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?

Oh dear, the perils of internet comms. I wasn't either being rude or suggesting that you were rude (I do take the 'suggesting that' - the 'suggesting that' was meant to imply a hypothesis). Just trying to clarify for ED, and apologies if anything was taken the wrong way.

You are correct, it works for people who work hard. But you are on over double the average wage, so it is easier for you to build up a good pension than someone earning say 25K. I’m on 59k, so again easier for me than it is for a lot of people I know.

I tried this and it just gave me addresses to write to i think? Have you got a url for it?

No, not you rude, the person who suggested I'm someone else. Perilous indeed!

https://www.gov.uk/find-pension-contact-details

It's an online form.

I'm sorry, but "keep your fingers crossed for another 8 years, it'll probably work out for the best" doesn't sound like a solid financial strategy.

Apols, I meant to include this rather vital info! I even had the page open. Goldfish memory.

Nor is it helpful.

This thread has been interesting. My first couple of jobs, back in the day, you couldn’t join their pension scheme until you were x years of age or had been working there for y amount of years.

I was young, pre-Internet and definitely not in the right set-up for savvy family advice etc.

Anyway, for those eligible, has anyone used the Pension Wise service. Am just wondering if it’s worth using, before going ahead and looking at paying for IFA? If it’s really not much help, I’d rather utilise my time better and go straight for IFA. But if it’s helpful then I’ll definitely utilise it before then using an advisor I have to pay.

I do 10 % and my employer does 15. I can’t adjust that though, it is set. Final salary scheme

It's because the planning has to be done much earlier, because of the effect of compound interest. What you save later in life will have much less time to grow. We should all start pension funds for our children in early childhood ideally even if we can't afford to put much into them.

It is a dire situation that has been hoisted upon people by economic mismanagement spanning decades and the expectation that now everybody takes all of the responsibility and risk to make provision for their retirements, alongside a period with no inflation-adjusted salary growth for 15 years so few people can afford to do so. The tony contributions that are automatically made only very recently now through the "automatic opt in" schemes are nowhere near sufficient to fund a decent living standard in retirement. Sadly the UK pension system is a complete mess.

The rough rule of thumb - although there are no guarantees - is that you'd need around £100k of funds to buy an annuity giving you an index-linked pension of £2-4k per year, depending on the age you retire. In far more generous final salary schemes which are taxed much less, you get roughly double the income for that same contribution.

It's out of many people's reach to afford what needs to be saved. The best chance people have is to start young and view it as an essential cost like tax or rent/ mortgage. But still very hard to save what is required even if you do. The more you can pay in the better. Also ensure you have selected funds that will make a decent return - this can make a big difference.

This is also a very good point that really needs to be hammered home to younger women: there are huge consequences later in life if you don't make career (and therefore pension contributions) a priority. Even if you can afford not to work right now, that's not the same as being able to afford the consequences of that later in life.

Sadly a lot of the unfunded public sector schemes won't pay out anything like what they've promised they will because they literally won't be able to. Much will be downgraded, again, because there is no way it is possible for them to meet their liabilities. DC schemes are treated far more unfavourably for tax and in terms of contributions but at least that is an actual investment that exists, no just a promise that tbh isn't worth the paper it is written on. I would not be happy at all if I was putting my eggs in that basket(case). Like the state pension, which will also likely be downgraded to such an extent that it becomes meaningless, by the time younger adults now should be receiving it.

As very sad state of affairs generally.

Around £800k per person if in a couple would be ok.

More needed if single, per person. These calculations also assume no housing cost (mortgage paid off).

www.retirementlivingstandards.org.uk/details

Absolutely, pension investment is very clearly the rational choice above overpaying a mortgage, then using the pension to pay off any remaining mortgage balance when you retire. I'm always surprised by people declaring they are using any "spare" money on overpaying mortgages to clear them earlier than required when some very basic maths shows that isn't the best option financially.

The calculations and standards also seem to allow wildly generous amounts for things: £1,500 a year for clothes. I don’t spend that now, or ever! I’m not planning on attending the Met Gala. I think it’s useful to look at them as a starting off point to consider what you actually spend money on (beyond housing, utilities, food) and therefore what you’d need in order to keep doing the things you like doing.

They did national research on costs, done by Lancaster University I think? Clearly they will be averages, but it is the ballpark figures for what will be required.

But what was he paying in per month? It must have been a negligible amount for his fund to be so small after all of those years. That is the critical point: people need to be saving double digit percentages starting with a 2 at least, to save enough in the current system. Saving a few % only and then complaining it doesn't amount to much is, well... obvious?

Definitely reconsider this. As in, stop doing that immediately and put the money into your pension instead! You are foregoing employer contributions and tax relief to pay off a debt costing you less in interest than a pension should be earning in interest if properly invested AND only using the post tax amount to do so, without the employer matching, so wasting 50-75% of your money depending on your tax rate. This is literally like setting fire to the money you have earned and makes zero sense. So definitely stop!!

I have! I literally put through a request yo the pension team yesterday!

@FarmGirl78 the guy you are dating has either been paying in very small amounts (to get those numbers the contributions can’t have been more than £150 per month) or his pension is invested in an awful vehicle.

Indeed. I am not a massively high earner but I have been in my current job for 2.5 years and my pot in this pension scheme is already at £40k.

Wanted, by some. Not required!

I did the BBC cost of living calculator the other day, which is absolutely pants (it told me I'm paying £xxx more on my mortgage because it didn't ask if I had a fix...).

One striking thing was that it was comparing me to average people in my household income bracket, and we are spending WAY less on just about everything.

And, naturally, it didn't include a section for savings and pensions, which could have demonstrated that those could be going up.

Indeed. People who complain about the generosity of public sector pensions usually overlook the large contributions made by members (sometimes £500 pm) plus the lower salaries earned compared with similar jobs in the private sector - remember many are graduate professionals. If the pension wasn't decent, the recruitment and retention crisis would be even worse than it is currently.

Of course you're not going to get a similar pension paying in £50/100 pm.

Don’t forget the older you get the less you’re likely to spend. We are working on the basis that we will spend more in our early retirement years.

We don’t have huge amounts in our pensions but I put in 12.5% (5% me 7.5% employer) and DH puts in 10% (5 him 5 employer) and we are 45 and 40. However we have a large house we will be able to downsize from so that will form part of the pot and once our building works are done and nursery fees gone we intend to save save save.

We also buried a friend yesterday so are also trying to strike a balance between saving and living now as it is of course possible that we might not make it to retirement