100k pension pot at 42

[hlu2]

I've finally checked my pension pot and age 42 it's currently 100k. Putting into random calculators, it seems ok at current money but with inflation in 25 years time, it seems tiny. And yes I should have been keeping up with this more, but I didnt start working until I was 30 (postgrad degrees and two pregnancies) so have only had 12 years of working and saving and with two kids and a house - pensions just didnt seem all that relevant until now. How much does everyone else have around this age?

And in addition to that we have £45k left of an inheritance that is our world is ending money

TBH I remember reading years ago that the first £100,000 is the equivalent of if you didn’t have a pension at all and had to go on income support.

Might have changed with inflation.

Yes that's low? Can't you take a 25% lump sum tax free also?

Most people are not struggling and unable to out into pensions, no. Some people are but not most. No one I know is struggling, we are all carrying on with savings and pension payments.

But you'd get state pension as well as this 100k

I am in my 60s and have £0 in my pension pot.

That is your circle though.

A lot of people are struggling with the cost of living going up.

We are OK (at the moment, things can always change) but I know some people who aren't and some people who are.

My sister will prob be in the same position - and several of my friends. Do you have a plan? Will you be OK? I am just wondering if we're suddenly going to have a huge and noticeable problem with pension poverty. I know it's quite bad now, but the signs are there that it could get much, much worse.

Read this hoping for some advice too. And then read a couple of articles.
one simple thing that seems to make sense is to aim for half your age percentage. So aged 42 you put in 21% of salary if you can. Check how much extra you can put in and aim for as much as you can reasonably afford. Seems that is as much as any of us can do. The rest is unknowable

Tell me how privileged you are without actually telling me how privileged you are

Same. I have friends and family who are very comfortable, and others who are barely keeping their heads above water. I'd say a good 50% of my friends don't have any kind of pension or savings at all.

I don't think you're showing off. I have savings (which wont last) but have found that people rarely talk about pensions because they don't understand them.

I wish someone normal could explain it to me in simple terms. Not a financial advisor etc all that goes over my head.

Op, I haven’t read all the replies but I would suggest:

ask pension provider for a pension forecast at retirement date, also for a forecast at a later/earlier retirement date

enquire about your top up options and ask for a projection of benefits if you were to increase contributions by different amounts.

find out if your employer will make more or any contribution to your pension.

This will give you a clearer idea of how much you are likely to have in retirement.

Also check your state pension and that you have enough years to get full pension, if not ask what your options are to pay for missing years. This is often one of the best ways to secure a full state pension.

There is being privileged but understanding that a lot of people aren't then there is @Overthebow

I can't believe anyone would have this view

My dh works for a local authority. A ‘good’ job, but not great pay as it’s LA. Only thing going for it are the perks of flexi working and the pension scheme.

One by one on his team, people have been opting out of the pension as they need the extra cash now. He won’t but I’m not going to lie, life would be easier with that money.

I know nurses who can’t afford the pension scheme now.

Things are difficult for a lot of people.

I’m retired, my monthly private pension is £171. a month.
Without my dh I’d be really poor.
I was silly and should have paid more attention to my pension.

Both my dc are in their 30’s and very into growing their pensions and their savings.

I can't read all the responses, so apologies if this has been said already:

Think about when you want to retire, and how much money you will need then.
At current prices lets say you need 24K per year individually.
At some age you will get a State Pension of £10K per year.
So you need to generate 14K per year additionally.

A useful rule of thumb is that you can withdraw 4% of your funds to give you a sustainable income. So you would need a pension pot of £350K.

You have £100K already. So you need to save another £250K over perhaps 20 years. That is £12.5K every year, but with employers' contributions and tax rebate from the government that is about £10K. Easily doable.
Now go back and adjust those figures for your situation, including State pension age.
Hope that helps.

Christ you don’t live in the real world

...and don't forget that you will need to increase contributions each year to match inflation, but hopefully your salary will rise too.

@Heathcote294 I don't think that quote is right a pot of £312,000 would be closer to 10K at age 67 each 100,000 buys about £3000-3500 it is calculated a pot of 350,00 would give you the state pension which is just over 10K now so with that pot you should be getting about 20K in total at 68, obviously if you retire at 55 you will get much less than 10K

Not putting all your eggs in one basket. Pension funds exist that are investments into a portfolio of properties as well as funds that are portfolios of business stocks from around the world. If you invest into a pension, you are putting eggs in many baskets, it’s called diversification and that massively reduces the risk you will lose money.

If you buy a property instead, all your eggs are on that 1 property and the risk you will lose money is higher. Especially since that 1 property could end up with high maintenance costs.

Investing in a pension is also more tax efficient in terms of you get to keep & reinvest most of the returns your investment earns. This isn’t the case with BTL investment properties.

"A useful rule of thumb is that you can withdraw 4% of your funds to give you a sustainable income. So you would need a pension pot of £350K."

Sorry, could you explain more, please? I think I don't understand the 4% thing🤐😬This 4% is on top of state pension, right?

Thank you for asking this. I thought it sounded loads to start with, and it has sent me down a bit of a rabbit hole of investigating what pensions I have and what I might need, as I have always joined company schemes but paid no attention to it.
I’m 40, and have about £40k in pensions (about 5 different ones). Clearly that’s not going to be enough! I can’t do anything about this now, but once childcare bills are finished I will def be looking into significantly upping my percentage.

The £30k per year is for a couple, not per person.

@Lollygaggle

Which is why the law should allow us to die should we wish so we won't spend all these hard earned savings on substandard care whilst we move zombie like through the days stuck in one memory+ probably causing us pain ...not remembering anything about ourselves or our loved ones whilst all our dreams for our family inheritance goes onto the pockets of bently driving care home owners.