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?

https://www.nutsaboutmoney.com/pensions/average-pension-pot-uk

If you invest wisely in your pension then you can at least expect your pension to pot to double in size every 10 years (7.2% growth per annum). So £50k becomes £200k in 20 years.

You can of course do even better than this. The S&P500 has averaged 9.5% per annum for the last 60 years. So if that continues then you should double your pot every 7 or 8 years meaning your £50k pot will already be £300k in the future.

Avoid managed funds. The fees kill your retirement.

Also:

Obviously the amount you have in your pension pot will dictate how much pension you can draw (which also depends on ho long you will live) and the amount of pension you need to draw is directly a result of how much you will spend.

I think it is right that pension advice services are telling people to work towards decent pots. I’m in my 30s and by the time I retire there won’t be a meaningful state pension and retirement age will be in the 70s. Pension contributions should be started from the get go, from first pay packet, this is the only way to build a decent pot (and to maximise pot growth over 40+ years). The advice is right in my opinion so that the majority (and especially women/mothers) aren’t in your position.

But you’ve also got another 10+ years to contribute so it would be advisable for you to prioritise your pension contributions as much as you can-it is tax free also which obviously is an uplift!

I don’t understand this.

I’ve done a calculation based on contributing £1,400 a month (including employers contribution and tax relief) into a pension pot (starting from zero) for the next 17 years. So that’s 1400 X 12 X 17=£285,600

I’ve used the government pension calculator and if I don’t take a lump sum then this pot will give me a pension of £10,000 a year if I retire age 60. I’m assuming this is based over 30 years??? Which would be £300,000.

Why would my pot only increase from £285,600 to £300,000??

@WelshNerd Gosh, in what industry do you work where they go as high as 14% employer pension contributions?! My employer does up to 10% and that's one of the best I've heard of among my circle.

I once went onto one of those pension type calculator things to see how much I would need in my pension pot when I retired.

Turned out I needed to be saving over three grand a month into a pension for the foreseeable. Yeah, right. That's more than I earn.

You're missing what I said. I was saying a public sector pension for many would be nothing approaching 300k.

I've been paying into an NHS pension for 20 years, I'm 45 and my full pension won't kick in till I'm 68 and even when it does, I don't have anything approaching 300k in the pot.

How much do you think the average NHS employee is earning?

I wish I knew about MN before I gave up my job to look after my 3 kids fir 10 years.

Don't you get the percentage you agreed with the pension provider? i.e. I give 100% to dh if I die, vice versa?

But you won't have a 'pot' in the NHS scheme. What is your annual pension predicted to be when you are 68?

Really. I’m surprised as the civil service makes a large contribution each month on your behalf too so ultimately at least 25% equivalent of your salary must be going into a pension if you include the employers contrib). Did you go very part time or not understanding the statement or is that £40k a year?

I honestly see shit hitting the fan in the next 20/30 years.

There is absolutely no way an average salary can save that much.

And its such a swizzle - if you die, where does it go? Back to the coffers!

You don’t have a pot. The only time you get told of the pot is in a divorce and you need a value.

however if your pension statement says it will pay you £20k per annum that is until you die so let’s say 83 so that equates to a “pot” of £320k ie 83-67 = 16 years multiplied by £20k = £320k. but you could end up getting more if you live beyond 83 or less if you live less.

If you work in the public sector, there isn't 'your pot'. Your pension will be related to the number of years worked and your final salary. Index-linked and paid for life.

In the public sector it goes back to fund other retirees as ultimately there isn’t a bank account somewhere where this money is being saved. As we pay in it goes straight out to fund those who have retired.

in the private sector if you die your will should determine where the balance goes.

Exactly but not difficult to calculate the “pot” based on annual pension multiplied by number of years you live. My public sector pension assumes I will live for 23.7 years after I retire if I retire now. If I retire in 20 years it says on average 25.1 years.

That's because you don't have a pot. You'll get a guaranteed sum every month for the rest of your life, which will almost certainly way outperform £300k in a DC scheme. Your NHS pension is one of the most valuable around.

Quite an interesting overview.

https://ifs.org.uk/publications/challenges-uk-pension-system-case-pensions-review

For a person with a defined contribution pension who dies before receiving any pension payments, the value accrued would be paid in accordance with the person's will. So generally, to the surviving spouse.

At 60 are you taking your pension early?

also they assume 23.7 years of life on average after retiring. (According to my pension plan)

I think most people will be relying on inheritance to see them through retirement

It's another vote to work in a non -caring industry i.e. one traditionally assumed that women will do

Teaching, nursing, charity work etc doesn't pay

Most (aka average) people won't ever see an inheritance.

@redrighthand83 it's quite possible to do it; many people have demonstrated that on this thread! To a certain extent it's down to choices.

I chose to work in a public sector role, foregoing the higher salary I could have commanded in the private sector. I didn't opt out of my occupational pension scheme (as some of my colleagues did) meaning I had less money in my pocket but was investing more in my future. I returned to work after each maternity leave, ensuring continuity of service, even when childcare wiped out everything I earned for a while. I dropped to part time when my kids were tiny babies but stepped up to full time again pretty quickly.

These were all choices I made. I could have done things differently; taken time out of the workplace, or remained part time for years and years, or opted for more money in my pocket rather than paying over 12% of my income into my pension.

There's always a trade-off. It's no good complaining about lack of pension provision if you haven't paid in. And I appreciate it's difficult - we could so have done with the extra hundreds of pounds in our pockets when we were in our 30s with expensive childcare, a house in need of repairs and desperate for a holiday. But now 25 years later I'm glad I went for short term pain for long term gain

Teaching and nursing may not pay as well as some other jobs, but teachers and nurses have gold-plated index-linked pensions -- unless they were daft enough to opt out! Charity work is not the best professional path, unless very senior.

The real difference in retirement is going to be between those who worked in the public sector and those who didn't.

Yeah, exactly! This is why people just give up and bury their heads in the sand.