Should I buy to let or focus on my pension?

Chloe*, 29, lives in Manchester in a rented flat. She works as a researcher for the NHS. This is her money month…

I live on my own with my cat, Katie. I’m renting my flat at the moment and I’m in the process of buying a house (which my dad lent me £10k towards). I work in the ‘research arm’ of the NHS, travelling around Manchester (prior to Covid-19!), ensuring hospital sites get given appropriate clinical trials, get set up effectively and performance manage the trials too. I also work closely with pharma companies and universities.

I’m fairly ambitious and hope to move up a band within the next year. I’m starting a Masters this month and luckily my work has agreed to pay for this which is a great opportunity.

I’ve already owned a house in the past with my ex. I’m very money focused and over the past two years since we split up I’ve applied for many part-time jobs to try and get extra money, and have never been successful. So recently I’ve started my own floral wreath-making side hustle. I’ve successfully sold one item at a grand old value of £12! I’ve not really promoted it yet but I’ve spent about £300 so I need to get some sales in.

I hardly ever go shopping and don’t get takeaways or go out drinking much, yet every month I’m still counting down the days until payday, there always seems to be a big expense every month! I’m currently not saving at all.

The reason I’m looking for financial advice is that I’ve been thinking about my future. I’ve contributed to my NHS pension for a year, but recently found out you get penalised for taking it sooner than state pension age. I know it’s a great scheme but I don’t want to work until I’m 68! If I took my pension at 55, I’d get nearly a half-reduced pension.

I’ve thought about stopping my contributions for 5/6 years and saving as much as I can for another house deposit, with a plan to buying to let. However, I’m aware this would affect my tax band and also there’s a load of charges and fees involved. The plan would be to sell when I’m 55, which might see me through to state pension age. I’m all confused and not sure what to do next. I tried to contact a financial planner but they wouldn’t help as I don’t have any assets.


Current account: £125
Savings account: £24k-ish (house deposit, including £10k borrowed from my dad)


Monthly wage: £3,240 before tax and deductions (£38,890 per year); £2,120 per month post-deductions. I pay £300 into my pension each month.
Monthly wage post Covid-19: No change
Any other incoming payments: £0


Rent: £625
Bills: £700 (including car payment and credit card)
Other: £120/month on petrol
Splurges: Nothing, apart from £300 for the wreath-making. I also spent £800 on a previous house purchase which fell through, and £350 on this one so far.
Weekly budget: I don’t have one, although I try and keep my food shop to under £30.
What I spent this month: about £500 excluding regular bills. Dentist, car tax, and wreath making materials have come out this month, plus a cinema trip.


Student debt: I have about £23k debt from my undergrad degree. I haven’t checked in years though and the interest is kinda scary, so it may have gone up. I pay about £140 a month off.
Other debts: My credit card (£1,300 that I pay £75 a month off), and my car (PCP of about £20k, but I will hand it back before it’s due. I pay £269 a month).


What I want to save for: A house, furniture, future.
How I want to plan my money for the future: As above, considering a BTL but need to think about impact on pension etc.
My worst money habit: Spending all my spare money within a week of payday and worrying about being skint for the rest of the month
My biggest money worry: making the wrong decision now and this impacting my quality of life/retirement (or not being able to retire until I’m nearly dead).
Current money mood: 😱 🤔 🤨


1. You’re in business!
You’ve got your side-hustle off the ground, which is a major win. Next step, scale! As a wreath maker, your season is coming up but before you hit the Christmas markets and local fairs (although do sign up for those ASAP!), double-check your costs and make sure you’re turning a profit. Does £12 really cover the flowers, shipping, delivery and other costs? For further inspo, this side-hustle post might be helpful.

2. Think tax
The good news is, if your side-hustle income is less than £1,000 this tax year, then the taxman isn’t a worry. That means no need to prepare accounts or complete a Self Assessment tax return. If you do go over the £1,000 mark, you’ll need to register with HMRC, but remember, you can use that £1000 ‘trading allowance’ or your business expenses, against your income to work out your profit.

3. The B-word
If big expenses are swiping your savings with worrying predictability, it’s time to do the dirty work and set up a budget. First things first, take a couple of hours to review your spending and find a technique that works for you. The adapted 50:30:20 method is my go-to. As part of that, review those big out of the blue expenses, see what else could come up in the next 12 months and start putting that money aside.

4. The pension question
When you look at the cold hard facts and free money up for grabs, pensions are a real winner in terms of retirement planning. Pensions also offer diversification across different kinds of asset such as shares, bonds and cash. If a pension is a pick n’ mix, a buy to let is a bag of bonbons. What this means in practical terms is that a pension allows you to reduce risk as its value is determined by the value of lots of different assets, whereas a buy-to-let value rests on the value of a single asset (a house). Unless the market is in your favour at the time of retirement, this can put you in a tricky spot. That being said, property can be a way to further diversify a retirement portfolio. For more, I highly recommend this retirement planning guide.

5. Hello, financial planner
So, buy-to-let or pension? Sadly, there’s no easy answer to this one but if you do want someone to do the maths, they’ll need to dig into the details of your NHS pension. Many financial planners make their money by charging a percentage-based fee. Instead, I’d suggest finding one willing to charge you a flat fee (or even nothing for an introductory call!) Use an online tool like Unbiased to search specifically for a financial advisor who specialises in pensions and investments. They’ll find someone who fits the bill.

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