So now all I need to do is save up 300K--is this for real?

[Coffeetree]

An article from This Is Money showed up on my feed this morning. Basically someone with £290K in pension pots at 50 years old, asking whether they're on the right track for retirement. The rest of the article was various investment advice. Generally the advice was "You're nearly there."

I read these articles and I feel like someone is playing a joke on me. I usually feel very very privileged in that, at 52, I have a mortgage that I'll hopefully be able to pay off in 4 years, plus about £50K in pensions. No inheritances on the horizon. I've worked in charities my whole life, then became single about five years ago, hence not much saved.

So, after paying off my mortgage, I then need to buckle down and save up 300K? That's not going to happen. My plan is to keep working and then go part-time or contract when I reach retirement age.

Am I the only one who thinks these "retirement advice" articles are really out-of-touch?

We lost our pension pot as the fund collapsed so we have no pension anymore!

Happened to my Dad just before he claimed - there was some compensation but they were mainly okay because house was paid off and his parents care was funded by investments and savings and didn't get to the house -his parents grew up in poverty but worked hard and were savvy with money - it was split between him and his sibling.

FIL was in industry that was known for lack of pensions or poor pensions so paid into several private ones.

I hope to start saving more as kids leave home and mortgage starts to come down and could hopefully downsize in future if needed - I'm not in a great position really but then expect to work much longer than current retirement age.

We’ve already talked to our kids about how important saving into a pension is.
If you’re already older those articles are frightening but if you’re younger hopefully they help people think about the importance of saving, the younger you are the less you save per month and there are tax benefits and contribution matching through some employers. There is a lot of info out there to read and help people understand.
Obviously not everyone can afford to save £100 let alone £100,000, but they maybe can consider how much they could potentially save and what they could do to supplement their income during retirement?

A massive piece of advice for any young people is to opt in to whatever pension scheme is available and stay in, no matter what. I know a man in his mid 60s with very poor health, who is now the only support for his brother of a similar age with moderate learning disabilities. He has worked in local government for 30 years but opted out of the scheme because he didn't think he would make to to the age of 65. Frankly, he's fucked. He should be retired on medical grounds but he can't afford it. Bear in mind that anyone saying they'll just keep working into their 70s doesn't know what their future health will be like. You might have no choice.

Can someone advise on the lump payment rules for pensions?

How much can I put in each year as a lump sum without incurring tax?

A decent pension is attainable for pretty much everyone as long as they start investing early enough. I don't know why we weren't taught about it in school. I naively thought for years that I'd live off my state pension. It was only when I hit 30 that I read an article in the paper and had a bit of a wake up call.

Bloody hell, he turned down a local govt pension

It swings and roundabouts. Public service we can't individually haggle for our salary increased. I've completed big projects at work, and my Brother who works for a private company can't understand that I can't go to my boss and say "Look at all this hard work I've been doing, I think I deserve a pay rise". We can't go into a new role within public service and blag a higher salary than advertised because we're been on more courses or more specialised in an area. My brother last blagged himself a pay rise that as it was above 10% had to go before the shareholders for approval. He can haggle for a bigger company car allowance, more annual leave etc. Can't do that in public service. We're generally less well paid for the work we do rather than private companies. eg, salary of IT/data staff within the NHS just doesn't match that of private sector.

My brother earns probably double what he'd get if he did the same job in public sector. His pension won't be DB but he's got bucketloads more cash to chuck into it.

Totally understand where you're coming from OP. The expectation of what you "should" have causes an adverse reaction and makes burying your head in the sand the preferred option.

I am younger but was determined to maximise everything I can pension wise at age 40.

Here's a few things I did:

Logged onto the gov.uk website and checked my NI contributions were on track for the full state pension.

Gathered all details of old pensions schemes and understood how much was in them and how they worked. An old scheme of mine, although set up as defined contribution, has a minimum income floor. So although my pot is only £7k, I'm guaranteed at least 1k a year on retirement. So make sure you understand the scheme rules of everything you do have.

Maxed out employer contributions in my current scheme. So I pay in 6% and get 14% from my employer. I haven't loss very much at all from my net wage but those employer contributions are worth a lot.

Checked that the pensions were invested in the right funds for my risk profile. I received some free financial advice via my union which helped with this.

(Also got my DH to do everything above so hopefully we won't split up but who knows)

Will I have 300k by the time I retire? No.

Do I feel more in control and confident that I won't be living in poverty in old age? Yes.

What do you mean by "what I'm entitled to"....?

I don't really understand what you mean. Is what you're entitled to not the same as what you'll have when you retire? Can you explain a bit more?

@Saschka and @Mikimoto Any one who is self-employed who does not have a SIPP is missing a huge opportunity.

I came across them about 2000, ironically re-writing a load of pension marketing leaflets for a very large financial services pensions and insurance company... and it was a light bulb moment. We bought an industrial unit at the intersection of two major roads, with a 10 year commercial mortgage and what was left (after redeeming our mortgage) when I sold my little flat that had been an accidental buy-to-let. It was let to a manufacturing company that paid off the entire mortgage within eight years, and so the rent has been building up ever since, tax-free (until it's drawn as income). Annual rent is now £40k, and the tenant is responsible for all repairs and maintenance. The building's not increased much in capital value/growth compared to residential property in 20 years.

It's not all smooth sailing. Tenants vary from wonderful (our first stayed 17 years and never missed a month) to diabolical... the second went bankrupt during Covid and left us £50k out of pocket by the time we repaired all the damage. And it takes months to market a property, write leases etc. during which you have no income but have to pay security patrols and higher insurance, as well as business rates after the 'holiday'.

SIPPs are allowed to invest in almost anything EXCEPT residential property and a few other classes (no art, wine, or classic cars). They could own a hotel or a care home, if that was what you understood. They are also quite admin intensive, especially commercial property and there are annual fees to pay the (mandatory) institutional trustee, which are quite high if the investments held are anything more complicated than standard shares or unit trust/funds. The income remains in the trust, accumulating tax-free as cash (interest rates are higher now, so this is good news) or can be invested elsewhere into stocks and bonds... at the trustee's discretion.

Plus, if you are self-employed or have your own company, you and the company can continue to contribute to your own pension, and receive the tax-relief. DH's company pays out in years when profits have been good, up to the full individual ceiling. However, there were many, many years when that wasn't an option.

The other bonus of a SIPP is that it's a trust, so the assets do not form part of the individual's estate for inheritance taxes. Our DC (who have been members since infancy) own about 5% in their own right but obviously can't take a pension until retirement age. HTH.

Martin Lewis can help you there….

https://www.moneysavingexpert.com/savings/discount-pensions/#need-3

@michalwave the amount you can contribute to your personal/private pension depends on your age: the percentage increases as a proportion of income with each passing decade but everyone, of any age, from birth can contribute £3,600 per year and receive the tax relief. You would have to check with your employer's HR/payroll if and how much you could put in. My knowledge mostly relates to the self-employed and entrepreneur/small business people.

I started a pension in my first job after uni. I'd read some advice that you should pay as a percentage half your age. So I did that. I worked for a charity then that made a 10% contribution!

I didn't realise that if you start young you keep that percentage all your life so I've increased my contributions to half my age every two years. That's an oops in my favour though.

Because I started young and never had the money in my pocket it was "easy" to budget accordingly.

I still won't have £300,000 when I retire.

My pension plan is to pay off mortgage. Remain married, make sure I qualify for state pension (qualifying years), live frugally, work part time and have my pension.

I wish I'd chosen a different employer/field. I too have worked in charities only since graduating.

We've started stake holder pension for our DC and lay £20 a month in. (2 DC).

I advise all young women to start a pension young, to pay into it every month, and to really consider options to them (looking ahead to retirement) when deciding about marriage, children, childcare, part time working etc.

I attend stuff about the gender pension gap.

I too would like advice for what to do with a small pot.

I have 2 one performing better than the other and I wonder if I should combine them but this is where I get scared!!!

@ReeseWitherfork @EffortlessDesmond thank you both

I understand it isn’t possible for everyone to contribute to a pension in full, but it’s also unhelpful to suggest a good pension pot is not attainable for anyone other than the super rich.

I am state school educated, no connections got me my jobs. I got a job after completing my training at 22 and have paid into a DB pension, maxing out my employer’s contributions, since the first day of work. I’m now 43 and have 300k in my pension pot. I realise I am now in a very well paid job but that hasn’t always been the case. If you start at 18 or 22, pick employers with good schemes and max out their contributions, you can build a great pension pot.

There needs to be better education around finance generally, including pensions. And there needs to be varied advice for all sorts of situations. But suggesting that a good pension pot is not achievable for anybody other than the mega rich and privileged is also unhelpful.

Interesting, thank you.

@michalwave , @ReeseWitherfork's figures and link are more accurate than mine!

Completely agree. We relied on DH's pension as he was on the USS university scheme and it was almost final salary. He died (and his life insurance didn't pay about because he died from a genetic condition). I get a widow's pension which is a tiny portion of what he would have got – don't get me wrong, I'm very glad to have it and it's a privilege, but it's not going to do much for me come retirement.

I know a nurse in the NHS, Been there years and could have been on the best paying scheme they have/had, but has purposely opted out as she like to use the money for weekends away.

When most of us are retiring at 55, she will be working until 67.

Sometimes you need to be realistic. You thought you were 'very very privlidged' to have 50k in a pension when you're already in your 50s? Surely you can do the basic maths and work out that 50k total in a pension doesn't get you very far.
Have you had a long time out of the work force or just opting out of pension contributions?

Not all advice is going to be aimed at everyone, particularly financial advice.
If you want to seek out financial advice for those approaching pension age with low savings there will be plenty of information out there. It will largely centre around increasing your savings as much as possible and lowering your expenses as much as possible.

I think this is exactly right. Reading these articles at breakfast time isn't palatable, but they're probably pretty accurate. I cannot begin to envisage what the future will hold, especially if times don't improve. A lot of soundbites out there about how much easier the job situation is now, but this isn't true for everyone - nor for every area of the country. And in low-paid or insecure jobs, zero hours contracts, maybe struggling to pay rent, ever-increasing bills, how do you save for a pension pot?

I think the lesson here is to not rely on it but see it as potential additional income

Yes "being realistic" means I cannot time travel. Opting into basic 3% pension schemes when your income is low doesn't get you far. Divorcing at 47 also wasn't factored in. Hence looking at what I can do now.

Just did some research and my current company lets me put 10% of my salary into my pension, and they'll match up to 6% of my salary! So I'm signing up for that now (increasing from the current 4% and 4%). That will slow down the mortgage overpayment, but better overall. So thanks!

It does but his does not, we checked.

Currently have £47k pot split over two places, plus whatever the latest job pot amounts to – pennies I think. I’m 42 and we’ve got 24 years left on the mortgage, and two small children. I’m currently on maternity leave with one and the other is about to start school.

I’m constantly torn between wanting to go back part time to have a day with the littlest, or ramping up the career to put money into the mortgage, pension, and savings for their future university/housing/pension needs, but also the house is a fixer upper and there’s a lot left to fix up, and I’d rather it were fixed up soon to enjoy their childhood in it with a garden and rooms rather than a building site. And will be worth more fixed up (we bought the worst house on the best street) so we can downsize to release funds at some point, I hope. Long before care home feed come onto the horizon and bugger up that plan.

I did think about pensions in my 20s and I did put money aside, but back then I lived in London, did a fun career that paid badly, and even living in a black mould houseshare and being frugal I couldn’t always afford bus fare at the end of the month (the Tube was always a luxury), let alone max out pension contributions. If I had my time again, and I will advise my children this, I’d have done a staid but steady public sector job with a decent pension and recognised that once you hit midlife, unless you were a roaring success in the fun job, what you want is a pension, decent pay, and flexibility. Lucky old DP has got a decent university pension and is now public sector with another good pension, pay rises in line with inflation, and a 35-hour week so gets to easily fit full time around the childcare timings, whereas my work’s 40-hour week is impossible so I do 35 hours so get paid part time. Gah!

Frequent daydreams include a modest lottery win, a distant European relative dying and bequeathing it all to me in the manner of an Eva Ibbotson novel, writing a feminist Twilight and making a mint that way, or cashing in the critical illness cover we have with a terrible but curable and not painful disease that doesn’t affect my life at all but does trigger the mortgage payout.