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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)
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?
I have worked for 14 years in public sector, so of which ptime, and currently working ptime. My projections are sent to me yearly from my pension scheme provider. It is about I think about £4.5k per year at current amount invested and will have another say 20 odd years of contributions so not much really. That is for a relatively well paying job in the sector.
I keep meaning to start AVCs but something always crops up. Am investing a small amount monthly in a stocks and share isa though. Husband has MUCH better pension provision, but I would like to see myself have enough to support myself as you never know what the longer term future holds.
At the age of 58, I´ve found myself in a wonderfully enviable position. Ten years ago our 20 year old business failed. We lost everything, including our home and have never really managed to get back on our feet. Both oh and I are self employed and just barely earn enough to live. We are about 6 years behind in our stamps so won´t even qualify for a full state pension. We rent our home and neither of us stand to inherit a bean. Therefore, my pension plan is as follows - work till I´m 80 odd (although hopefully I won´t live that long), have a day off, then kick the bucket.
DH & I both fully paid up for state pension. I have a live final salary scheme and am now buying extra years too. DH has a paid up final salary scheme and two live private schemes. Both pay in ISA limit each year and could be mortgage free but keep the offset for flexibility; may want to give DS money for first property in the future.
May receive money from both lots of parents but frankly I encourage them to enjoy it - as I say to my ma in law I would rather you are gadding about abroad etc. than in a nursing home & it's cheaper too! I have always told them that I see it as my responsibility to plan for my own retirement. Any money we get from them would be great (I would like to pass some down to DS) but my retirement plans have never been based on their money / houses.
Juliet - really interesting to read what you say about opting out of automatic enrolment. I've just found out our company scheme starts in July and the company are going to contribute 1% of salary. If I do the same it will be about �50 a month going into a pension (I have no previous pensions worth mentioning, just a couple of tiny short-lived ones from years ago). I realise this is �25 a month from my company that I get, effectively, for free. But is it worth it or should I just spend my �25 and over pay the mortgage, or put �25 a month into an ISA or similar? (I'm 50 and due to retire (currently) at 66).
Secondly, would you advise starting pensions now for my two teenage DCs who are still in full time education?
I worry about putting money into pensions because they get so much bad press and a family member lost everything in their pension fund when the company they had worked for for 40 years suddenly and unexpectedly folded.
With pensions the earlier you start saving for one the better whatever scheme you are in People who started in their twenties are laughing by their forties Investing in a buy to let property is a common way of saving for a pension Again those who bought early are laughing given the rise in property in the last 20 to 30 years
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Still can't decide what to do about this. DH thinks we have enough tied up in pensions at the moment and should look at other assets.
Tat - You know lots of people my age did the same and now have private pensions that are worth less than they paid into it? Pensions are a gamble, and we should be honest about that.
We're retired now and are "comfortable". We both took out pensions as soon as we started work and have always overpaid into them. After the DSs left home we saved as much as we could and lived quite frugally for 10 years and threw all spare money into pension funds and investments.
Dh retired at 60 but isn't yet getting his state pension. I get my private pension and state pension and also still work part time.
We've encourage DSs to take out pensions as well because by the time they retire the state pension will be hardly worth having. They have friends who say they cannot afford to have a pension but they really cannot afford not to, long term.
I do take your point juliet but its not about making your fortune for the vast majority, its about having something, anything (!) to live on given that the state pension is already inadequate and is likely to be much lower or non existent in the future.
Plus its all very well if you have your own business but those planning to go and work in B&Q are going to be fighting the youngsters for those jobs! We are all needing to work for longer but there are likely to be fewer jobs to go around.
( I should add that you can take a lower annuity and buy a guaranteed 10 years etc of the pension and some people take a lower annuity and it continues for their spouse if they have one of course which is some protection for early death but any way view is pension bad deal but do do save something instead).
I am the same as talkinp (but I can work until I die and I see no reason I'd give up the business). Also my father worked full time to 77,put all his spare money all his life into pensions and then died aged 79 (not a great investment).
I just take the view that if I put money into a pension I lose ALL control over it to faceless people in the City who have never been held accountable for past misdeeds
if I have a variety of savings and income streams I keep my options open
a family member bought a £100,000 annuity and then died 36 days later before a single payment was ever made
nice profit margin for THAT company, but not the family.
But I don't think there are any guarantees there will be State Pensions and top ups and housing benefit in 20-30 years time.
If you do not earn much by the time charges are applied you may not get that much back. Even with private pensions ni many cases the sum you go off to buy an annuity with gives you back not much more than you paid in and you have so much less control over a pension fund than your own savings. There have been some press articles on whether auto enrolment is state sponsored scam.
and "Workers on £20,000 a year saving for decades are going to be lucky to see £100 a week during retirement." I think it may be best if you earn very little to keep out of it and keep your money to feed your children. It is not going to make your fortune. Also those without much when they are older will have the £140 a week state pension too if they have 35 years of contributions including childcare years and possibly housing benefit and pension credit.
Interesting, Juliet, I opted out of the automatic enrolment due to other but financial reasons, but why don't you recomend it?
A reasonable sum in a SIPP and I manage the shares in the fund. I will work until I die from choice and I have another business which will probably continue to yield income so not putting more into pensions now. I feel the rules change too much and so many people without employer contributions hardly get back what they paid in now despite the tax relief. The life time limit on the pot before HMRC effectively start confiscating it gets lower and lower too and may well go even lower in due course so I'm not sure I'm prepared to take the risk.
For low earners I advise to contract out of automatic enrolment by the way once it hits your workplace. Keep your money.
I am 33 and don't have a pension. I have a rental property which is mortgage free and am in the process of buying another one. We would like another 5 properties by the time I am forty. Our own home has a mortgage but we are overpaying and all being well will be mortgage free within the next 15 years.
"Darling we don't need to have that conversation about financial planning anymore. I've decided to invest all our money in minestrone soup."
Fits with your name too!
I think its actually a good plan. Old people people like tinned carrots and corned beef.
I might buy tinned food and keep it all under the bed. Then I'll beat food price inflation and not have to worry so much about the cash I have in my old age
I agree with notmadeofrib, cash ISAs are fine for very short term and small amount savings but not for long-term saving, for example akin to a pension.
The nominal rate that you are getting for your cash ISA is 2.5%. Inflation (RPI) was 2.6% in October (down from 3.2%) in September. This means that your real rate of return on your cash ISA is negative. Your money will buy you less than when you put it in.
I am not a financial adviser, but maintain a reasonable balance in an easily accessible account, with the rest invested in either stocks and shares ISAs, SIPPs or other assets such as property, antiques etc. Though I am considering adding whisky at the moment.
Talk, yes my scheme is funded (I say funded, it has a deficit of course) , and I have been a member so long that I do not have to move to career average, all my years are final salary. It's different for people who joined more recently.
Thanks notmade, I think I am too busy with the day job to manage an investment portfolio properly IYSWIM so perhaps ought to pay the premium for someone else to handle things.
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