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?

Some won't be able to afford the services of a financial adviser @Mark19735 which is why I mentioned MSE.

A random thread in 'chat' asking random people about this specific area of finances does come across as clueless. You're welcome to disagree, as you have, of course.

I plan on continuing to work until I die or lose my cognitive abilities. Not in a grim way, I'm a writer and I enjoy what I do. Ofcourse, at some point I might retire.

I mean go part time, not retire

That’s the wild card isn’t it? If no social security or state pension, eek! Thought fills me with panic. We’d have massive elder poverty rates again.

I think it is really important to talk about these things.
Even talking in a random forum to get ideas, backgrounds and personal experiences.

It is not clueless but gathering info. Where do you start??

Many financial advisors will give you a meeting free of charge. If you go with an independent advisor it is probably £500 and the advisor is normally attached to a pension company or has a favourite company the use.

Basically many want your money under management where there is a significant management charge. I am not poo pooing this but before you do this is is best to gather as much info as possible before you part with your money.

There are lots of free resources out there and it is good to utilize those.

If in a company the best place to start is look at the pension the company offers. Max out your contributions if you can. There have been some great advise on this thread.

I am knowledgably (to a certain extent) but I have still used the government free resources. It means I can make informed decisions. If talking about personal experiences help any woman understand the importance of a pension and financial freedom, I will contribute even on a random forum.

Women helping women - don't knock it.
I do agree a good starting point is the MPS. moneyandpensionsservice.org.uk/

I don’t think the state pension will go- as this thread shows, lots of people will be relying on it for survival. Might become means tested though.

I do think public sector pensions are going to have to change massively, even if just for new joiners, partly as they won’t be affordable and partly because people will start to realise the extent of the disparity and it won’t be politically tenable to continue it.

I'm 49 and my pot is £150K (only worked FT for 6 years (but I paid AVC for those years) - been part-time for the last 20 or on maternity leave). I would've gone back to FT for my pension but DH's pension is healthy (over LTA) so that is my main pension plan (I know, flame me now).

Before factoring in your State Pension, please be aware that if you work for the civil service, a local authority, teacher, NHS, police etc, you were contracted out of part of the SP so will not receive the full amount being quoted here. You will be paying slightly less in National Insurance though so could use that to add to your pension fund.

And if you have a work related pension then it is likely that your SP will also be taxed so again, the amount you receive will not be as much as you might think.

That's so untrue. It's a fairly widespread opinion, but frankly it's bollocks.

Longevity risk (the danger that you'll outlive your savings) is perfectly capable of being insured. The costs are borne by those who don't need it (the unlucky ones who die before their savings run out). The mistake people make is they assume everyone will live out a long retirement, but many, many people don't.

Making the individual own this risk is dangerous. In a great many cases (often attested to by people on this thread), workers over-insure by working longer than they need to, saving more than is necessary, and dying without having enjoyed the fruits of their labour. Making private financial institutions own this risk is less dangerous, but as we have seen many, many times, the profit motive encourages them to make unwise assumptions and sell products in an unethical way that exploits individual policy holders.

The state is the largest entity capable of spreading the risk most widely, and managing that risk most appropriately. It is entirely right and sensible for the state to offer it's employees, as a bare minimum, this level of protection.

Contracting out ended in 2016, so all employees now pay the same NI rates.

Exactly. It's bizarre how people are trying to silence others discussing this, some very odd comments on this thread. The UK has one of the worst state pensions in the developed world so the entire system is reliant on the expectation that people make private savings and treat the state pension as a top up. Particularly with the rising state pension age: many will need to have made provisions so that they can stop work earlier than that, for health reasons.

OP that's not a terrible pot for your age, but not great considering your salary. It's a good start. I'd say you need to triple your contributions, if you can.

I have more than you in my pot (all saved from salary, no inheritance) and I'm a few years younger. Like you I didn't start saving until mid-20s, when I finished studying. But I treat pension contributions as an essential outgoing, like my mortgage, even though I'm a lone parent and could do with more money right now! And as soon as my childcare costs decrease a bit I'll be increasing pensiom contributions further.

I can't imagine anything more miserable than old age in poverty. Been there as a child and do not want to go back! So for me it's a priority. And if I don't live long enough to need it then the money will go to my children anyway.

Statistically the average UK life span of someone who reaches 65 is 21.5 years for a woman and 18.8 years for a man ( ONS 2020)
if you reach 80 statistcally the average life span is 9 more years
so realistically you need to plan for 20 + years on a pension

Odd comments on this thread because people do not understand pensions and therefore their seething jealousy is totally misplaced. Yes , it may be better than what other people have, but actually it isn't that great.

It's a really important issue but if people can't get passed their own jealousy to discuss this issue, then nothing will change. And this will impact women more.

The "Which?" article is good. What it doesn't factor in however is that all of those calculations are assuming a state pension in the total income received. We have no idea how much that will be in two or three decades of how old you'll have to be to claim it, so it's dangerous to rely on it in your planning OP. You may well need to retire before you're 70! So best to re-run the calcs based on the estimates of income required - which are sensible - but stripping out income from state pension from the other side of the equation. You can then use the pension calculators online to work out how much per month you need to save now to get there, within a margin of error obviously.

Yes I think you're right. And what will happen as a result of their defensiveness and insulting people rather than listening and making whatever provision they can is that their retirements will be more impoverished than they would otherwise. Even small contributions, started early, mount up obviously because of compound interest.

People who bury their head in the sand and panic when they hit their 50s or even 60s will be in a very bad position unless they are earning very high salaries by then because the contributions required later on to make up for a lack of them during 20s/ 30s/ 40s will be much, much higher, to get to the same overall outcome. It is very silly. But what can you do if they won't listen? I just hope their ridiculous comments don't put the OP off from addressing it as she's doing exactly the right thing by addressing it and making a plan.

Might become means tested though.

If it becomes means tested it absolutely will disappear, because the people who fund the vast majority of the expense for everyone will be the ones who then don't receive anything back. Such a huge item of public expenditure has to be universal to maintain public support.

I do think public sector pensions are going to have to change massively

And this, unfortunately, is an absolute guarantee, because many are totally unfunded and can't be oajd because there won't be enough money to pay them. Government knows this, they've known it for many, many years. Most of those public sector pensions are linked to state pension age so I presume the main way they'll reduce the liability, for ease and to avoid having to change the actual terms and argue with unions, will be to continually raise the state pension age so that most people can only claim public sector/ state pensions for a few years before they die.

Exactly this.

One of my pension pots has £145K in it, I just checked the date I started it and I was 18. I can't remember paying that much into it and stopped paying into it in my 20's at some point and it has sat in the background with me not having much visibility to it. It was even in my maiden name up until a few years ago when I decided to have a look at it and saw how much was in it. I haven't paid into it for years but it was a worthwhile investment to start paying in when I was 18.

I have set up a pension for my 18 year old daughter and 16 year old son on this basis. Wish I had done it for them earlier to be honest!

This type of 'advice' is why you should speak to an IFA about how much you need to be investing to achieve your retirement plans not asking randoms on the internet. On a £60k salary investing into your pension is far more tax efficient/ beneficial than buying property!

It's amazing how that strategy results in a pot that grows and compounds over time, and frankly I'm astonished (and a little disgusted) by the financially illiterate in this thread who have under-provisioned for their retirement. Smacks of envy and bitterness.

And you can be sure it'll be those same people moaning when they're older, or demanding the others who have sacrificed things now to provide for themselves later pay even more tax or have their pensions raided yet again. I feel sorry for people who are being so stupid but understand your disgust because they are exactly the type who'll then demand everyone else picks up the tab for them being irresponsible.

I agree with your prognosis of what the government will do, but I don't agree with your diagnosis of the ailment.

Public sector pensions are not unfunded. They are funded by the absolute best guarantor of future earnings ... the government. The government has the right to levy taxes on anyone, for anything, at any time. Any industry, any sector, any rate. It is a share in the future revenue of the country as a whole.

A share in a company only creates a right to share in the profits of future workers' efforts, and then only in those companies that your fund has bought into.

'Unfunded' is a stupid Tory spin doctor word that actually means nothing.

I think you've misunderstood what the term "unfunded pension schemes" means.

It has nothing to do with Tories. 🤣 It's a technical term used when discussing different pension schemes.

@Floofyduffypuddy
I had a bit over £150k in my pot, and yes, that sounds about right for monthly payout only I'm getting it annually in arrears as that gave me a bit more.

One of my pension pots has £145K in it, I just checked the date I started it and I was 18. I can't remember paying that much into it and stopped paying into it in my 20's at some point and it has sat in the background with me not having much visibility to it. It was even in my maiden name up until a few years ago when I decided to have a look at it and saw how much was in it. I haven't paid into it for years but it was a worthwhile investment to start paying in when I was 18.

I have set up a pension for my 18 year old daughter and 16 year old son on this basis. Wish I had done it for them earlier to be honest

The magic of compound interest! My children are still in early primary school and as a lone parent I have not much to spare but once my childcare costs reduce I will set up something for them as well as increasing my own contributions. You're so right: it's all about planning. If you plan far ahead, you don't actually even have to contribute huge amounts.