Pension worry…help

This might not apply to you, but when I was approaching pension age, I was able to top up my State Pension contributions because I had some missing years.

This is great and I will be taking a look too! This is what MN should be about 👍

Apologies if it has already been mentioned, but I really recommend looking at Rebel Finance School.

They run a free annual course (no catch, no selling of products, totally free apart from the “cost” of your time) which whilst aimed at people who primarily want to retire early, also gives you a good grounding in how pensions work, the power of compounding, etc.

They have a website and their videos are up on YouTube.

https://rebeldonegans.com/finance/rfs/

What's the point of raising this? What's the relevance of these comparisons?

don't worry OP, you're still relatively young and thinking about this now!

These videos are helpful

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OP, try not to panic. I had a similar sized pot when I was 40. I am turning 50 soon and now have £200k approx. I have gradually increased my contributions as my salary has increased and also actively managed my investments - moved all previous work pensions into a SIPP and chosen higher risk funds in my current work pension. Based on my current contributions, I now have a projected income of £77,000 per annum (including state pension) if I retire at 67. And I plan to continue increasing the amount of my contributions so will hopefully be more than that.

In today's money, my combined pensions (state, employer, private) are projected to pay out about £9k/yr. And I do actually know that will be enough for me.

Anyway, I don't think "worry" is the helpful response. But there are lot of good suggestions on this thread if you want more in your pension pot. Best Wishes.

OP was clear that it’s 25k when combined with the state pension,ot 25k as a stand alone penny.

I’m embarrassed for you. A pot of £240k will not get the OP a large pension. Probably around £13k per year at today’s annuity rates and what will £13k per year be actually worth in 25 years time?! Not very much.

You've saved me a job then 👍👍

Agree. You can feel the bitterness coming through in the posts 🙄

They are also on other threads making similar comments and insulting OP’s. I’ve reported.

You get that £240k is the pension pot and not the yearly pension, right ?

You should be ashamed of yourself. It’s not the OP fault you don’t earn enough money that’s your fault. Are you totally blind to the fact others that have things work very hard for maybe you should stop being such a nasty jealous person maybe things might change.

Don’t engage with @HoskinsChoice he/she did same to me when I started a pension post. They will just pull you apart. I can only assume they have not planned very well themselves.

Depending on when you went back to work after being a sahm, you might want to look into whether you are missing any years of NICs and if so, explore whether you can pay up any missing years and whether this would be advisable, instead of paying any bonus into your pension scheme. I think there is a limit on how far you can go back though with NICs.

TBF have a look at money saving expert they have a really long thread called ‘how much to live on’ ask the question there very helpful people who will guide you. Think there is also a pensions thread, think you might get more helpful feedback who will share their experience, unlike some people on this thread.

🙄 She's not talking about a £240k pension, she is projected to have a pension pot of £240k which needs to last her entire retirement. Rather a big distinction! £240k is not a large pension pot even now - and that's before taking into account inflation between now and when OP actually retires. And since when were people banned from asking for financial advice just because poor people exist?? It's not a race to the bottom FFS.

Not "most people" - 15-18% of pensioners only have a state pension.

Scanning for a sensible response. Finally!

Pensions are relative. I don’t care what anyone else thinks is decent or not. £25k is not enough for me!

So it depends on the life style you want in your retirement years. This would not be enough for me, I am aiming for a pension that is double this, along with zero mortgage and debt.I want to travel, I want to visit my kids if they move away from home and I want to live part of my time oversees. All you can do is try and work out your projections and save as much possible, to ensure decent pension and access to a lump sum. Save, save & save some more

Hi OP, you are not going mad, you are completely right to take notice of this. So many people blindly buy into the trope that we will all have nothing in retirement so just do nothing about it. The main thing is you have looked into it now and can start making choices based on what you need in future. I know some have mentioned Martin Lewis. I would also suggest looking up Rebel Finance School. It’s a course in YouTube and really helps you to understand your pension, investing and how to prepare for retirement. The couple who run it (for free) do a great job of explaining the basics and beyond. A general rule of thumb is that your pension pot, at retirement, should be 25 times your annual expenses. Then you will never run out. I’m simplifying, but that’s the basic premise. Bear in mind, no one really buys an annuity anymore, most just drawn down what they need and leave the rest invested.
Good luck!

Loads of good advice already. Another vote for Pete Matthews and his books and podcast. His first book Meaningful Money is probably the one you want.

You definitely need to be paying in more!

But good news is 40 is still quite young and with career switch and hopefully future promotions you could still boost your income a lot. So I wouldn’t worry about increasing contributions right now so much as resolving to our future pay rises etc into it.

FWIW I had ZERO pension at your age and just 10 or so years later have a pot of over £300k. I managed to move into a very good career, higher rate tax, but rather than increase our lifestyle we kept our modest standard of living and put a massive % of my earning into my pension.

Putting in your bonus is a great start. Also the person who suggested putting in any above cost of living pay rise - so if you get a promotion and your pay goes up 10%, increase your contributions by that amount rather than getting the take home.

because you get tax relief on the contributions this will put A LOT more into your pension than you would have had in your pocket anyway . For example if you tip into higher rate tax , you’ll get £1,000 in your pension, where you’d only get about £500-600 of that take home after tax and NI. So it really is a no brainer unless you need the cash.

also def check your state pension . You’ve got plenty of time to make up years there now you’r working, and you should get credit for any years you were SAHM if you were getting child benefit.

@Greylakemiragewhat do you mean 33k DB is 33k a year? Do you understand that the public sector has phased out final salary to career average and you would need service to an equivalent of around a 700,000 nominal ‘pot’ to achieve that level of benefit per year?

What do posters like you get out of this sort of thing? Is it some kind of skewed bitterness? Or just basic boredom? Someone asks for advice about their pension and you want to "shame" them in some way for not flaggelating themselves before you and society in general for not being in a position others might be in. Why? How absolutely pitiful.

I recommend creeping up your contributions each year. Even if it’s only 1% at time.

i would assume your contributions are from your gross pay (pay before tax is taken) so you should find that you don’t actually lose that much from your take home (net) pay as you’ll pay less tax on what is actually going into your bank account.

also look at what the risk level is that your investing in through your pension. You can change it to a higher risk level. At your age you’ve enough time to take a longer term view of things.