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?

@ArcticSkewer

No..the raison d'etre of Mumsnet is help and support.

This is what the op is after and has been said many times on this thread unfortunately knocked off course by some posters....and this is what the op shouldn't hope to receive.

It's the posters who are not helpful who should go elsewhere because many people lurk and get brilliant helpful information.

Many people ( as I did year's ago) go off and do their own research. Women's are still far behind men on this regard so it shouldn't be Hidden away.

People need to report such poster's and remind mnhq of their ethos.

Pounds and* pence

It's definitely true that £100k is "a lot of money" if it's received as a lump sum in one go. But £100k in the context of a pension is not a huge amount because it need to last many, many years.

If the OP retired at 65 and lived to 80 (which is roughly in line with average life expectancy), £100k that would equate to a massive £6.7k per year.

In reality, buying an annuity would likely be more expensive than that because the annuity provider would be taking the risk that the OP lives to 90 or 100, and people often buy an annuity that goes up with inflation to protect themselves.

If she took out an annuity at age 65 that was linked to RPI, she'd get a pension of c. £4.1k per year for her £100k - that's not exactly wealthy.

The OP is certainly more fortunate than many others who are in a worse position, but she is not swimming around in bank notes like Scrooge McDuck, laughing over her champagne at the poor people.

1. Goto Martin's Money (Money Saving expert) for advice. Educate yourself.
2. Independent Financial Advisor - not a terrible idea, provided you do your research - there are good and bad ones. See more than one.
3. At £60k, you have money that would otherwise be charged at high rate tax, if you can afford to put ALL of it into the pension, do.
4. Keep your State Pension up to date/fully paid into.
5. By money savvy folk, I was told, to do these 4 ^ AND once my (final) mortgage is paid off, to put the equivalent of the mortgage payments in in ADDITION each month until I retire. (Not traditional advice I know!)
6. DO NOT retire before 65 if you can possibly avoid it. Most of the money the pension makes is in the final few years. (Again, not traditional advice)
7. Personally, I recommend having a couple of pensions... so not all the money is in one basket... but that's not for everyone. Goto Point No 1.

For reference, I currently pay in £600p/m (this is what actually leaves my bank account ie before contributions/tax relief etc etc). I don't care about how much I have already saved (that goes up and down anyway), all that matters is how much I put away each month today (although if this inflation at 9-10% malarkey continues on much longer, I may have to have a rethink!!!)

Pensions are a bit like trees - the best time to plant one is 10 years ago.

The whole point is that £100k (in the context of a DC pension) is not a large pot of money. It equates to about £4k a year. It's not remotely tone deaf for OP to be concerned about this.

I think it's good that women especially talk about pensions. I've got a really good civil service one, and I started one for DS when he was 5 years old. I don't think the state pension will be there when he is 68 so I though he should start saving early.

Op - I would try saving a bit more if you can. You still have at least 20 years of work and so it will be worth it.

Surely if you’re trying to ‘be a grown up’ you would be asking a financial/pension adviser, not a bunch of randoms on mumsnet?

Exactly, and in 25yrs when OP is 67 and looking to retire £4K/Yr will be worth only £1k- £2k/Yr in todays money depending on how long inflation stays high.

It is huge! Despite earning a fraction of what you do I know pensions are important and have paid for advice. You need a financial advisor. It is really hard on a forum to get any proper help. People need to know more about your circumstances that you can reasonably say. An advisor will look at everything in the round - what your priorities are, what your attitude to risk is, what kind of retirement you want, whether you'll inherit anything (if you've already inherited all you will do then that's very different that if you're likely to inherit half a parent's house with your sibling or something), what your responsibilities re likely to be - kids though college, elderly parents or other frail relative whose care might impact on your working life, etc.

It is good to ask about finances - many women don't - but poor form perhaps to make value judgements - you must realise that 60k is much more than many on here will earn. You earn on your own more than twice our whole family income. Just say you earn 60K without making a value judgement about the size!

As to the financial advisor it is best to get one recommended by someone you know. Otherwise Money Helper is a useful site (for lots of finance issues). It is government backed and has loads of advice and a helpline 0800 011 3797

www.moneyhelper.org.uk/en/getting-help-and-advice/financial-advisers/choosing-a-financial-adviser

"MoneyHelper is a free service provided by the Money and Pensions Service.
The Money and Pensions service is an arm’s-length body, sponsored by the Department for Work and Pensions. It has a joint commitment to ensure that people throughout the UK have guidance and access to the information they need to make effective financial decisions over their lifetime.

It’s funded by levies on both the financial services industry and pension schemes."

If the OP had posted, "Oh no, my pension is full and I have this spare £100k that I just don't know what to do with! What shall I do?" she could reasonably be accused of being tone-deaf, but pension savings are not the same as having a massive pile of spare cash. That money is going to be needed (unless the OP dies), and may need to be stretched over 20 or 30 years.

Why?
There's a wealth of knowledge out there online, not just mumsnet, that is free and points you in the right direction.
I like mumsnet for the high net worth posters who share their knowledge. It's useful.
A lot of people are in the middle brackets where there is little benefit to paying for financial advice but a lot to be gained from information gathering yourself.

She's not tone deaf. It's ridiculus for people to not mention they're on more than average salaries so as not to 'upset' people on less, especially on a thread that is literally about finances. It's not like she's bragging about how she can't pay into her pension pot because she spends all her money on caviare and repairing her castle.

I am 45 and have $280K (about £235k). It worries me but I've had a patchy employment history until about 8 years ago. Since then I've saved the max I can in my work retirement plan. This years IRS max is $22,500 so I'll put that in. I wish with all my heart that I'd started saving sooner. Thankfully I don't plan to retire until I'm 65 so even assuming low/no growth I'll have close to $750k. My husband has much more than I do, though he's 12 years older than me and closer to retirement. We also have three kids to put through college. Sigh.

I suppose the most important thing is I started young. So at 21 my company put in 17.5% of our salary plus our contribution was about 7%. But I was there for 6 years salary went from £9k to 25k.

That part of the pension is worth about £100k - not great return, not the best financial decisions but a good pot.

Next 6 years bits and pieces. Worth about £64k

Best part was from 31 for the next 10 years or so. It was a finally salary scheme but with limited growth. When I transferred it (with financial advice) about 5/6 years later it was worth £320k. My salary range here was £30k to £50k. Worth about £450k now

Final salary scheme stopped. So re: contributions, I have always put in to get the max contribution from work. Salary went from £50k to £115k or the next 8 years.
Pension worth £230k now.

Last 5 years earning £115k to £130k, put in the max I can. Now worth just shy of £200k.

I work in a specialist area, have become an expert in my field. Left school after A 'levels. Sorry a bit vague but in the corporate world.

I’m 44. Final salary pension scheme. Currently pay 12.5% in and employer also pays in. Total pot worth in the region of £320k if I’ve done my sums right. Another 18-20 years paying in to it to hopefully cram some more in. I can take it at 65 but will probably take a hit on the monthly payout to be able to go earlier if we have the mortgage paid off by, say, 62.

DP has a standard private pension which will pay out very little, but with two state pensions (if they still exist then!) I think we should be ok.

Honest to god, I wish someone had sat me down at school and explained this shit to me. I didn’t really start understanding the importance until my mid 30s and didn’t understand anything about my pension until a few years later. Nobody explained to a woman I work with the importance and she opted out for several years in her 20s/30s after bad advice and now she might have to leave work young due to ill health and have her husband support them both. She’s devastated her pension will be tiny when she gets to retirement and is working through a significant amount of pain currently to try and stick the job out as long as possible.

We NEED to talk about this more.

I've got 3 random pensions knocking around all with bugger all in - handing out random £30 a month.

I'm self employed now and really need to get back on it - but so skint. My understanding of putting in half your age as a percentage would mean 25% of my income - no chance! We wouldn't eat if I put that in.

I'm literally at the point where I feel whacking £250 a month into a pension is going to provide nothing meaningful for retirement and will simply stop me living literally right now.

Really need to see an advisor....

I think the US social security is more generous than the U.K. state pension though? Have you checked on your mysocialsecurity account how much you are projected to get each month? That might ease your worries a bit.

Hi OP, there are some absolutely ridiculous responses to your post here. Some people clearly have massive inferiority complexes, and I think your question is good and that it's excellent that you are considering this.

I'm the same age as you and have a little more in my pension pot, and want a minimum of £500K in my pension pot by the time I retire, which, according to pension predictor tools should result in an approx pension of £23K per annum excluding any state pension. But also think about diversifying your pension portfolio if you can, don't just rely on one income during your retirement if possible.

If I were you I would definitely put more away. I found moneysavingexpert really helpful.

But that's £171 on top of the state pension.

Presume your mortgage is paid off.

You could easily live on that on your own! You would hardly be 'really poor' I'm living on that now with a mortgage and with kids to support.

Funnily enough, I did that last night (before seeing this thread!) and at the moment I'm projected to get about $2,600 a month, which will likely rise to $3,000. If I was confident that SS will actually exist when I retire, I would feel better about it (also my husband will get $3,000 but there are always rumblings that it might go away (or be means tested.)

If you follow the 4% you should be able to release 4% of the pot a year as income without the capital making a loss over time). So, £330 a month.
A £100k pot doesn’t get you much, I’m afraid.

👏🏻👏🏻👏🏻

It comes across as clueless.

Or MSE if you go to forums for financial advice

The State Pension is about £10K. It is completely independent of any savings you have, and assuming you have made the necessary NI contributions you will get that as a matter of course.
If you have savings or investments, you can realistically expect them to grow at 4% per year. Therefore if you take out 4% every year, the savings pot stays the same. So if you have £250K in savings, you can take out £10K every year, which can be added to your State pension to make £20K total.
Worst case scenario, you have no growth in your savings pot, and you take out 4% every year, then it will last you 25 years. But you will still receive your State Pension of £10K even after your savings run out.
(Of course inflation will have an impact on this).

I disagree completely.

There's a big difference between asking a technical question about which fund to select, or a specific question about what the tax implications are of taking one route or another, and sounding out a broad cohort of people with comparable aims and objectives.

It's called crowdsourcing, it's not clueless, and I use the wisdom of crowds to help me narrow down a range of options all the time. It's only when I'm about to sign on the dotted line that I get a specialist adivisor in.