your money that gets locked away for a long time. There are scams left, right and centre when it comes to retirement savings and retirement pots. Everyone knows a horror story and even legitimately your money can be at risk but even with all that you're still overthinking pensions.

So we're here today in a safe space to talk pensions. We also on Instagram asked for all your weird and wonderful questions. Some are quite niche, some are not. And if I'm being honest, we got that many that I don't think we're gonna be able to get through them all. I'm gonna see how we go for time, and then it might be that we need to batch them

onto next week's Unlocked, because honestly, there were so many. We did do investing in detail in one of the previous Unlocked episodes, which is called Unlocked, why investing isn't scary and why you need to start now. So you may find it useful to go back and listen to that one, if it's definitely something that you're keen to learn more about. So first, we're going to go through five things that you need to know.

Then we're going to dive into your questions on pensions. Now when we say pensions as well, we're basically talking retirement accounts. So for all our amazing listeners in different countries in the UK, the principles are the same. We're gonna touch on a couple of specifics because we were asked about them about the UK,

but there are equivalents in your countries. So whilst the principles are quite similar, make sure that you check the specifics in your country. And as ever, I know a caveat at the end, but this is not financial advice. This is me explaining some financial concepts and giving guidance and hoping to get you closer to making a good decision for you

and your financial future. Okay, think one that you need to know. So retirement accounts, aka pensions in the UK, are just pots of money that we build up to look after us when we reach retirement age. So just think about them really as a bank account. Yes, typically they're investments, but if you picture them as a bank account,

I think that you'll be a lot more comfortable with them. Now typically, this bank account is effectively locked. It's locked up and you cannot get access to its contents until you reach retirement age. So in the UK right now, state pension retirement age is 66. You don't have to stop working then, but you can. And this is gonna increase to 67 over the next few years and it's likely to be increased further in the future.

Now state pension age is the age at which you can access the state's pension. This is the pension from the government that you get as a result of contributing enough national insurance contributions throughout your working life. For private pensions, at the moment you can access these at age 55, this is going to increase to 57 in 2028. So you're going to be able to access private pensions earlier than accessing the state pension. So we're building up this pot of money, this essentially a bank account of money that's invested and that

we hope grows during this time so that we have enough money to live off when we either don't want to work anymore or we might want to work more flexibly or part-time but we still want a guaranteed income. So when you're trying to work out how much you should have in your pension pot, one thing that you need to try have in mind as just a rough estimate is when do you expect to retire? Do you expect to retire at 57, for example, and be able to access your private pensions?

Do you plan to retire later at 67, 68, maybe older? Where you've not been drawn down out of that pension, so it's been growing and you've not been taking anything out of it. And crudely, you also have to have an estimation on how long you expect to live, which there are no crystal balls here, I know that. And when you look at, you know, a man's life expectancy

is currently at 85, it's 87 for a woman. So if you chose, for example, to retire at 57 and get access to your private pension, and obviously a decade later, you'd be able to access your state pension, you'd be wise to at least assume that you could live another 30 years. So we're trying to think of firstly,

a pot of money that will not run out for as long as we are alive. Now we might live until we're 100, so there's an element of balance here but I think it's roughly working out when you think you would like to retire and like we don't like to retire very early but at some stage we do have to put some like method to the madness and come up with a number that's right for us and quite frankly it's a bit like field but we might not want to retire early, we might want a more flexible working life, we want to keep our hand in some things, want to retire early. We might want a more flexible working life.

We wanna keep our hand in some things. We wanna keep ourselves busy. I've often heard from many, if you don't have to stay in work actually, sometimes you like doing that, but you come up with when roughly are you going to retire and how long are you going to live? There's loads of ways that you can calculate

the pot that's needed for that time. This is where people check out straight away. So it is easy to get overwhelmed. The thing I want you to take away from this is doing a little bit of planning on a scrap of paper is 100% better than doing nothing and ignoring it. At the other end of the scale, and especially for those of us

that have been building up wealth or that intend to build up wealth that have some complex needs. A financial planner can do a super detailed plan for you. They can do things like take into account the cost of your golf membership or the cost of your Wales holiday home, perhaps. What you'd like to gift to grandchildren at different times of the year. It can be super, super specific and you get what you pay for. You know, it can be expensive to get a super detailed plan from a financial planner, but that's the kind of expertise

that you're buying. They will help you come up with this figure and work backwards and help you work out what you need to contribute. But at the other end of the scale, doing nothing just means you're kind of not shooting for anything. You're not even aiming. And so there's one thing that could get you to take away.

It's that a little bit of thought goes a long way here. You are not gonna get it right. This is all forecast. This is all based on lots of what we call assumptions, but having a rough idea can really help. But actually as a minimum in the UK, you can roughly plan out what you expect to need in the future with a really good tool

on moneyhelper.org.uk, which is a government-backed pensions guidance website. If you search on the tools you'll be able to find one that asks you questions like how much gross income do you make now and then it will recommend the percentage of your current salary that most people expect to have by retirement. For example it might be 70% of your current salary now. If you think about it at that time you'll have to take into consideration whether you expect to be mortgage salary now. If you think about it at that time, you'll have to take into consideration whether you expect to be mortgage free. Will you want to travel?

How often? What will that cost? Will you have reduced travel to work costs? Can you reduce the number of cars that you have? You won't necessarily be making pension contributions. It's also worth having a think about whether you want to take a tax-free lump sum. At the moment in the UK,

you can take 25% of your pension pot as a tax-free lump sum at that minimum access age of at the moment 55, but it's gonna go up to 57 in 2028. Obviously taking that out will impact the pot of money that you need to grow to deliver you the income that you want. But basically there are tools that get you thinking about this and it really doesn't take a lot of effort

to have a little play around with it and as I said just see some initial numbers. The important thing to do here is come up with a number and aim for it especially in the absence of nothing. Now there are lots of different ways to use that number, that ideal income number in retirement to estimate how much you need in a pension pot to retire. One of the most common is the rule of 25 and the rule says that you need 25 times your desired annual retirement income to retire comfortably. So for example if you wanted £30,000 per year in retirement income if you times that by 25 it gives £750,000 so you'd need to aim to have £750,000 saved in your pension pot. Now it comes from the basis of the 4% rule which

assumes that you can safely withdraw 4% of your retirement pot each year and your money will likely last for at least 30 years adjusted for inflation. There are lots of different tools and calculators in your investment apps, in your banking apps, on banking websites. I use Pension B and they've got one. They've got a tool in retirement to show how on track you are for your desired retirement income, the kind of pot that it thinks you're gonna need. So no matter which way you come at it, I promise you having a go

is better than not having a target at all. And so if you want something simple, you take your desired annual retirement income, you times it by 25 and that's the pot you need. A little side note here that if you have an NHS pension or if you have a defined benefit pension it's obviously a bit different because you don't have that pot value as easily accessible and it's based on a lot of different calculations but what you can do is sometimes see what the income would be and you could take that

off the pot number and at least see what the gap might be if that makes sense. But quick recap for the rest of us, you've come up with the amount that you want to earn in retirement, you've times it by 25 which gives you your retirement pot goal number. But the missing piece here now is contributions and that's point two that I want you to think about. So many of you asked how do I know what to put in and there's a couple of ways that you can do this. In the UK a starter for 10 is to at least make sure that you are participating in the UK government's auto-enrolment calculations which is essentially contributing 8% into your

pension, 5% from the employee which is, and then 3% from your employer. There are some people who may be employed but aren't entitled to that contribution for a number of different reasons. They may earn less than the required amounts. They may have enough earnings but across lots of different employers. They may be a certain age.

So there are a few exceptions, but generally if you're employed in the UK, there are auto-enrollment entitlements for the individual where you contribute generally 5% of your salary and there's a contribution from the employer of 3%. Again, I'm doing high level here. There are some exceptions. It's not on all earnings.

There's lots of different calculations, but we're doing rough and ready here. If you are self-employed, whether that be self-assessment or whether that be a limited company, please have a think about at least mirroring those contributions. Now I appreciate you don't have the 3% from employer to help but you're behind and so at least looking at putting 8% of your earnings into

retirement or there-or-thereabouts will have you at least on par with someone who is employed. At least starting here make sure that you get the ball rolling with pensions. It's not scary, you make regular contributions and once you're there we can then start looking at whether that's going to be enough to achieve what you want to achieve which is the pot that we talked about. Now in most cases there'd be a gap, in most cases the auto-enrollment percentage will not necessarily get you the pot you want and so roughly we can work this out with a process of elimination. So if you go to any investment calculator you could play around with monthly contribution amounts, input a

conservative year-on-year growth percentage. I'm super conservative, I tend to put like 5, 6 percent, some people put 10, some people put higher than that but I like playing it safe. And then you stretch that over 30 years, really simple calculations, and you'll see what it pops out, and you'll be able to see that if you invested that sum of money, and it gave you that return over that number of years, what you get at the end.

So if you use an example of you started to invest 500 pounds a month across 30 years with an annual return rate of 6%. You'd be contributing 180,000 pounds, but the end balance based on that 6% annual return would be 487,000 pounds. If I wanted to increase my pot by 487,000, I could contribute 500 pounds a month to my pension

based on a 6% annual return. We're not even talking about the tax relief on that money and it's gonna help close the gap. But likewise, if I didn't need to close the gap by that much, I could calculate, oh, what if I only put £400 a month into my pension? You'd be making £144,000 in contributions, but your end result would be growth, getting you to around £390,000 in total. And so if you know what your goal pot is and you take off what you've already accumulated, that's your gap, and you can work out using an investment calculator by doing it backwards, what monthly contribution do you need to be making

to get that figure? You then look at what you're making now on auto-enrollment, and let's say through auto-enrollment, from the 8%, you're already contributing 200 pounds. So your gap's 200. And as I said, that's without any extra contributions in terms of the tax relief that government give you for investing in your pension.

But if you just treated it like a savings account, like a bank account that you're just moving that bit of money into, that can help close that gap over 20, 30 years for not always that much early on. Obviously, time plays a massive factor in compound interest and in growth of pension parts. And so, yes, the closer to retirement you are,

the higher the contributions need to be because they've not got as long to grow. But as I said, as a starter for 10, you can stick with the auto-enrollment calculations, getting you to a total of 8% contribution across the employer and the employee. You could explore what that gap is. And so then if you're in a position, especially if you do the financial

playbook and you're debt free, you've got a good emergency fund and you've got the capacity to contribute extra into your pension, you can use the reverse engineering calculation to work out, okay, what's that gap? But I'm also giving you another out. If you don't fancy doing that, these calculators are not for everyone. If you really don't want to do it and it's a bit overwhelming just increase the percentage you could do 10 percent of your gross earnings you could do 15 percent of your gross earnings as long as you're getting close to the number you require and as long as you're not overwhelmed by it that

much that you do nothing you're going to be in a much better place. That brings us on to number three, treat optional pension contributions like a bill. So it's super helpful for those of us that are employed where our employer does it for us, it's just one less thing that we have to think about when he's growing for us in the background, we're getting that contribution, but then that's playing it safe and where you need to contribute extra to your pension or to your retirement, you can do it just like a bill. Whether you pick a set percentage of your income, whether you pick a fixed amount and you automate it, you just create the direct debit and you forget about it. If you have fluctuating income then diarise for whenever your payday is, whenever you pay yourself. Just like if you put money aside for tax for example,

you need to do the same thing and you have to pay yourself, pay your pension. So many platforms like PensionBeat will let you do ad hoc payments, you don't have to necessarily do the direct debit, the direct debit is better for making sure you actually do it and getting into that I have to do it mindset. But if you want that flexibility, especially if you're self-employed, especially if you're commission based income, treating it like a bill and just getting it paid is one of the best things that you can do for your future self. This is also true if there's an earning disparity between you and a partner and there's a feeling

that the household should, you know, carry some of the financial burden of making sure that one person's pension isn't behind. It happens a lot in maternity leave. It happens a lot when women go part time or take on reduced salaries. This can be set up like a bill, it doesn't need to go into a work account, it doesn't need to be this big thing that we overthink, it can just be assessed, pick a number, set up a direct debit or set up a direct transfer and just get it going. Pension contributions should come after making sure that you've got a roof over your head and food and utilities, but before new clothes, new cars, Netflix, whatever it is.

Point number four is a little bit short and sweet. I can't remember if we went into detail on this on the other episode. But know that you can vote with your money. You can use your pension contributions, basically your investments, to reward companies that you believe not only do commercially well but do so in alignment with your principles, whether that be environmental, whether it be faith-based, whether it be that you don't want to back companies involved in arms or tobacco or whatever it is for you. You can with almost all pension providers

impact where your money's invested. It could be a particular type of plan, whatever it is. You do have options there. And so whilst I don't want to overwhelm you with another thing to choose, and you may just want to go into the default plan that is in alignment with your age and your risk appetite, it is worth having a little look at the ability

to vote with your pensions and vote for things that you stand for and invest and reward businesses with your hard earned cash that align with your values. I think the way that I've described this before is reminding you that a big part of your pension is typically made up of what we call equities, so stocks and shares. And so people and machines really and automated programs

are buying and selling stocks and shares on your behalf and they're doing so in a way that spreads risk and diversifies your pension portfolios, but also in a way that they want it to make a return. So they take your money, they buy shares in these big companies that say they're going to do amazing things, that have done amazing things in the past and that company gives you shares and takes your money and reinvests it in their business. And so if a company doesn't get investment, if it doesn't get picked,

if it's doing naughty things and no one wants to kind of invest in it, then that company is not going to do well. But the purpose-driven company's not going to do well. But the purpose driven company that you want to back and that your plan backs gets extra money because people want to be sustainable and people want to be purpose driven. And it has more capital, more cash to put into good projects and good products that might help our environment or help people or make life harder for people that don't do those things. So it's just something to consider. It may be that you consider it later. It may be that you're quite comfortable with investing

and you'd like to take more of an interest in it, but have a little look because you do have a say. Like you could have massive impact just with where your portfolio is invested. And then the fifth point before we jump into your questions is I often hear this concept, it's too late for me, it's too late for my husband, it's too late for my mom. And listen, there's some truth in the maths, isn't there?

What have we talked about? We've talked about estimating when we're going to retire. We've talked about knowing what you need to contribute to have enough in the pot to grow to the amount that you want when you retire. That is going to be driven by the amount of time that you have until you retire, the amount that you earn at your job. You know, you can't pick a 10 million pound portfolio pot if you earn 20 grand a year. It's not physically possible unless you live for another thousand years or you get a humongous pay rise. That being said,

does that mean we just do nothing? get a humongous pay rise. That being said, does that mean we just do nothing? No. For a couple of reasons. One, because something is better than nothing and closing the gap is really, really important. It's important for our self-esteem that we are doing something actively to improve our own wellbeing, improve our longevity, improve our retirement experience. And ultimately we will be growing our net worth, which is again a massive confidence booster for people. It really enhances their financial wellbeing when they can see them directly contributing to their own future.

You know, I often share my auntie's story. Here is someone that 10 years ago really didn't pay attention to pension. It wasn't a thing that our family did before that. Her mum before her didn't do it. You know, it's work, work, work, and you're not thinking about the longer term financial situation.

But when I sat down with her and I looked at firstly, grabbing all her pensions from around the world, getting them all together, understanding what she had. Firstly, that exercise was massive because she realized she actually had more than she'd perhaps thought. But importantly, we worked out the approximate gap. And the minute we'd done that exercise

that I talked about earlier, her priority became pension. She was consumer debt free, she'd never really played around with debt, and she had a good emergency fund that she built up. And had we not done that pension exercise, whenever she had potentially come into money through a bonus or through a pay rise, tax refund maybe, the focus might have been more on treating herself like she definitely didn't

see herself as an investor, quite a risk averse person, but she knew that gap and her focus in the growth stage of the playbook is to invest in things that grow her net worth and her pension was the thing staring us in the face. There was a gap we needed to fill it. She would get the contribution from her employer. She would also get the tax benefit of making that investment. And so we started that process. She set up these direct debits and was putting it in and putting it in and then she'd get a bonus once in a while and she'd put that in. And honestly, I'm so proud and we may not close that gap,

but we've done a bloody good job of trying and had we not had that conversation and that framing of this process she would be tens of thousands of pounds behind where she is. That's all well and good if you have the employment means to earn and to close that gap but as I said this is a maths game and there are some scenarios where someone might not be able to work, they may have ill health, they may have maximised their earning potential and they can't earn anymore but I think even in those scenarios just having a better feel of the numbers and knowing what is possible and contributing in some small way to your financial future is one of the most empowering things you can do and so whenever anyone says it's too late for me,

it's too late for someone else, I usually just smile and say, but why not do a bit anyway? Okay listeners, you know that here at Financial, we hold your hands through your money journey, navigating life's ups and downs. It's rare that a money journey is linear.

Big life events like babies, death, or getting divorced can have huge implications on your financial health, but at what cost? Luckily, our friends at Pension B have the answers. Their Pension Confident podcast explores all of these topics and more. Each episode dives into a key personal finance question from what's the real cost of divorce

to can you afford to have kids? The Pension Confident podcast is available right now wherever you usually get your podcasts. And remember, when investing, your capital is at risk. Now on that note, let's jump into some of the questions that you guys asked. As I said, I don't think we're gonna get through them all because we had so many amazing questions.

Some were duplicates as well, so I've kind of wrapped them together. We had a few questions around planning for early retirement. So obviously, if you are planning for an early retirement, you need to make sure that you have enough money to keep yourself going. And if you want to retire earlier than the age at which you can access your private pension,

so let's say you want to retire at 50, the rules at the moment say that you can't get your pension for years after that, you can't get access to the lump sums, you can't get access to your private pension and obviously state pensions another decade after that. So you have to come up with a strategy, an investment strategy that can help give you the assets that you need in pre retirement locations without compromising on the upside of investing in your pension especially the tax upsides and especially the employer contribution upside. So if you think typically about the vehicles or the

places that you can put money and you can invest in to help sustain you in a financially independent way where you don't have to work and your assets give you enough income. So obviously you've got your pension, you get tax relief on the way in, so you get your tax back for contributions that you make. Obviously for salary sacrifice, you don't get the tax back because you actually got the tax benefit on the way in. But essentially you get tax relief on pension contributions and then later you are taxed on the way out.

So what that means is pension income is taxable, but the thought process is most people will earn less in retirement than they do before retirement. And so it may be possible to end up paying less tax because you might drop down a tax band. And so that's pension. And as we've just said, you can't access that until the minimum access age,

which if you wanna retire at 50 is well after that. Now, similar to pension, you've also got a lifetime ISA. So that can be used either for buying your first home up to 450,000 pounds or for retirement, you can access it after the age of 60. Now this is 10 years after our target age of early retirement, but I thought we should include it anyway.

You can open a lifetime ISA between the ages of 18 and 39. You can contribute up to 4,000 pounds per year and the government will then contribute 25% of what you put in up to a thousand pounds. So max out at 5,000 pounds contribution total between you and the government per year. You could do a cash or stocks and shares ISA and there is a penalty for withdrawing before 60

if it's not for buying your first home. But alongside the pension, you do have the lifetime ISA. So aside from those mainly retirement focused products, you've got the stocks and shares ISA. There's no tax relief on the weighing because you've paid tax on that money, but it grows tax free and it can later be accessed tax free crucially at any time.

So for those people that want early retirement, it is still very important to think about your pension strategy and to make sure that you're building up a pension that can grow over a long period of time. But you would be wanting to complement that with a pre-retirement investment vehicle like an ISA, like a stocks and shares ISA. Next one down would be a cash ISA, obviously that's only going to grow by the interest rate that's set on the account that you get. And then as we work down kind of like the priority ladder, it might be things like extra investments like you might decide to invest in property. If you max out all your ICES, you may

have regular savers or regular investment accounts where you do pay tax on the growth. But ultimately that's the kind of planning that you have to do. You have to work out how much is right to divert to your post-retirement vehicles like your pensions and your lifetime ICES and your pre-formal retirement but your early retirement vehicles like your ICES. Just with everything, balance is key. I think there's other things that you can definitely do to support the early retirement dream, making sure that you are mortgage free, you might explore rental properties, you might have a business that doesn't require you to actively work in it but you can kind of

pay yourself in dividends. Lots of options but it takes that kind of strategy. Okay another question I was asked was do you trust the state pension will still be around in 30 plus years? Now short and sweet for me the optimist in me does. Obviously it's risky to be wholly reliant on state benefits and whilst for now the state pension is inflation linked there's so many unknowns that do worry me and so I'm hustling for the state pension to inflation linked, there's so many unknowns that do worry me. And so I'm hustling for the state pension to be a complete bonus for me. I do not include it in any calculations. It's something that when we're speaking to

an older member of the financial community, someone who's close to retirement, it is probably a good idea to factor that in. It's obviously closer to them receiving it. And so it's possibly okay to be presumptuous that they're going to be able to get it. It can give them peace of mind to know that that's some of the income they're gonna be getting

on top of the private pension income. But yeah, I would see the state pension as a complete bonus. And actually, I probably would be happy to be means tested. And in the future, if the state pension wasn't available for people that had pension pots over a certain amount, I think that's a privileged place to be. And personally wouldn't be something that I would be against,

but it's again, very, very personal. Next up we've got a question where someone said they had a good workplace pension or that's in a good place. They've got a stocks and shares ISA that it sounds like they contribute to as well. Do they top up with a cash lifetime ISA or stocks and shares lifetime ISA? This is someone who is age 35.

Firstly, well done on your pensions and stocks and shares ISAs, you are on it. And it's a really good idea to look at what other options you have in terms of other pots you can optimize, especially where there's money on the table. So the lifetime ISA will typically depend, as we've said a little bit earlier, if you're a first time buyer,

it could be really good to use a vehicle to help support saving up for a house deposit. If you have a house and you're not a first time buyer, then the reason to open a lifetime ISA is obviously to get access to that bonus and you're young enough that you can do it because you need to be under the age of 40 to open one up.

And because you then can't access it until 60, you've got time for that lifetime ISA to grow. And so given you're a bit of an investor and given you seem comfortable in that way and a cash lifetime ISA, I think, I've got to be honest, I don't really see the point of them because it's not an emergency fund. So it's not something you can access.

And at Fanshell, we always love to give the guidance that you should have really good emergency savings before you're doing extra investing. And so on the basis that you can't access that for another 25 years, we'd like to think that you have really good cash savings anyway. And so on that basis, if it were me, I'd be tempted to do the stocks and shares, lifetime ISA, if I was comfortable with it being locked away until 60. And then yeah, you've got a really good balance. But just remember you know given those 25 years you've got time for investments to potentially increase at a faster rate than cash would, capital's at risk and so it couldn't always go up as well as down you know that because you're already doing that kind of

investing but just for anyone else listening being aware of it. Interesting debate that one, let us know which one you choose to do. Okay, so the next question is about overpaying the mortgage versus putting more into the pension. This is technically a head versus heart debate because we could answer this with maths. And the way to think about it in the maths sense is this is about the respective returns

that you would get from doing either action. Now with a pension, you can look at past performance as a guide. It's not an indicator of future returns, but it can help to show you typically how a pension has increased over time. So you can estimate a rate of return. Now I suspect what you'd find if you look at that is that pensions and typically equities and investments have increased over time at a higher rate than a mortgage interest rate. And that's the maths question to answer.

If you have a 4% mortgage rate, are you likely, or do you think it's likely that you can beat that rate over a long period of time? You might have some ups and some downs, but can you beat that rate? Because if you can, this is a maths question. Because if you can and you want the maths answer, then the maths answer is that it makes more sense

to try and beat that mortgage rate and go invest. The reality is very different. If we think about the heart-focused answer, it's about how each of those options make you feel. Just picture overpaying that mortgage and getting rid of that mortgage, working towards being completely debt-free. It might make you feel better.

There is a guaranteed financial rate of return. If your mortgage rate is 4%, you are definitely making a 4% saving every time you make an overpayment. That's the return on the mortgage overpayment. And so that's why personal finance is so personal. And what you tend to find is people will pick what makes them feel better.

Some people don't feel stressed by a mortgage. They are much more motivated by investing extra into the pension, getting the higher rate of return, knowing that they can't get access to that growth until they're retired, but they want that bigger return. They're okay risking that they don't get that rate of return and kind of keeping the mortgage as normal. Other people are kind of, no, no, I'm doing the minimum investing.

I'm doing what I need to do. I'm then going helpful other than getting rid of this mortgage. I don't like it. It stresses me out. I want to be mortgage free. I want to retire early and not know that I've got expenses. And they lean all the way into overpaying the mortgage. And some people are in the middle. Some people have a foot in each camp,

they have an excess in their budget and they split it between extra investments and overpaying the mortgage. And people might change as well based on economic climate. So if interest rates come down really low, people are a bit more relaxed about the cost of their mortgage and they feel happier doing extra investing.

Likewise, if mortgage rates are high, it can stress people out and you just wanna overpay that mortgage because you're paying so much interest to the bank. So have a little think about how this whole situation makes you feel and I think you're probably going to know when you go what you'd like to do but it's a great question. I think it will help lots of people to picture what they would do when they get to that stage. I'm going to leave it there because we've got still a lot of questions to get through and so we'll do a follow up on another unlocked episode soon. But thank you so much for listening. If you've any comments or any questions, please email The Vault at Fanshawe.com.

Leave us some fan mail, leave us some feedback in community. But more than anything, I hope this episode helped to reduce some of the overthinking when it comes to pensions. It is complicated, it is confusing, I'm definitely not saying that but as we said at the very beginning even a little plan is a step forward and it's progress and it's better than nothing and my final point on it is a lot of people don't think of themselves as investors but if you have a pension you're an investor, you're already doing way more than you think. Just a final disclaimer The Vault Unlocked is a light hearted chat around life and money. We're not giving financial advice. Bye bye. Okay listeners you know that here at financial we hold your hands through your money

journey navigating life's ups and downs. It's rare that a money journey is linear. Big life events like babies, death or getting divorced can have huge implications on your financial health. But at what cost? Luckily our friends at Pension B have the answers. Their Pension Confident podcast explores all of these topics and more. Each episode dives into a key personal finance question from what's the real cost of divorce to can you afford to have kids? The Pension Confident podcast is available right now wherever you usually get your podcasts.

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