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?

I'm glad your hard work plus your good luck paid off.

But you only have to look at the salary pyramid in each institution to see that most people are in lower paid jobs.

Not everyone can rise to the top, there isn't space. It's a competition. You won, but don't blame others for the fact there are so many places below you. They didn't make society any more than you did.

You don’t have a pot- final salary pensions work in a completely different way. The amount you’ll get a year is all you need to know, and it’s guaranteed.

@BadSkiingMum the kids' pensions are with the Co-Op which I think rebranded as Royal London. I don't even think that it's a specific "child" product, just a pension which you can start on their behalf.

https://www.royallondon.com/about-us/media/media-centre/press-releases/archive/parents-triple-boost-to-children-by-pension-payments/

Eh?

I'm on track for a 300k pension from my current pot at the age of 34. I'm not super rich, nor am I a landlord, nor were there any family connections involved at any stage of my career. The biggest role my family have played in my financial life is by explaining finances and by demonstrating extreme frugality.

I'm not extremely frugal, but I do live well within my means, and have made sure my career has progressed up til now. Hence significant chunks of my income going into pensions every month.

Just as much as it is important for people like the OP to have advice fitting to their circumstances, it's also hugely important to contradict the narrative that this sort of thing is impossible, unobtainable. Because so many people believe it and then don't try.

https://www.moneyhelper.org.uk/en/pensions-and-retirement/pensions-basics/use-our-pension-calculator

This is quite useful if you’ve not seen it OP.

I don’t have any sort of pension and DH has the one he was auto enrolled on when that first came in. I’ve no idea how much is in it.

It just never occurred to us when we were young and broke and now we’re middle aged and not much better off 😂. The amounts being bandied around here are pie in the sky for either a single person or a couple earning minimum wage or not much more.

I think it’s incredibly important to make young people more aware of the necessity to not opt out of paying in. My DD was very blasé about it, figuring she’d rather have the extra £7 or whatever it was a week. Once I pointed out that her employer would be paying in too, she decided to stay in the scheme.

found this online - it’s mad to think how much the state pension will cost the public purse in years to come.

In 4 years your mortgage will be paid off. If you continue to paid in to your pension pot at the same rate you are currently paying towards you house, then pension pot will increase by a large amount by retirement age.

these "retirement advice" articles are really out-of-touch?

A huge amount of what I encounter everywhere is "out of touch" with my experience, and maybe "out of touch" with many people's experiences.

Is this possible? Please could you tell me how.

@FlatWhiteExtraHot Good advice! More than that, the money she puts in to her pension comes out of her pre tax salary - so it's free money from her employer AND the government.

I don’t find it disheartening it’s just reality. I’m 30 and have about £100k in pension pots been paying in religiously since I was 22. And I up my contributions when I get pay rises. My other friends all prioritise holidays and festivals as they want to “live now” but financial security is really important to me.

Yes I get not everyone can save for a pension but there is help for those people in terms of pension credit - my grandparents got this as they didn’t save a thing.

I do think there’s an issue atm where people are getting to 40/50 and not having started a pension because no one was really encouraged to until recently.

But I’m hoping my generation are a bit more aware of it with auto enrolment etc. and also adverts on the telly but only time will tell.

Assume you are divorced? Did you not get half his pension in the divorce?

You need to contribute as much as you can afford and take advantage of any workplace contribution. My actual contributions are only about £30k but my employer contribtuion (effectively matched at 5%) plus the tax relief plus the investment growth (monitored not just left) over approx 15 years (nb 30k drip fed in not lump sum) means one of my pension pots is worth nearly £300k. I am mid 40's.

My current employer (a bank) tops up 13% if I pay 7% so I have 20% of a relatively high salary being paid in now. I chose the job on the basis of the pension contribution as many are still only matching to 5% (like my old employer). The 7% reduces my tax bill now so is more like approx 4% out of pocket to me.

Impossible to save £300k as capital unless a v high earner or supported by others so don't be discouraged by that.

At 50 ish it is a no brainer to save as much as you can as you can take 25% out tax free at 56/57. Assuming you have any free cash which is very difficult these days.

Just save what you can and don't worry about it.

My DM is a widow living in a mortgage free house on the state pension and a small amount extra from my dad's pension. She probably has about £1200/1300 pm coming in.

She has enough money to do what she wants. Fine she can't go on world cruises or drive a Porsche, but she goes on holiday, has pets, does her food shopping in M&S/Ocado, has money to do things in the house, has the heating on when she wants to, can go out for lunch most weeks, has paid for her funeral, can treat grandchildren, that sort of thing.

In answer to your question, what do I do if I can’t just find £300k:

The thing that wasn’t obvious to me ( a financial advisor told me) was that in many cases you’re better to prioritise putting money in your pension over paying down your mortgage. Particularly if your company does salary sacrifice the amount of tax you save plus the return on the investment in your pension is way higher than the interest you pay on your mortgage. So you should pay into your pension now, and then use a lump sum from it to pay off your mortgage if you need to, as your money will have worked harder for you. Mortgage debt is the cheapest and most secure debt you’ll ever have, but psychologically we just want to own our house and have that security.

He could show that this held true even if your mortgage interest rate went up to 7 or 8% but after that it depended on your tax bracket.

Just google Junior SIPP

We had a pension company come in and talk to us at work. They said if you want to continue living the same lifestyle as when you're working, in general you need to aim to save 10× your final salary.

This isn't going to be achievable for a lot of people (including myself).

I do think that younger people need it drummed into them that they will care a bout it one day so start saving early. Appreciate with cost of living though savings are just not possible for a lot of the population

Sometimes when we are thinking about a big purchase we work it out that it will mean working another x months or years when we are in our 60s and then it puts us off. We put any bonus (though mine is peanuts) straight into pension. Also whenever I've had a raise I try and increase my pension contribution and sustain a simular lifestyle

I will have the mortgage paid off, state pension (paid up with NI) and maybe 20k savings for emergencies. I am used to driving a small old car, and living within my means. After getting kids through driving lessons, uni, and me being self employed that was the best I could do. I don't see it as terrible. I will have a home and small garden.

This is really helpful. I’d already thought that I’d like to pay into their pensions when they’re young and saving for houses so that they’d get the benefit of compound interest. I didn’t realise you could do it while they were children!

I don't think there's much pension advice you can give someone in your situation. No point in going back and telling you all the things that you should have done.

If you have any spare income prioritise saving/paying down your mortgage debt. Look at your employer's pension scheme to see if they match additional contributions.

You will have an asset in your house in retirement so you could potentially downsize, or get a lodger. There will also be state benefits.

Now that is really helpful, thank you.

The thing is people are expecting to have a similar lifestyle as when they were working.I read somewhere that about 30% of people dont have any private pension at all! If you have paid off the mortgage then its not so bad ,but in future years more people will hit retirement with rent to pay as well. The figures quoted are unrealistic I think

If your mortgage is going to paid off when you're 56 you could easily work another 10 years and all the money you had previously been paying on a mortgage can go into your pension. It might not be £300k but it doesn’t sound such a bad situation to me?

I'm not going to hit that amount, so my plan is to look at how to enjoy life for not many £££. I've already got a low maintenance home in a great area. I won't run a car. Public transport will be free & I'll have access to free & low-cost culture. I've always been frugal so I reckon I'll be able to eat well and go on interesting European holidays like I do now. If I get short, something like doggy day care pays £50 a day in my area. My parents were pretty comfortable on state pension + a little bit. No splurging but a good life.