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Original poster

Pensions. How much should we realistically need?

41 replies

Reallyyyyyy · 26/04/2025 12:48

I'm 33 and only just started saving into a private pension with my bank (I'm self employed and have been for the last 12 years)

I'm aware I'm very behind with saving. At the moment i out in '120 a month and get the tax back which is £30 a month. So £150 a month.

I am hoping to up it to £300 a month as my contribution by the end of the year as I will have finished paying off some debts.

Do you think this would be enough plus government pension on top?

I wish they taught these things when we where at school. I was a bit naive!

I live in the south east. So living costs are high. Might potentially move more north before retiring age if need be. But would rather not.

Dh is 49 and I have just found out he doesn't have any pension. What so ever. So we are sorting that out this weekend. By the end of the ywar he can pay a higher amount monthly. Probably £500 a month.

I think we have majorly cocked up. But also just didn't have the spare funds to do so before hand!

We rent and don't have a mortgage either. So no assets to use.

OP posts:
Frozenpeace · 26/04/2025 13:15

Reallyyyyyy · 26/04/2025 12:55

Oh gosh so I'm looking at needing £800k if we carry on and that's with halving the rent for a smaller place!

I wander if it would be wiser to work harder at getting a small mortgage instead of ploughing money going forward into a pension?

I think it possibly would be.

3amamama · 26/04/2025 13:15

Oh sorry - start as in start saving into one, not plan to start drawing down on one. Got it! 😅

3amamama · 26/04/2025 13:14

WanderleyWagon · 26/04/2025 13:00

Have you looked at Martin Lewis advice?
https://www.moneysavingexpert.com/savings/discount-pensions/
For a comfortable retirement, he advises:
Take the age you start a pension and halve it. Then aim to put this % of your pre-tax salary into your pension each year until you retire.

Obviously lots of people won't be able to do that, but putting a few grand a year towards it sounds like a very good start. Only you two know whether a mortgage is doable; I'd try to seek some financial advice on this. Either way it sounds as if you're now looking to put away much more money each month for the future, which will be positive whether you end up putting it into pension or putting it into saving for a mortgage.

Does this make sense - it doesn’t seem to, to me, as the later you’d plan to retire the bigger percentage it says to put away, surely the opposite would be true? Am I being thick?

User46576 · 26/04/2025 13:08

Why are you pension saving with your bank? Have you tried vanguard or other SIPP providers?

Whoonearthareyou · 26/04/2025 13:08

Bear in mind your husband is going to struggle to get a mortgage the older he gets, particularly with no projected retirement income. You need to seek proper financial advice really.

andtheworldrollson · 26/04/2025 13:07

so you can work out how much you will have saved by the time you retire - hqk much you save times the number of months left ( you may save more later but this is a start)

DH 500 a month and 18 years is 108k

for a first approximation assume that the gains in interest and the effect of inflation balance - not true but a safe starting point

then use a rule of thumb and assume you can take 4% a year - so if you have 108k saved you will get just over 4k a year

then add that to the state pension to see what you will have a year - about 16k ( check that you are fully paid up )

pop it into a salary calculator to see what that would be monthly after tax ( assuming it’s more than the allowance) £1250 a month for DH

then compare that to what you spend now - do you rent or will you have paid off mortgage? Do you have huge commuting costs ?

yes compound interest on pensions often helps the pot grow faster than inflation and other things but I think this would give you a reasonable feel

AddictedtoCrunchies · 26/04/2025 13:04

The best time to start a pension was 20 years ago but the second best time is now!

You have time to improve things. Look at Martin Lewis and also Meaningful Money. Good luck.

Mrsttcno1 · 26/04/2025 13:03

It depends on so many things, main one though, do you rent or own?

If you own your home then pension isn’t as much of a disaster because worst case scenario you won’t have rent to pay in retirement if mortgage paid off, or you could sell and downsize to free up some cash as well as obviously still not having any rent to pay.

Home owning is the other way to plan for retirement really as a way of minimising outgoings, whereas rent you’re paying monthly until the day you die.

Notellinganyone · 26/04/2025 13:01

Slightly off the point but the - ‘I wish they taught this in schools.’ Things drives me nuts. To students at school retirement feels totally unreal they would not take any notice. There are far more pressing things to engage with.

WanderleyWagon · 26/04/2025 13:00

Have you looked at Martin Lewis advice?
https://www.moneysavingexpert.com/savings/discount-pensions/
For a comfortable retirement, he advises:
Take the age you start a pension and halve it. Then aim to put this % of your pre-tax salary into your pension each year until you retire.

Obviously lots of people won't be able to do that, but putting a few grand a year towards it sounds like a very good start. Only you two know whether a mortgage is doable; I'd try to seek some financial advice on this. Either way it sounds as if you're now looking to put away much more money each month for the future, which will be positive whether you end up putting it into pension or putting it into saving for a mortgage.

BeaSure · 26/04/2025 12:57

OP take a deep breath - you have plenty of time to build wealth, you just have to do it properly.

Be back in a bit!

Original poster
Reallyyyyyy · 26/04/2025 12:55

Oh gosh so I'm looking at needing £800k if we carry on and that's with halving the rent for a smaller place!

I wander if it would be wiser to work harder at getting a small mortgage instead of ploughing money going forward into a pension?

OP posts:
Original poster
Reallyyyyyy · 26/04/2025 12:53

Thank you @Mum2Fergus

OP posts:
Mum2Fergus · 26/04/2025 12:51

General rule is 25 x your anticipated outgoings at retirement, this allows for 4% drawdown per year.

Original poster
Reallyyyyyy · 26/04/2025 12:51

Thank you @Leafy74

At least i know to educate my kids on this when they start working!

OP posts: