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Pensions - how prepared are you for retirement? Do you know how much you're likely to have to live on?

(135 Posts)
littleredsquirrel Mon 09-Dec-13 13:08:11

Just curious really. I am currently trying to plough my way through all the paperwork to work out what my likely income levels will be when I retire.

I have a pension which I paid into for ten years but nothing being paid in at the moment. Trying to work out whether its worth putting more in or look at other forms of investment.

Currently my pension fund is projecting I'll have 24k pa (or £14k in real terms taking inflation into account.). I have 20 years to go if I want to retire at 60. Looks like we'd definitely be selling the house!

What arrangements have you made for retirement?

misscph1973 Mon 09-Dec-13 13:13:10

Not much! I had a a pension when I was a teacher, only for 5 years, and prior to that I was a student and didn't pay into any pension. I have been self-employed since 2008 and I haven't yet started paying in again, although I have promised myself I must start it up again this year where I turned 40. So far I am considering a cash ISA as I haven't got much faith in investment pensions. Any input is appreciated.

Am 55 and see a lot of old people so pension planning quite important to me.

I have a pension I pay into monthly but it's nowhere big enough Definitely plan to downsize and live on the house (luckily in South East and no mortgage).

DP has NHS final salary type pension but still has 17 years to go before he can retire so very hard to predict what that will actually be worth.

I think at the moment if I had a mortgage I'd be concentrating on paying that off rather than investing in a pension plan, given my house is part of my pension planning.

I'm just sorting out mine at the moment, as I have 3 funds floating around from previous employers and have just set up a 4th with my current employer. The combined transfer values of my funds are currently approx £40k (I'm 35), and I will be paying in around £300 per month going forward. I have no idea what this will give me though when I retire at (hopefully) 60, or any idea how to find this out easily.

£14kpa sounds loads though, if no mortgage or childcare to pay?

Beastofburden Mon 09-Dec-13 13:21:44

I have a mix of old defined contribution schemes from my first career and a defined benefit scheme from my second career. I have worked out that between us we will have roughly half what we get now. Given that we earn the same, and my salary goes on thi hs that will have stopped by then (mortgage, savings, care for my disabled son) I think we will be in equilibrium, as long as we both hang on in there and work until 67.

Retiring as early as 60 would be fab but not affordable I think.

Beastofburden Mon 09-Dec-13 13:24:18

Woodburner, your dormant schemes will write to you once a year with a statement of what they will be worth. Your current scheme you can ask them for a projection. Don't forget to add in the state pension.

People can be tempted to bring all the schemes together to keep it simple, but you lose a lot of money to fees that way, be careful.

Beastofburden Mon 09-Dec-13 13:28:37

If I had a poor pension I might join the grey army of people who buy a house or flat and let it out. As long as you use a reputable agent to make sure it's all managed to a good standard, and you have some spare cash for repairs when they are needed, the monthly rental on a home will always keep pace with inflation, I would say, and give you an income you can live off. But it's not money for old rope, you need to give them fair value for money in terms of repairs, gas certificates and so forth. And you need proper contracts and references etc. I would always use an agent personally, even if I was retired.

VivaLeBeaver Mon 09-Dec-13 13:36:43

Houses are a lot of hassle. I've just inherited one and have been thinking about keeping it and renting it out for an income and future pension. By the time you've paid tex on the rental income, repairs, agent fees, risk having unlet periods, capital gains tax and estate agent fees if you do need to sell I'm really not sure about it.

I'm thinking of selling it and trying to invest the money instead.

I've got a private final salary scheme which will pay out the equivalent of 1.5k per annum at today's rates when I'm 55. I'm now in the nhs defined benefit scheme. No idea how much it will be but I won't get it till I'm 67 at the earliest.

They are all stakeholder ones, therefore there aren't massive fees to transfer, I think this was one of the rules when the Government set up stakeholder ones. I've had advice from a FA about combining them, he suggested I sort out the transfers myself rather than pay him money to fill in a couple of forms!

Meglet Mon 09-Dec-13 13:44:44

I'm not sure blush. I have a few years of local government pension, a pension with my current employer and a small private pension I've been paying £10 a month into for over 10yrs now.

Maybe I should sort this out over Xmas. I'm nearly 40 so I should know about these things.

Beastofburden Mon 09-Dec-13 13:47:20

Viva, agree houses are work- Definitely worth involving a proper agent. But I think it's also a fair bit of work investing in the stock market, and that's taxable too.

True that a big disadvantage is you can't realise a few thousand if you need it- you either sell the whole thing, or keep the whole thing.

littleredsquirrel Mon 09-Dec-13 13:47:42

Misscph I'm in exactly the same position. I am self employed and pension slipped to the bottom of the list of priorities (hence the sudden flurry of activity to try to get it back on track again.

I would agree with vivalebeaver that property is a lot of hassle. Lots of people forget about capital gains tax completely and assume that any gain in property value belongs to them. Although I think (but might be wrong) that if you buy an investment property and then ultimately downsize and move into that property then since its then your principal dwelling the capital gains tax might not be payable. Would have to look into that in more detail though.

I agree that £14k doesn't sound impossible to live on but DH's pension is crap and so that's unlikely to pay out much. Also depends on how long the DCs hang around for!!

CogitoErgoSometimes Mon 09-Dec-13 13:48:24

£24k sounds pretty chunky to me!!! I'm still +/- 20 years off retirement and my fund projections aren't in that zone yet. However, the house is fairly expensive and I have ideas that I'll downsize to a luxurious flat to see out my twilight years, see DS set up with a place of his own.... and blow the rest on cruises. smile

Beastofburden Mon 09-Dec-13 13:49:23

Viva, if its a defined benefit scheme you have a defined benefit, ie, they know how much it's going to be, what you cant be sure of is how much ot will cost you. Probably based on your years of service by 67 and you salary, either now or career average. There will be a calculator on their website.

Pagwatch Mon 09-Dec-13 13:51:16

Pensioned up to the eyeballs. Plus ISAs and investments. The dc all have pensions started already.
It's dull but it's important to me.
When my dad died I paid off his debts and help support my mother. I would never leave my children in that position when I have the good luck to be able to make provision.

Spherical Mon 09-Dec-13 13:52:19

Don't forget to write to previous employers with your new address if you move so that they notify the right person to send you the statements that beastofburden mentioned.

Beastofburden Mon 09-Dec-13 13:56:02

Tiny bit of capital gains advice in general terms here.. I think it is still up to date but do check this if you intend to act on it.

If you have two houses, you need to tell the tax man which is your main residence. Assuming you did that, and the first house wasn't let out etc and you didn't do anything else funny, you sell your first house and there's no tax.

You move into the other house and tell taxman that its now your sole residence.

If you sold that other house, there would be some tax due. They basically take the profit and divide it by the number of years you owned it. The years it was your principal residence don't count. Some other years don't count, and there are various letting reliefs, annual reliefs, etc.

However, none of that matters until you sell it. Dying is not a chargeable event for CGT. If you live in it till you die, it's just subject to inheritance tax, which it would have been anyway.

Grennie Mon 09-Dec-13 13:56:44

I have been paying into a public sector pension for 25 years. It will give me a pension of £12k a year. But the retirement age has now been changed to 67 years of age. I am not sure if starting out again, if I would bother paying into a pension at all.

MoominMammasHandbag Mon 09-Dec-13 13:58:00

At the moment, £100,000 of pension fund seems to give you about £4,000 to £5,000 of pension fund. Depending on how good an annuity you can buy, how early you buy it etc.
You've done really well squirrel to get a pot of £300,000 envy

Beastofburden Mon 09-Dec-13 13:59:23

Grennie, I don't think they can change your prior benefits, just your new ones. So check- you may the right to take your existing pension earlier than you think.

MoominMammasHandbag Mon 09-Dec-13 13:59:47

Sorry, I mean £4,000 £5,000 of pension income per year.

CalamitouslyWrong Mon 09-Dec-13 14:06:36

I've got a final salary scheme, but it need to work for at least another 35 years to access it (probably more, as they keep putting the state retirement age up and my retirement age is tied to that). And by then they'll have changed the terms and conditions so I'll probably end up with a shiny button and a Mars bar each month in retirement. DH has the same pension, so maybe we'll have two buttons and a Mars bar each.

And no state pension, because I am 100% sure that there will be no universal state pension by the time they eventually decide to let me retire. My button and mars bar personal provision will disqualify me from state help.

littleredsquirrel Mon 09-Dec-13 14:09:48

Pagwatch thats interesting about childrens pensions. I was looking at that too and the website I was on made it sound like a very good idea. They get a 20 percent bonus on top of the investment and 18 years of additional growth. Does your scheme require hands on management (that's the bit that scares me)?

Cogito £24k does sound fine but on my pension providers website it gives you two different figures. One gives you the projection in actual terms (£24k) and the other gives you the figure in real terms taking inflation into account £14k. Not quite so good.

Yes, the £140 flat rate thing sounds good - I have 18 years contributions already, so I don't have to work for too many more years to get the whole lot - and I will be receiving CB for a child under 12 for the next 11 years whether I'm working or not, so I guess I'll get a full state pension - however, I too believe it will not exist when I get to 67 and 10 months, which apparently is my current retirement age...

littleredsquirrel Mon 09-Dec-13 14:14:31

Moomin my pot is currently just over £152k but I have another 20 years (of growth hopefully!) to go.

I am lucky in that I was a high earner and paid in 10 percent of my salary for ten years. Employer then paid in 6.5 percent too.

Now I'm self employed I obviously have no employer contributions and since my income fluctuates its tempting just to keep the money out and pay down on the mortgage instead. I also understand mortgages (unlike pensions!!)

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