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?

You will get the state pension but it may be reduced unless your health issues mean you are eligible to have NI paid as part of any benefits you receive.

I think £300k is a minimum and by comfortable they just mean not having to claim pension credit.

I'm in my 40s and have also only managed around £50k so far. My projections say I'll be getting £99 month on top of the state pension 😬

I'm just really hoping that I can earn and save a lot more when the kids are a bit older and I'm not hamstrung by the school run

To answer an earlier question, yes my current employer has an excellent pension plan and matches contributions up to 6%. However I'm putting in the minimum and putting all the money I can spare into overpaying my mortgage. I'm now reconsidering this strategy, so thank you!

Yes. Me.

OP, I too worked in a charity / low salary sector.

Your pension will grow between now and retired age. Don’t pay off your mortgage and THEN start paying into a pension, pay in whatever you can afford now. The Gvt will top it up and it will all grow, exponentially.

My retirement income won’t reach the lowest amount deemed suitable for a ‘modest’ retirement but I know I will be OK because I can live fine on the projected amount. I always have!

But do put what you can in as early as you can. It will make an actual difference.

I worry how my DC will afford it all 50k for housing deposit/moving costs, uni loan repayment, savings and a pension.

They will not have inheritance or money from the bank of Mum to help them but I want them to enjoy life not just exist to pay bills.

@ArabeIIaScott People who have never worked may not get a full state pension. They need between 35-37 years of work to qualify for the full amount.
They may get pension credit ( a top up) if they don't qualify for the full pension.

Well, you know. People's situations, wants, needs, and satisfactions differ.

It's all relative. If you're already on a low income, then why would you expect to be on the same or more in retirement?

And remember those figures don't include the state pension.

I'm so sorry. This is the risk with any form of savings that isn't gov backed (eg non public sector)

Agree that the people with big pension pots haven’t stolen them despite what people here think. In most cases, they’ve made sacrifices to achieve them - older cars, no/modest holidays etc. They’ve saved for the proverbial rainy day.

That said, I agree entirely with @Coffeetree that we need better advice from an early age for everyone. When I hired a nanny, I had to convince her a pension was a good idea. She didn’t see the point. I’ve also struggled to convinced mothers considering whether to return to the workforce to consider the pension impact. So yes, more advice needed at all ages.

Well, you know. People's situations, wants, needs, and satisfactions differ.

I am only talking about necessities not wants or luxury.

Are you living on £9K pa?

My mum lives on a little above the SP, as she has some pension from my late father. I can assure you that the state pension alone does not go far when council tax and fuel bills are eating up around £4K pa, even being careful with heating.

We are dealing with the issue at present but still it’s very hard seeing your life pensions get destroyed, it’s not really worth going into detail on here as this isn’t the thread for that but I just wanted to add my comment that we are currently at about 500 quid!

@Coffeetree Have you considered switching jobs to an employer offering high pension contributions? Mine offers double what I pay in to a maximum of 12% (them) and 6% (me), so 18% total contribution.

i’m definitely not in my dream job, however in under 4 years of working there, there is now £40k in that pot which is quite motivating. Public sector/education all tend to offer good pensions, makes up for the frustrating work 😬

People shouldn't suddenly wake up in the 50's and start thinking about pensions . The costs of funding a pension from scratch will be impossible . You need to start in your 20's to have any chance of a decent pot . Pensions are not a new concept , two options when you're older you die or you need to fund retirement.
If you can't afford to save when you're working how are you going to afford to live when you're retired .

I started work at 18 and my mum made me start paying into the works pension; so at 63 I have 45 years worth of contributions.

Thanks mum; I didn’t really understand it at the time but it was the best advice I ever took. ( Although to be fair in those days you were too scared of your parents to ignore them).
As others have said it’s something we need to drill into our children as soon as they start working, not wait to sort it out until retirement is looming.

My dad did similar and drummed into me the value of joining a company with a decent pension scheme or if not a private pension no matter how little I saved it would add up .

No, they're not out of touch; they're accurate.

It's unfortunate that pensions wasn't/isn't a topic taught in school, as a number of people have no idea what they should be saving or what they are likely to need in retirement. The state pension (if it's still around) is not enough to live on.

In terms of what you can do now, shop around for an Independent Financial Advisor and get some informed advice on what you can realistically do to save what you can before you retire and what retirement may look like for you, based on these calculations. As you're over 50, you can also get free guidance from Pension Wise:

https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-wise

If you have a pension with your employer now (or any one you may have had in the past), logon to your pension provider website and do some forecasting/modelling to see what would happen if you increase/decrease pension savings. (Most, if not all, will have some form of simple calculator to help you model different options.)

Also, go on LinkedIn and type 'pensions' into the search bar and then filter the results by 'posts'. Loads of pension providers publish free papers and guidance.

No one is going to give you a personalised, step-by-step guide of 'you should do x in this time frame in order to achieve y' unless you pay them for it.

Also, as someone upthread said, if you do find yourself in the position of changing jobs, look for an employer with a generous pension provision (scarce as hen's teeth now...).

Sounds like you're in a DB (defined benefit) scheme, rather than a defined contribution scheme. It's fine to have these phrases banded about but not many people know what they mean.

Defined benefit workplace pensions (usual pubic service jobs such as Police, NHS, Civil Service etc) are where your employer takes money from your earnings and calculates an annual pension income that you'll get paid monthly. This is obviously what yours is. Depending who you work for your pension statement might also tell you a "equivalent value" for your pot which is only really used as an indicator for if your pension was going to be transferred or used in divorce financial separation etc.

Some DB pensions are calculated using your final salary, some are calculated using career average earnings.

If you've worked all your life in public service jobs, or other DB pension jobs you're probably oblivious to the other kind. In essence it's just like a savings account that both you and your employer pay into, but you can't access until you're 55 at the very earliest (rising to 57ish at some point). This pension is a "pot" which is what people here are generally talking about. Once you retire you don't automatically get paid a monthly amount from your pot. You can either just take money out when you it, or buy an "annuity" which is when you sort of sell your pension pot to a provider who in return will pay you a monthly income for the rest of your life. So (and I'm making these figures up) a £50k pot might buy you £200 a month income.

Apologies if I've oversimplified it, I don't want to insult your intelligence but thought it better to be a bit Noddy and BigEars about it as this is all just confusing scary mumbo jumbo to most of us.

There's also private pensions and other bits I've not mentioned but I'm not rich enough to be bothered about them 🤣

@Notanotherhousepost Both DH and I have final salary pensions, hazarding a guess on figures of your DH final salary looking at his pension size plus your 77k would very possibly put you in top 5% of earners. You can easily check this yourself.

So you are not amongst the super wealthy but you are far better off in relation to the general population than you probably realise.

Where I worked the final salary defined benefits scheme I am on was closed around a decade ago. The defined benefits scheme that replaced it is certainly decent but not as good, the sick pay for new employees is also not as good. So that organisation has a two tier system.

I started my job at 21 and decided to join the scheme, heavily influenced by a colleague who was getting close to retirement at the time. This was the early 1980’s and I am so grateful to that colleague. My Mother who was way ahead of her time in just about everything gave me advice on the stock market when I was a teenager.

It is very difficult to predict what will happen to people with low income and low savings when they retire in many years time. At the moment the state will top people up with benefits and having a small private pension may not be worth it if it just nets off against benefits. Mind you PM Suella Braverman may well have introduced compulsory euthanasia for the poor and old so it may all be irrelevant

There are other options to consider to top up your pension pot eg equity release, buy a buy to let and live off the rental income, downsize etc

Yep this is what DH has done - self employed, so no employer contributions. He worked out a 2 bedroom flat would pay about twice as much in renal income as a pension pot of the same amount. And you get to pass on the flat when you die (his DM scrimped and saved for a pension, and then died within two years of retirement, so that was a priority for him).

Obviously there are maintenance costs, and you have to be in a position to save up a deposit to get a BTL mortgage. But it gives a better return on your money than a private pension (I have an occupational pension, and a BTL is definitely not as good as my pension scheme, but that option wasn’t open to him).

At 52, you have about 20 years of work left. To save, invest. You're a long way off retirement and it's great that your mortgage is nearly done

Ill be paying mine til im about 70

Large pension pots take some discipline, forgoing the instant gratification of spend now and kick the retirement can down the road.

I have relatives with almost no savings as they've chosen to waste money on eating out daily, drinking, buying lots of useless tat. One spends maybe 10 to 15 on energy drinks and coffee every day. It adds up. Over 5000 a year on that. I don't feel a bit sorry for them.

I’ve had an NHS pension for a decade now (since I was 23) and I have no bloody clue how it works. I know it’s 1/54th final salary. But that’s the extent of my knowledge. So I am very grateful for your post! Thank you.