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?

Well I'm 33 and have £5,000 total in my original workplace pension that I paid into for 3 years. I lived overseas from 18-28 and didn't save at all. I got a new job with an LGPS pension a couple of years ago and so far I've already got a yearly amount of £1,500. I don't think I'd go back to a private pension anymore, the pension is part of what keeps me in the job.

What's the point in investing in your pension instead of trying to invest in property that you could sell/rent out in future?

For me it’s tax relief+employer contributions+ attitude to risk.

Point 5- only uncrystalised . And if you die before 75, that uncrystalised pot can be passed tax free to beneficiaries pensions

i disagree that personal pension pots are ok as a principle.

whqt is means is that individuals take the sole risk of investments and the sole responsisibltiy for charges . It has made a lot of money for the pension markets, and the new government scheme using private pension pots is quite frankly screwing the poor over to line the pockets of shareholders and the rich.

if someone wants to retire just at pint when market slumps, they will crystallise their pots at a lower value and pay the penalty for that for the rest of their life

add to that, that a very large proportion of the public, including posters here, haven’t got a clue and haven’t got the financial acumen to understand the great complexity there is in pension. I’ve had a lot of advice and support and even I’m struggling to understand stuff like how my opting out of SERPS effects me when I get to 65, as my company pension will drop and stay low before state pension kicks in, but my state pension is also reduced. Between terms like crystallised, uncrystalised, draw down, etc it is not easy . Then the government now allows people to blow the whole lot as a lump sum on retirement, with many people not appreciating the tax penalties to do that.

a much better idea is this thing called NI and state pension. The government could have put NI contribution up and put the state pension up in line with those gains. The state pension spreads the admins costs out amongst all tax payers. It spreads the risk out over the entire NI scheme. It guarantees an income at a certain level, and it doesn’t involve people having to gamble personally on their life expectancy, how much they need to live, and whether to blow it on a holiday home. Yep, I know some people don’t want that- but those are usually people who have high salaries, wealthy etc. we have NI to spread the risks of poverty, hardship, illness and retirement needs across the entire nation - it has been stripped away and replaced with a system that lines the pockets of the wealthy investors.

www.gov.uk/future-pension-centre

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I'm 42. 20 years nhs pension. I have £312, 653 in the pot which will give me £3,537 per year at 60 plus £10k lump sum and £2,715 per year from 68.

If you earn £60k but only adding £3k per year, that means your employer is adding 3% and you are adding 2%.

That's not a massive percentage. Your contribution should be at least 5% if you can afford it.

I earn £24k in the NHS. I have that pension for the time I’ve been there. It won’t be much longer as I’m looking elsewhere as it’s too hard now. My pension is in two halves and the second half isn’t as good as that. I have savings I’m building up a small amount monthly as long term. We hope to be mortgage free in about ten years. There will be equity in the house

I come from a line of a family with early deaths so I refuse to put all my earnings and saving towards a pension I might never have or when I have ill health. I want to live a life while I can. I do have one eye on the future but only what I can afford without affecting my quality of life.

You can invest in property by investing in your pension. Investing in property specific funds is an option, if that’s your thing. It’s much less trouble and can get you a decent return.

Owning and renting property is a massive ballache and very much not for everyone. Especially residential buy to let. I don’t want to be called at work to discuss immersion heaters or rodent incursions.

We have made far more from investing in stocks and shares (medium-high risk, mostly US companies but a decent, ethical spread), plus a couple of decent start ups, than we would ever have made from investing an equivalent sum in property over the last twenty years. Doubly so now BTL mortgages are not tax deductible.

Big fat zero. I don’t even have full NI contributions so my state pension is crap too.

The bang average life comment is interesting - Aviva suggesting you need 30k for this, when you probably won't have childcare, commuting or housing costs seems a bit mad when the average salary is less than 30K - plus you often have those costs to pay. I know it is in their interests to get people to save more.

FWIW, my DP have state pension only and say it's the most they've ever been paid. That will be normal for many people, rightly or wrongly.

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.

The unknown here is how much healthy life you will have left. My mother in law had dementia in her last years , we looked after her as best we could for as long as we could and it almost killed us with both having jobs and children still at home.
She had very healthy pensions,savings and house. At £1500 a week for her care home (it had to be both dementia and nursing care ) after a couple of years and selling the house etc she had virtually nothing left and fortunately passed away before we had to look at changing her to a home you wouldn't put your dog in.
You can buy an annuity to pay for care home fees but you have to try to be a bit cold hearted and work out if someone will live long enough to make it worth while. When we enquired it would have cost £150,000 to buy the annuity. Our cousins mum similarly had dementia and lived 6 years in a home which again meant everything was sold and cashed up to pay the fees , they estimated they spent over £400,000.
Lifetime spend on care home fees is supposed to be capped but essentially if you have dementia that is meaningless.
We are both now putting all the spare cash we have to top up pensions but are also paying into Isas to fund care home annuities, if necessary. After a lifetime of saving and care we want to be able to pass something onto our children who will be working even longer than we are and with a bigger debt burden eg student loans than we ever had.

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

Its twice the national average, so double is a massive amount regardless of what you checked

That seems very low. Or is that the amount it would give if you left your job now rather than staying to 60?

Yep, I can understand that a bit. My mum died when she was 59, my grandmother was 61, so at 63 myself I have felt on borrowed time for years, and do get anxious

BUT here I am still, and I retired at 60 to make the most of what years I had. Ok, I earnt a good salary, but right from start I decided I was buggered if I’d work myself to the grave and paid a lot of money into my pension pot - sometimes up to 20% . Yep, that meant I sacrificed stuff that cost money at times, but I replaced it with cheaper things. Days out through memberships or freebies instead of a foreign holiday, doing things that were free for kids, making and renovating things instead of paying to replace etc. we weren’t mostly wealthy as a family- there were times we really struggled and defaulted on mortgage for instance ( 1980s pre house price boom so houses were more affordable ), my ex was made redundant 5 times in 8 years at one stage with long period of unemployment.

It doesn’t have to mean a miserable life - it’s where you choose to put your priority or where life throws curve balls that you have to spend money on. I like that I can enjoy my work free life now while well enough to enjoy it.

This is a good article on what sort of pension people will need to find certain lifestyles: www.bbc.co.uk/news/business-58883053.amp

I often here Martin Lewis say that if you can afford to (ie don’t leave yourself in debt over it) then one of the best things you can do for your children is to open a pension for them when they are young. Put in, say, £50 a month and when they start earning hand it over to them to start contributing. The compound interest over time will mean they have a decent pot on reaching retirement.

If you open it when they are 10, and apply the “half your age” rule of thumb then they will only ever have to put away a small % of their earnings compared to someone E who doesn’t start a pension until their 30s.

Gah! Damn typos in that last post 😳

It's not that much - and £60K isn't a massive salary either. Above average, of course, but only because average salaries in this country are absolutely sh*t. People are struggling because of government policy, and that's who they should be having a go at, not you, but it's classic Mumsnet - if you don't get at least one person telling you you're a horrific person for starting whatever thread it is, there's something wrong.

I'm in a similar boat. Income similar, pension the same although I'm a bit older at 47. I have a private pension (I've jumped between full time and freelance work for years, so kept paying into that as a security measure) which has about £40K in it, and a work pension from an old job with about £50K in it, then about another £10K in pensions I've acquired from changing jobs a few times over the last few years. I need to consolidate them into one place, and was thinking of trying a service like Pension Egg to see if that would help me get the best return on my money. I've upped my payments a bit but I still reckon I'll be lucky to have £300K saved in pensions by retirement age. So I'd have about £1200 a month to live off, but how does that work with inflation? What if you have a mortgage still or debts? Not sure what happens then! Will we all just...be poor?

@hlu2 I would suggest posting on the Pensions section on the Money saving expert forum.
You will get non-judgemental input from people who actually know what they are talking about rather than insults from the hysterical nutters on here.

I would say that is a decent size of pot for your age BUT only because of the inheritance. Your contributions probably need to double if you want a decent retirement income.

I'm a similar age on a similar wage. I pay 11%, my employer pays 10% so pretty much £1k a month goes into pension.

@hlu2 not sure if it would help you (yet) to see a financial advisor, unless you've done the following already;

1. calculated what your household spend is now per month / year, are there any areas you want to cut back on, or are there any expected changes in spending coming up
2. checked how much are the available money pots of all sorts of investments and savings you have right now (Whether joint or individual)
3. checked have you got an emergency account for maybe 3 months' worth of spending - that shouldn't be counted as part of your longer term savings
4. then you can ask your work pensions people to explain the options, for example is there a matching scheme where if you put in 5% they add 10% and so on
5. discussed with your DP about priorities / any big spending coming up / how you both want to manage money
6. after all that you'll have a clear picture of how much per month could potentially be saved and then at that point it could be more useful to look at Money Saving Expert forum discussions (to gain knowledge) and then if you wish, to use a financial advisor

When I was your age, my pension pot was similar - as I've got older, like other PPs, I've been putting a lot more of my salary into my work pension.

At 42 I had zero, but was in a job that had a final salary pension. At 55, I have 45k saved, dh (self employed) £50k. We are now in a place where we can save substantially and have set ourselves a target to have £200k in 5 years. I think that once we hit (if we get there) state retirement age, that plus my bits of final salary pension will be enough to live on reasonably. I think if we have £200k tucked away, it will give us peace of mind to go part time in our early 60s and travel.

Mine is pretty low and I am nearly 50. This is despite always working and earning an ok salary. Main reason is that I lived in a other country for a while and then became a lone parent, so had to focus on making sure we had somewhere to live. It’s quite depressing that despite going to uni, getting very good qualifications and working hard I face a very uncertain future. I am exhausted but I don’t think I will be ever be able to afford to retire.