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?

@AboutTheDog my dad advised the same when I got my first job. I've been drumming it into my DCs too since they were around 15 and had part time jobs. They have JSIPPS which I'm paying into and they understand the benefit of the government top up and compound growth. It's so important that DCs are financially educated as young as possible as investing early makes such a huge difference to returns.

Just look into it.
There's no barrier to you being better informed if you're curious, but you can't m expect them to knock on your door and spoon feed you either.

Not an investment adviser, but the general advice is a split (60:40 or 70:30) between a broad-based tracker fund with low admin costs, and a bit less in a specialised sector. Global healthcare is often mentioned, as most of the world has an ageing unhealthy population. If you are under 40, I'd probably reverse the allocations.

You can always buy back some years, but there was an amnesty for older years which was due to end in April, then July, but I think it's now been extended to 2025 due to overwhelming (to HMRC!) demand.

This is an old thread but still very relevant and made for an interesting read.

There is no magic wand of course but to anyone reading with new kids you could follow my example to ensure they don’t suffer like some..

when your kids are born open them a JSIPP and a JISA. Put £50 in each account each month. Choose an index like the S&P 500.

if you educate your children to continue this £50, and then can add 2% every year so £51 the next year and so on.

in 50 years they will have £1m in each account.

This is the secret to pensions, time and compound interest.

i did this with my kids and they are 14 and 13 now and have more in their pensions now than I did at 40.

@pleasemayileavethetable

Totally agree . To hit a decent pension you need to start as early as possible , add something every month and be totally committed to your savings whilst leaving time and compound interest to do their thing .
You really have to see pension payments the same as paying your gas or phone bill, not an optional extra .
As the saying goes if you can't afford a pension payment when working how will you afford to live when not working . If you leave it to the state pension you'll have a miserable retirement.

That is a fantastic way of looking at it, like a gas bill and asking that question “if you can’t afford the pension payment whilst you are working ..”

It should be something taught at school, I find it staggering that personal finance isn’t taught.

I sat down with my two and explained everything. Told them how much I earn, about tax, pensions, everything. It’s as important as the birds and the bees. I don’t think it takes anything away from childhood by having these conversations as soon as kids are able to speak. It’s what we have done and our two have their heads screwed on but they’re still giddy kids.

Finally, to make those they don’t have big pension lots feel all is not lost. Remember, £100k in a pension pot is worth approx £5k as a salary. So if you can work part time to earn this or double or even as much as £25k then you are effectively living, and admittedly working, as if you had £500k. So retirement doesn’t have to, and often doesn’t, mean stopping. It can mean just easing back on what you do.

Importantly you need to look at your expenses, and use this as a guide to how much you will need. These averages that financial experts come up with are meaningless and as I discovered reading all the messages, they lead to apathy. Figure out what YOU will need in retirement and then multiply from there.

After giving birth to our two my wife decided to start her own business doing something she enjoys. It brings in a modest £50k but it is something she can do into her retirement. It’s almost a hobby. Using the maths of 5% it’s the equivalent of a £1m pension pot.

So if you find yourself with a low pension pot you can spend some times exploring how you can supplement it with something you enjoy.

In appreciate it’s easy for me to say “do something you enjoy” but it does take effort. My wife and I sat for many weeks figuring her next career move. And it took ten years to build it what it is today. It’s not rocket science, it just takes a lot of thought.

This is good advice. Too many people leave it too late then get angry at the system for allowing that to happen. Not enough personal responsibility when it comes to pensions these days. I was fairly disengaged about pensions until about 5 years ago - although I'd put away at least 10% of my salary for 20 years by that point - I realised it still wasn't enough to have the kind of retirement I'd like so have ramped it up. And also opened JISAs for the kids.
Putting away pension money should be seen as another necessary bill and not ranked as an after thought.

Very similar to me. Three years ago I woke up and focused on our finances, just in time. The crazy aspect is when you look at that £50/m from birth versus unlike you I didn’t start my pension until I was 40. And then at 48 like you realised I wouldn’t emhave enough. So I am having to put £60k into my pension each year. Whereas my kids at my age will be putting £100/m (after inflation) to get the same amount.

For me the unwillingness to invest was a total lack of education and neither of my parents thought to tell me. At the same time during the 80s and 90s and for what feels like forever the reputations of pensions was tails of people losing their money. Plus I think I had some confidence issues - I assumed I would not keep a job for long enough despite having worked since I was 18.

So my point to commenting here on such an old thread was to try and get us all to take the positives. We can do what all good parents should do and that is to learn from our mistakes (no matter who is to ‘blame’) and ensure our children benefit from our lessons.

@pleasemayileavethetable indeed education is key! My parents taught me nothing about pensions or finance in general but fortunately I ended up working in finance so I'm surrounded by money talk! I'm now putting in around £40k a year although DH much less as his company pension scheme is fairly crap but he's still putting in around £10k a year.
I still wish I'd thought about it sooner though. There was a time when I had far fewer responsibilities and could have really put more in. Now I'm juggling pension payments, mortgage and school fees with not much fun money left over.

Sounds like the same as us, my decided to put everything into my pension due to the contribs, not quite as efficient when withdrawing but meh. It's staggeting how 10% isn't even enough isn't it.

It's tough isn't it, forgoing today for the sake of a hoped tomorrow. One thing we did find from redoing all our finances a few years ago is whilst we are are frivelous as we used to be, we aren't actually missing out. We mostly used to waste our money on stuff we didn't need. So the forgoing is really only in our heads.

One thing to consider though is, once the kids have grown let's say ten years from now we will look back and take stock and realise we did the right thing. It feels difficult now because we are right in the middle of it and it's hard to imagine being older than we are now. But it will come. And when I am 60 I will feel exactly the same as I do now - maybe except a few minor aches and pains - but it finances will ease and so will the pressure and we will thank our present selves.

I remember an IFA telling me it was fairly unusual for a 40 something to ask about their pension. They are so used to people at 60 asking, and of course it's more of a challenge at that age.

Anyway, well done us, and there is hope for everyone no matter where they are financially. There is always a way through it.

I agree - my pay in 16% and I pay in 8. It increases with age - you have to be 45 and over. It was similar to your amounts pre-45.

I think people get very get up about salaries on mumsnet, but pensions vary hugely. I’ve been there 12 years and have about 150k in that pot. I wouldn’t have made that amount on me paying in 5 and my employer paying in 5 for example.

What percentage of income have you and your employer been paying in so far?

Start paying in early. REALLY take on board that if you choose to work part time for significant chunks of your adult life, then you'll only have a part time pension.

It's not rocket science. Too many women end up screwed in their older age because they haven't thought about this until too late, or they think their husband having a good pension will see them through (if he dies first, you may get a widow's element but you're not going to get the whole thing)

Yes to more education about pensions and finance in school if possible but to be fair schools have enough on their plates. There's a lot of info out there that isn't difficult to access. It's about really taking on board that if you're not paying in early and consistently, you're not going to end up with a good pension.

A pp put it very well; see it as an essential payment like your gas bill or council tax.

if he dies first, you may get a widow's element but you're not going to get the whole thing

Again, that is not the case for contributions defined pensions - they can be inherited. Unless you purchase an annuity.

We have been sold the story that final salary pensions are better, but they aren’t always.