‘Can I be self-em­ployed and re­tire early?’

The Daily Telegraph - Your Money - - INVESTING -

sure what to aim for,” he said. “Ups and downs in my in­come mean it’s hard to know what I can save. I in­vest £200 in it each month but this could fall if I have a drought on the work front.”

While things are good Mr Dodsworth is also putting £400 each month into his stocks and shares Isa, where he has £33,000. Ex­tra cash goes into a Life­time Isa, now with £10,000.

As a new free­lancer his tax bill is as yet un­cer­tain, but he ex­pects it to be at the ba­sic rate of 20pc.

He said: “Once I know my taxes for the year in De­cem­ber I can make sure I have those funds and then see what I’m able to put into the Isa or Lisa be­fore the tax year end in April.”

Sen­si­bly, Mr Dodsworth has put £4,000 in a high-in­ter­est cur­rent ac­count as a rainy-day fund to cover the fam­ily’s ex­pen­di­ture for around two months. He and his wife save in Isas for the chil­dren but he doesn’t have life cover or in­come pro­tec­tion.

Mr Dodsworth en­vis­ages a fu­ture that is mod­est but com­fort­able: “I’m not a big spender. My TV is from 2007 and I’m not likely to re­place it un­til it burns out. There are a few mi­nor im­prove­ments to make to the home, and later I’d like to re­place the con­ser­va­tory. We live near the Nor­folk coast and spend fam­ily time on lo­cal day trips, so hol­i­days abroad aren’t a big deal now but it would be nice to do one ev­ery cou­ple of years.”

An­drew Pen­nie, of spe­cial­ist ad­viser In­tel­li­gent Pen­sions:

If you’d like to be con­sid­ered, please email [email protected] tele­graph. co.uk with the header “Give me a Money Makeover”, pro­vid­ing the fol­low­ing in­for­ma­tion:

Your name, age and tele­phone num­ber (we will not share this with any­one);

Your main fi­nan­cial goals (as much de­tail as pos­si­ble), de­tails of any debts (in­clud­ing mort­gages) and how you would de­scribe your at­ti­tude to in­vest­ment risk;

Your cur­rent in­vest­ments, in­clud­ing cash and prop­erty.

You must be will­ing to be pho­tographed for the ar­ti­cle.

April Ritchie, of wealth man­ager Mat­ti­oli Woods:

Re­tir­ing early is a nice as­pi­ra­tion. Mr Dodsworth’s wife is still a mem­ber of the Lo­cal Govern­ment Pen­sion Scheme (LGPS) so they should save via ad­di­tional con­tri­bu­tions to that rather than the Lisa, as it is more tax-ef­fi­cient. This type of pen­sion gen­er­ally pro­vides a guar­an­teed in­come at re­tire­ment, which is hard to find these days, and in­creases in line with the cost of liv­ing. As a for­mer mem­ber of the LGPS, Mr Dodsworth also en­joys these ben­e­fits. If he trans­ferred out he would lose valu­able guar­an­tees.

Mr Dodsworth should save as much as pos­si­ble into his Sipp, putting £400 per month into this pen­sion pot and £200 into his Isa. Tax re­lief on pen­sion con­tri­bu­tions means sav­ing £400 would put £480 per month into the Sipp.

Free­lanc­ing as a pho­tog­ra­pher mixes work free­dom with fi­nan­cial worry, writes ‘I’m con­fused with all the in­for­ma­tion about how much to squir­rel away’

As he’s look­ing to re­tire in 22 years’ time, this would mean con­tri­bu­tions of £126,720. As­sum­ing 4pc growth, this would pro­vide a fund of around £205,000 by age 60. Con­verted into an in­come of 5pc, it would pro­vide around £10,000 a year. The fam­ily must de­cide if they could live on that.

Mr Dodsworth can­not use his Lisa to fund a first home pur­chase and must there­fore hold it to age 60 to avoid any penalty and re­ceive the Govern­ment’s 25pc bonus. In the mean­time he could re­pay his home im­prove­ment loan by tak­ing money out of his stocks and shares Isa, free­ing up cash for ex­tra con­tri­bu­tions to help the fam­ily reach its fi­nan­cial goals.

Mr Dodsworth could pay off his mort­gage by the time he turns 60. But as he’s self-em­ployed and has a young fam­ily, he may want to con­sider a fixed-rate deal for the next few years. It’s not easy to achieve all your goals and ob­jec­tives at once. Plan­ning is es­sen­tial to re­duce that feel­ing of be­ing twisted in the wind.

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