Page 11 | 100k pension pot at 42

hlu2 · 2023-01-27T10:08:08+00:00

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?

SwordToFlamethrower · 27/01/2023 14:05

45 and zero. I'm disabled so I'll never be able to get a workplace pension.

Onnabugeisha · 27/01/2023 14:06

DesertIslandCondiment · 27/01/2023 13:53

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.

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I’m contributing £0 to my pension because I’m struggling. It’s been that way for ten years now. But I’m not offended or upset by this discussion. I think the advice is to save what you can when you can. I saved lots towards my pension when I was able to, and the fact that people are struggling now or may be in the future is not a reason to not discuss pensions.

Chewbecca · 27/01/2023 14:08

xogossipgirlxo · 27/01/2023 14:04

"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?

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4% of your pot used to be considered a 'safe' amount to withdraw per year. Some experts suggesting lower now.

So if your DC pot was £350k, you could reasonably take £14k pa from it. Yes, you would also have your State Pension from your State Pension Age if you have paid enough NI (check on gov.uk for your personal forecast).

So if you knew you have paid enough for full SP (around £10k) and calculated you needed £24k pa to live on from your SPA, a pot of around £350k would support that goal.

DesertIslandCondiment · 27/01/2023 14:08

Onnabugeisha · 27/01/2023 14:06

I’m contributing £0 to my pension because I’m struggling. It’s been that way for ten years now. But I’m not offended or upset by this discussion. I think the advice is to save what you can when you can. I saved lots towards my pension when I was able to, and the fact that people are struggling now or may be in the future is not a reason to not discuss pensions.

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Where have I said I'm upset? I've just said we are OK. I was annoyed that the poster said that most people aren't struggling

You have just made up that I said something else

Cocochat · 27/01/2023 14:12

Someone once told me that if you saved the price of a packet of cigarettes every day for 40 years you’d have a good pension pot.
Just looked and 20 cigarettes are £12.61 on average.
At an average of 3% interest over 40 years you would have £362k.

Cocochat · 27/01/2023 14:13

That was without the increase in the price of cigarettes.

MrsFrugal · 27/01/2023 14:14

I have to say this post has been a real eye opener - I am lucky as I have some NHS pension and now I'm in the teachers pension, I knew public sector pensions were always seen as better but I hadn't quite realised how much in comparison to private sector. I have just worked out mine against my husbands (he earns more than me). We have both been paying into a work pension for the same number of years (although me part time in some years due to having children) my contributions are higher 10.2% and his 5% which is the max he can contribute.

If I continue to pay in as I do now I will get around 28K P/A + state pension
Husband approx. 10k + state pension.

xogossipgirlxo · 27/01/2023 14:17

Chewbecca · 27/01/2023 14:08

4% of your pot used to be considered a 'safe' amount to withdraw per year. Some experts suggesting lower now.

So if your DC pot was £350k, you could reasonably take £14k pa from it. Yes, you would also have your State Pension from your State Pension Age if you have paid enough NI (check on gov.uk for your personal forecast).

So if you knew you have paid enough for full SP (around £10k) and calculated you needed £24k pa to live on from your SPA, a pot of around £350k would support that goal.

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Thank you ❤I seriously need to have a read this weekend about pensions and how much I need to put into it. I know this will be changing over years, but my work pension scheme is really shit (5% me, 3% employer), so I have two options: change job for better paid and with better pension scheme (which isn't an option for now, as baby on the way) or start investing somewhere else by myself.

Lifeisgood1 · 27/01/2023 14:19

43 mines 25k can't add to it as a carer for my son.

HermioneWeasley · 27/01/2023 14:20

@xogossipgirlxo see if you can make additional contributions into your pension rather than invest elsewhere. The fees are likely to be relatively reasonable for a workplace scheme and you’ll get tax relief. Your company ought to have a pension team who oversee governance on your behalf.

Rayna37 · 27/01/2023 14:21

£100k at your age when you earn 60k and a large chunk came from inheritance isn't great, you should definitely increase your percentage if you can. You'll save on tax too.

I'm lucky that my employer pays 10% and I opted in at 22; I've always added minimum of 5% (to get the max employer contribution available to me) and for a long time it's been 10% which keeps me comfortably below the higher rate tax band. I don't come from wealth but just viewed it like another tax; there was no guarantee I wouldn't just be looking after myself forever so it had to be done!

For context at the same age and on a lower wage I have roughly twice that HOWEVER that's because I was able to start early rather than still studying as you were and I've never lived in London or the SE. As DH is older and has also prioritised pensions I intend to retire very early so need to add more while I can! Your pot has got plenty of time to grow and for what it's worth investing your inheritance was a great thing to do, certainly above property IMO.

Chewbecca · 27/01/2023 14:22

MrsFrugal · 27/01/2023 14:14

I have to say this post has been a real eye opener - I am lucky as I have some NHS pension and now I'm in the teachers pension, I knew public sector pensions were always seen as better but I hadn't quite realised how much in comparison to private sector. I have just worked out mine against my husbands (he earns more than me). We have both been paying into a work pension for the same number of years (although me part time in some years due to having children) my contributions are higher 10.2% and his 5% which is the max he can contribute.

If I continue to pay in as I do now I will get around 28K P/A + state pension
Husband approx. 10k + state pension.

I'd suggest your husband pays more into a private pension if his company one doesn't allow him to contribute more than 5%. You can pay into more than one at a time.

winelove · 27/01/2023 14:25

Name changed because I am going to get roasted.

Financial independence for women is vital. The only person who looks after you is you. The importance of being financially savvy as a women gives you options and freedom.

I would say £100k at 42 is not enough. The good thing is you have time to focus on this (if other things don't get in the way). It is tough but it needs to be a priority (fucking easy for me to say, I know).

I think at 42 I had about £350k in my pension pot. At 58 it is nearly £1M. To be fair a lot of the growth has been in the latter years and I am still paying in significant amounts. It is a tax free saving vehicle and I have utilised and will utilize again the 25% tax free facility to take money out - my plan has always been to utilize this to reduce mortgage.

I am not quite ready to stop work and still have a mortgage but have other assets that would pay this off.

But to be honest I would probably sell and down size at some point in the future. I haven't always made the right financial choices but have ploughed on through the difficulties. I have had to sell a previous home to pay debts and have gone through a husband's bankruptcy. (We are still together, but finances are separate).

I know I am incredibly lucky to be where I am and not many women are in my position. I come from an ordinary working family, no inheritance, no help with getting on the housing ladder. But there is no doubt I have been fortunate.

Is this a boast, yes probably, but I am proud of where I am and I would tell any young woman prioritise your financial security. It can be done.

bumpytrumpy · 27/01/2023 14:27

hlu2 · 27/01/2023 12:22

I think the thought of having 300k now to only receive 10k per year is pretty insane. Am assuming that in 25 years that pot would need to be much bigger to keep up with inflation. This thread has been pretty odd, on the one hand people telling me that am boasting while others tell me that it's absolutely not enough and I will live in poverty

This is what I find hard as well. How much is "enough" to live a comfortable life? Who knows.

Maybe there is a range

1 - people who save nothing, get state benefits, probably quite poor

2 - people who save a bit, enough to not quality for benefits but end up with a similar income - still quite poor. Feel bitter that their savings haven't bought them anything better than group 1.

3 - those who work a lot, save a lot, have a more comfortable retirement and live with 1&2 saying they're "lucky" and "showing off"

4 - mega rich, long term wealthy families with access to advice and investments and savings tactics that the rest of us don't even know exist

I'd like to make it to group 3 but I worry I'll remain in 2, despite excellent career & income I just don't have the background of wealth to fall back on.

MrKlaw · 27/01/2023 14:28

blimey paying in half your age? 50 here so 25% of my wages? Even with tax relief and the employer putting in a whole 35% (!) thats a huge amount. Makes a lot of assumptions too - despite tax relief its locked away so I expect nobody is doing that level of contribution unless they also have a 3-6 month rainy day buffer which can take years and years to build up.

Onnabugeisha · 27/01/2023 14:30

DesertIslandCondiment · 27/01/2023 14:08

Where have I said I'm upset? I've just said we are OK. I was annoyed that the poster said that most people aren't struggling

You have just made up that I said something else

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I never said you said you were upset.
I said I am not offended or upset.
Am I not allowed to say how I am feeling?

Catspyjamas17 · 27/01/2023 14:31

Janieread · 27/01/2023 13:50

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

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I'm not confident that the state pension will exist in any meaningful sense in 20 years time.

xogossipgirlxo · 27/01/2023 14:31

HermioneWeasley · 27/01/2023 14:20

@xogossipgirlxo see if you can make additional contributions into your pension rather than invest elsewhere. The fees are likely to be relatively reasonable for a workplace scheme and you’ll get tax relief. Your company ought to have a pension team who oversee governance on your behalf.

Thank you. My husband already increased his contribution, as his scheme is better than mine. I'm wondering if maternity pay counts to state pension contributions? I'd probably need to top it up to qualify as full year anyway?

bumpytrumpy · 27/01/2023 14:32

winelove · 27/01/2023 14:25

Name changed because I am going to get roasted.

Financial independence for women is vital. The only person who looks after you is you. The importance of being financially savvy as a women gives you options and freedom.

I would say £100k at 42 is not enough. The good thing is you have time to focus on this (if other things don't get in the way). It is tough but it needs to be a priority (fucking easy for me to say, I know).

I think at 42 I had about £350k in my pension pot. At 58 it is nearly £1M. To be fair a lot of the growth has been in the latter years and I am still paying in significant amounts. It is a tax free saving vehicle and I have utilised and will utilize again the 25% tax free facility to take money out - my plan has always been to utilize this to reduce mortgage.

I am not quite ready to stop work and still have a mortgage but have other assets that would pay this off.

But to be honest I would probably sell and down size at some point in the future. I haven't always made the right financial choices but have ploughed on through the difficulties. I have had to sell a previous home to pay debts and have gone through a husband's bankruptcy. (We are still together, but finances are separate).

I know I am incredibly lucky to be where I am and not many women are in my position. I come from an ordinary working family, no inheritance, no help with getting on the housing ladder. But there is no doubt I have been fortunate.

Is this a boast, yes probably, but I am proud of where I am and I would tell any young woman prioritise your financial security. It can be done.

How? What do you do for work? How much do you earn? This is vital information to understand the context of your post.

OhIdoLike2bBesideTheSeaside · 27/01/2023 14:33

hlu2 · 27/01/2023 10:20

I earn 60k which the last time i checked is not a massive amount

That's more than 2 of us earn combined I'd be delighted to be earning that much !

Catspyjamas17 · 27/01/2023 14:34

Mark19735 · 27/01/2023 13:28

Oh God, the level of knowledge is so depressing.

An actuarial valuation of a defined benefit scheme is not the same as a "pot". It matters for very high earners, for income tax reasons, but it isn't money you can spend.

A pensions estimate that provides an indication of a future income expressed in today's money will grow between now and when that benefit is drawn.

An index-linked income in retirement is worth far, far more than a regular monthly amount that doesn't increase in line with inflation.

Spousal benefits are worth something too - the exact amount depends on the age of your spouse.

Each of these parameters can affect the 'value' of a pension by a considerable amount.

If you don't understand these concepts, that is a clear sign why you need an IFA.

It's a clear sign to me that these things are made deliberately obscure so that people don't understand them.

ExtremeJean · 27/01/2023 14:34

winelove · 27/01/2023 14:25

Name changed because I am going to get roasted.

Financial independence for women is vital. The only person who looks after you is you. The importance of being financially savvy as a women gives you options and freedom.

I would say £100k at 42 is not enough. The good thing is you have time to focus on this (if other things don't get in the way). It is tough but it needs to be a priority (fucking easy for me to say, I know).

I think at 42 I had about £350k in my pension pot. At 58 it is nearly £1M. To be fair a lot of the growth has been in the latter years and I am still paying in significant amounts. It is a tax free saving vehicle and I have utilised and will utilize again the 25% tax free facility to take money out - my plan has always been to utilize this to reduce mortgage.

I am not quite ready to stop work and still have a mortgage but have other assets that would pay this off.

But to be honest I would probably sell and down size at some point in the future. I haven't always made the right financial choices but have ploughed on through the difficulties. I have had to sell a previous home to pay debts and have gone through a husband's bankruptcy. (We are still together, but finances are separate).

I know I am incredibly lucky to be where I am and not many women are in my position. I come from an ordinary working family, no inheritance, no help with getting on the housing ladder. But there is no doubt I have been fortunate.

Is this a boast, yes probably, but I am proud of where I am and I would tell any young woman prioritise your financial security. It can be done.

Great post. The pension gap between men and women is 40 percent.

totallybonafido · 27/01/2023 14:36

MrKlaw · 27/01/2023 14:28

blimey paying in half your age? 50 here so 25% of my wages? Even with tax relief and the employer putting in a whole 35% (!) thats a huge amount. Makes a lot of assumptions too - despite tax relief its locked away so I expect nobody is doing that level of contribution unless they also have a 3-6 month rainy day buffer which can take years and years to build up.

It's half your age when you start, the % doesn't go up as you get older. So if you started at 40 and put in 20%, you would stick at 20% for as long as you contributed. And yes, if you weren't starting to save until 50 you would need to put in a huge amount!

mightymam · 27/01/2023 14:37

How can I find out what my whole pot of pension is?

Heathcote294 · 27/01/2023 14:38

Cottagecheeseisnotcheese · 27/01/2023 14:03

@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

I've tried to screen shot my statement but it won't let me attach it so I'll type it out:

1995 scheme (from age 60)
Pension: 3537
Lump sum: 10613
Hypothetical annuity cost:176,891

Or

Pension:2842
Lump sum:18,952

2015 scheme (from age 68)
Pension: 2715
Lump sum:0
Hypothetical annuity cost:135,762

Or

Pension:1,745
Lumpsum:11,636

100k pension pot at 42

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