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?

@Itsokay2020 I started working in a factory at 17 and joined the pension as soon as I was eligible, as I've done at every job since which offered one (even if I was only there for a year or two) - I'm 51 now and pensions are not a "new" thing, although previously they were optional. I came from grinding poverty, and took every single opportunity to never be stuck in the same groove as my parents.

Thanks Heatherbell. As the UK higher rate kicks in at 50k, do I basically need to get my gross wage down to £4166pm by salary sacrifice?

I've just used this calculator and I'm actually really surprised that my savings are on target for a reasonable income at retirement - we're a similar age so give it a go! https://www.standardlife.co.uk/pensions/tools/pension-calculator#pension-calculator

Lots of useful information and encouragement in this thread, and it's great that so many women are asking questions and seizing control.

I couldn’t get this calculator to work correctly unfortunately. There didn’t seem to be anywhere to enter my existing pension pot amount. Nor did it ask if I’m planning on taking a lump sum or the age I plan to retire? So either I’m missing something or it’s not very reliable?

Thank you for mentioning The Rest is Money. The interview with Richard Buxton that they are talking about was in yesterday's FT. He was interviewed on R4 Today this morning about 6:15 if anyone wants to listen again.

Thanks Heatherbell. As the UK higher rate kicks in at 50k, do I basically need to get my gross wage down to £4166pm by salary sacrifice?

Exactly - I have various other things coming out of my salary including an EV so for me I salary sacrifice the car and pension and make sure my taxable pay is within the £43k annually. My pay slip shows taxable and non-taxable pay.

@Loopyaboutmy2boys your logic is sound in terms of the 35 qualifying years...I'm always wary about that as it's a policy choice and a future Government could increase it!

Make it 40 or 45 qualifying years needed. I hope they never do but it's something to consider.

@R4ID it doesn't ask about a lump sum, but on P3 Existing Pensions you enter your current value in the first field. It bases the calcs on NRD 67 to coincide with SRA.

At 55 my pension pot was 10k, so I took it out!
in 12 years time when I retire 12k is going to be worth nothing, so I’d rather enjoy it now

Putting cash into your pension via salary/bonus sacrifice is a very sensible thing to do if you are a higher rate tax payer, but I doubt many people I know do this as they tend to have a higher outgoings so need the money now.

But if you can get below the £50k mark you can then claim child benefit so that's an extra 96 sovs every 4 weeks.

Of course the only downside is that you can't access it til 55, soon to be 57, and who knows if that will go up to 60 or beyond in the coming decades.

Use an online tax calculator, there is one that shows you the breakdown of each tax band, so adjust your pension contributions on it till there is nothing in the 40% band, depending on your tax code it's around £50k.

In England while you can buy a car through a work scheme I don't believe it's tax free, so it's not salary sacrifice, it's just a workplace scheme to pay for it and take the payments from salary.

You need to ignore these payments for pension purposes as they are not reducing your tax liability.

There is no NI issue by the way, not for higher earners.

*In England while you can buy a car through a work scheme I don't believe it's tax free, so it's not salary sacrifice, it's just a workplace scheme to pay for it and take the payments from salary.

You need to ignore these payments for pension purposes as they are not reducing your tax liability.

There is no NI issue by the way, not for higher earners*

Mine is an electric car and subject to 0% tax so the work scheme I'm in does count as a salary sacrifice for tax purposes.

It's so hard. I'm in my 50s and realise I don't have anywhere near enough. But I took time off with children, worked part time for years and when pensions were easy to opt out of, I opted out as I needed every penny.
I wish I'd paid more attention to pension information.
It seems a bit late now and I'm reconciling to working for much longer

I am nearly 54 with about 400k in my pension. I don’t have a mortgage anymore my house is worth about £550k but have two older teenagers to support on my own.

Absolutely, start giving the advice now for people in their 40's and 50's so they can plan, take some action.
Actually there was a bit of advice on mse a while ago about paying in for missing NI contributions, but I think that ship sailed.

@Coffeetree 300k might sound unachievable but actually it just highlights how important it is for people to understand by the time they are young adults, how important a pension is, and to have a broad understanding of how pensions work. If someone starts paying in as soon as they start working (easier now with auto enrolment) even if not a huge amount then the more time there is for the pension to grow. It's also important people understand the implications of time out of the workplace or lengthy periods of not being in full time employment.

My kids as teenagers when they heard figures like 300/400k they just laughed as though it was pie in the sky. We've drummed into them the importance of a pension and now they're all young working adults they can see that it's not pie in the sky at all; they're all paying into pensions already in their twenties and they can see the benefits of employer contributions and long term security

Great thread, I’ve read the entire thing. I just came on to recommend some reading for anyone who’s interested. How To Own The World by Andrew Craig. The Gone Fishin’ Portfolio by Alexander Green. Fail Safe Investing by Harry Browne, and Way Of The Turtle by Curtis Faith (you don’t have to want to be a trader to read this one, the cognitive bias is very relevant and interesting). I wish a comfortable, happy & healthy retirement to all of you.

Based on this thread I've done one of those pension calculators and based on my pots and current contributions apparently I should have £354000 when I retire.

I can't see that happening because in recent years my pot has fallen in value and what if I can't keep paying the same amount in?

My pension contributions will be among the last thing to be cut due to cost of living, but they remain an option.

@CaptainSeven which funds are you invested in? If you're in a global passive tracker you are very very unlikely to lose money over the LONG term. ie an absolute minimum of 10 years.

So don't worry about daily/monthly even yearly losses. They are buying opportunities and during a downturn is a good time to increase your contributions (subject to many caveats such as valuations etc).

As you get closer to retirement you should derisk gradually out of equities.

I would strongly recommend looking up meaningful money, James Shack and Pensioncraft on YouTube. There's a wealth of information out there (excuse the pun) on investing and retirement. Knowledge is power as they say! And helps to avoid mistakes which is half the battle when it comes to investing.

@Amboseli I've got no idea what funds I'm in! This is the bit that terrifies me. I wish I was more informed so that I could feel like I was making active choices.
I've got 2 pensions. One with Standard Life and one with NEST.

@CaptainSeven there's nothing stopping you from being informed. Go onto nest and Aviva website. Register for online access. Log in to your account and you'll see what funds your contributions are going into. It's likely to be the default fund. Check whether you are able to choose your own fund if you don't want to be in their default funds.

Then watch the YouTube channels I've recommended, start with the beginner investor ones and work your way through.

Then you'll be in a position to make an informed decision about which funds you would like to be invested in. You may decide you want to stay in the default fund but at least you'll have made the decision yourself.

It's not difficult. You can do it! Take control of your financial future, it's really important.

Post on holiday again if you run into any issues. I'm no expert but I was in your position not long ago and now I am so much better informed and feel confident I'm on the right track.

I know it’s been said before, but I want to repeat this just in case anyone missed it. For every £1.00 you put into a private pension, the government add 25p. So if you put £100 in every month, your pension will be credited with £125 per month. If you put in £1,000, it will be £1,250. If you are a higher rate tax payer, the difference between that 25% credit and 40% will be set against tax.

Essentially, you are saving and, at the same time, reducing your tax liability.

I am lucky enough to have DB pensions, but I was long in the tooth before I understood this and opened a private pension.

To add that my Dad died last year at the age of 89. He had endured an impoverished childhood, could barely read and spent his entire working life in manual Labour. However, he told me when I was a youngster that it was vital I always paid into a pension.

Even though he never earned a great deal, the fact that he practised what he preached meant that my mum has more than enough to see her through.