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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?

GentlyGentlyOhDear Mon 09-Dec-13 14:16:20

DH and I are both 29 and neither of us have a pension - I'm studying and SAHM and he works FT.
No idea what would be the best option for us. Are private pensions any good?
His company don't provide one but they suggest one. Need to find out really if there are company contributions.
We are due to pay off mortgage (assuming we don't move!) in 20 years so that's one good thing I suppose.

littleredsquirrel Mon 09-Dec-13 14:17:53

Beastofburden so the tax efficient thing to do with property investment is to buy a property you'd be happy to downsize to and live out your days there having made some money from the sale of your previous home?

littleredsquirrel Mon 09-Dec-13 14:19:12

DH keeps saying we'll live on the proceeds of the house but the problem with that is once the money has gone its gone.

Beastofburden Mon 09-Dec-13 14:22:37

I believe so, little but I should emphasise that it is some years since I did tax advice professionally, so before you did that, you ought to doublecheck that its still true. I'm not allowed to give financial advice to people I don't know, as I don't know other things about their situation that might be relevant. It's like medical advice on MN- happy to give you the thought but please check with your GP smile

milk Mon 09-Dec-13 14:23:39

Not at all blush

CreamyCooler Mon 09-Dec-13 14:23:48

I have a final salary one which is 6/60ths of 60k, a pot with 150k, a pot with 120k, a small another small pension which will be about 1k a year. They have 13 years to grow and I'm hoping to have around 25k a year (dont know how to work it but hoping). If the pots don't do well or something goes belly up the plan is to downsize to a smaller property or cheaper area to free up some money.

Grennie Mon 09-Dec-13 14:25:59

The problem is for most people, you have to save an incredibly large amount of money to be able to have a decent pension.

littleredsquirrel Mon 09-Dec-13 14:31:27

Its also very difficult to work out what you'd even need in retirement.

I guess initially you look at current outgoings and strip out mortgage (hopefully) and any other outgoings like things connected to DCs, work related expenses such as travel to and from work that you don't get back. Then look at what's left and see what percentage of that you could realistically live on.

Indeed - I am paying 12% of my salary at the moment, with 2% employer contributions. This will rise to 6% employer contributions next year, but even with 18% of my salary going in, I'll be lucky to retire on half my current salary. And that's if I keep working, I work 4 days a week with 3 small children and it's killing me at the moment. Otherwise DH and I will have to work out another plan...

If I contribute nothing more, the calculators online reckon I'll have about £80k pot - which won't buy much...

Pagwatch Mon 09-Dec-13 14:34:22

We don't manage them littlered - we just chose products with good reputations. But we do have a financial advisor and an accountant.i would be anxious about chosing on my own. I am really rubbish at all that stuff so I get good advice and get it double checked.

Beastofburden Mon 09-Dec-13 14:35:44

That's roughly what I have done. Essentially, my salary goes on things that will stop by then, and the balance we save, so we are already living off our pension, IYSWIM, because together we will get what DH earns now.

A good argument for downsizing is that in retirement you will be home all day, so you will need to heat the house and provide lunch as well as dinner every day.

Physical frailty can increase and that's expensive, so it is almost as important, I would say, to keep very active in your 50s and 60s - this from someone who hates exercise- so you can manage without domestic help and mobility aids for as long as possible.

littleredsquirrel Mon 09-Dec-13 14:36:49

Hmm I've just looked at a website called the moneyadviceservice which has a pensions calculator and it suggests that standard life's predictions for my annual income are wildly optimistic hmm

Dilidali Mon 09-Dec-13 14:37:32

I have a private pension with Legal and General since... before time, really. I didn't transfer it to the new employer, I just left it there. Should I pay into it? A bit like a mini savings account? I can't close it and it would be a hassle to add it to existing pension etc. would it make sense to continue it, dies anybody know?

Beastofburden Mon 09-Dec-13 14:41:10

Dilidali, I guess you should ask both providers to give you an estimate of what you would get from paying additional voluntary contributions. But if your current employer would match any additional voluntary contributions you make to your current pension scheme, you should put your money there instead, because that doubles your money before you start. And check that both would be tax deductible.

littleredsquirrel Mon 09-Dec-13 14:42:25

As you can see Dilidali I know very little about pensions but I would have thought you're better to increase your contributions to your work pension so that your employer's contribution also increases (unless you're already at the maximum employer contribution).

VivaLeBeaver Mon 09-Dec-13 14:44:13

Our current bills a month not inc mortgage, food or petrol are £600 a month.

So that's council tax, utility bills, car insurance, home and contents insurance, dog insurance, life insurance, phone, cable TV, Internet, mobiles. They're not all essential I guess and when I'm retired I won't be paying life assurance and maybe I won't have a car so could get the bills down a bit I'm sure.

So if you add another £400 for food I reckon 1k a month to live off would be doable. It wouldn't be cruises and living it up but it would be warm and food to eat.

Oh, I'm also assuming that there will be no inheritances to come. Friends of mine have retirement plans that appear to hang on inheriting money, without kind of realising this means their parents have to die...

Beastofburden Mon 09-Dec-13 14:48:26

Pleased to see you won't be giving up the dog, viva ;)

Beastofburden Mon 09-Dec-13 14:49:23

On the whole, parents sadly do have to die, but they might spend all their money first (on nursing care if not otherwise)

Grennie Mon 09-Dec-13 14:50:27

Wood - I think that is common from what I can see. But I also do see a lot of my friends inheriting substantial sums. DP and I both come from very poor backgrounds, so there is nothing to inherit.

randomquicknamechange Mon 09-Dec-13 14:51:07

There is currently £26000 in my pension pot, works out about 750 a year. I am only 30 though so another 35 years paying in left so hope will do better. And only have 8 years left on the mortgage so hope to put a lot more into it once that is paid.

VivaLeBeaver Mon 09-Dec-13 14:52:23

I think my dog haunts me on MN. I'm always going to be remembered for him I reckon. grin

VivaLeBeaver Mon 09-Dec-13 14:56:30

Dh banks on inheriting half a house from his mum for his pension. hmm

He has already inherited half a barn, half a stable block and half of 8 acres of land. If we could get planning permission for the fields we'd be laughing. grin. As it is its about 90k worth so if/when we come to sell that then its a bit of a lump sum.

I think I probably would downsize when I retire. We live in a three bed house but its got a massive garden so that makes it harder to maintain as well as more expensive. I'd hope if I moved to a two bed terrace I'd get 50k in the bank. But then not sure I want to live in a terrace house when I'm 70. Steep stairs and noisy neighbour potential.

VivaLeBeaver Mon 09-Dec-13 15:02:03

Just done the pension calculator. If I retire at 60 I can get £9,400 a year. No lump sum. But that's only rough as my pension is a career average one not a final salary one and it doesn't seem to take that into account.

Dilidali Mon 09-Dec-13 15:06:02

Thank you beast, it makes sense.

Been looking at SIPPS and trying to decide about that. Potentially I could turn the L&G pension into one and just 'play', we're not talking more than probably £4-5 thousands? So even if I muck it up royally, I won't go bankrupt, but the potential revenue might be slightly higher than what it is earning now.
It annoys me, it really isn't that difficult, getting your head around finances, but it is cloaked behind jargon and other rubbish, it's like learning another language.

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