how can I prepare for retirement with no state pension likely?

[tabbyoak]

Hi all,

im just wondering if anyone has any general advice regarding retirement planning!

I’m mid twenties and currently a trainee. The field I work in has very poor pay as a trainee but excellent money and prospects once qualified.

I’m of the impression that state pension is very unlikely for me, or it will be means tested etc.

As a result I’m already quite panicky about retirement! Sounds daft I know! I love my job, but I don’t want to be forced to work at 70 because I need the money.

Obviously at the moment my wage is not great, but I am aware once I qualify it will jump massively which will make things a lot easier.

I’m mainly worried that as state pension age increases, as does private pension age, so what if state pension age becomes 80 and I can’t even get private pension until 70?!

At the moment I do the following;
pay into workplace pension to get the employer contribution
pay regularly into a s&s lisa
pay regularly into a s&s isa which is earmarked specifically for retirement

I could pay more into the workplace pension but it would mean not paying into the isas. As mentioned above, I’m worried about the goalposts on pensions being changed and therefore am reluctant to go crazy on those contributions. Particularly on a lower salary.

I will admit I’m not the most clued up on retirement savings, so I’m wondering if anyone has any advice or anything they would do differently? Should I change my methods when my salary increases too?

I’m 48 and I assume the state pension age will be raised or means tested such that it won’t be much use to me.

I think UK political parties are raising the age to reduce costs where it would be much fairer to means test it. They brought in means testing in Australia (and 1985-1998 there was a “surcharge” for richer retired people in NZ which stopped short of means testing but effectively reduced the amount of money you received proportionate to your assets. I see some work around like that on the cards for the UK).

in your position OP the single best thing you can do is max out your AVCs and squeeze every last drop out of your employer contribution. Coming from Nz I simply couldn’t believe that my employer was giving me “free money” and that they would up their contributions if I did too (to a point obviously).

due to children, SAHM, contracting, I haven’t contributed to my pension for a decade nor will I again before retirement - but compounding interest means the money I worked very hard to save before 35 will cover me in retirement.

You are doing brilliantly. The state pension isn't really a pension, it's a benefit paid to old people. And that is very likely to go down, as people aren't having enough children. I think the advice about reducing your costs as you head towards being older is good, and that is mostly having a mortgage free life so don't get tempted to get a massive mortgage in a few years when your salaries are higher. It may also alter your decisions about having children, of course.

As you can say, you can split savings between low risk areas (the risk refers to losing your initial capital, not a risk of reduced returns) and higher risks ISAs.

You're doing well to be considering this at your age. I didn't really give it much thought until I was in my 60s! 🤡

Damien Talks Money on YouTube is really excellent for advice on this. I read about him on another MN thread and he really helped to turn things around for me, coming at it all from a naive perspective waaaaay too late in life!

What did the old people pay their NI for then? For their state pension.

This is a great recommendation. Also, given the OPs age, she may also be interested in the bankofdadshow instagram account that the Meaningful Money founder does with his DD, aimed at giving good financial advice to people who might otherwise take notice of crap on social media such as how they won't be a state pension when today's 20 and 30 somethings get to retirement age.

Two things I would do If I was your age again. Put any monthly sum I could afford into both a pension AND investments. Do not just save! invest.
Even if its only £10 a month.

At what point did that poster say the old people now didn't pay ni? Why are you trying to make this some sort of generational argument

OP, something else that you'll probably find useful as a 'to list' for finances is the financial flow chart:

The UK Personal Finance Flowchart - UKPersonalFinance Wiki

This is really helpful, thank you :)

Because she thinks it won't exist by the time she retires.

I think you’re trying to be deliberately goady here, and I would prefer the thread not get derailed over a debate over the pension. I didn’t pass any comment other than that I doubt I will get one!

For what it’s worth, NI is just another form of tax. It doesn’t “go towards” anything specific, it just goes into the general pot of tax income. It’s a common misconception that people think their NI pays into some kind of pension pot for them

Nonsense, there are plenty of children:

'As of late 2025 and early 2026, nearly one million young people aged 16–24 in the UK are not in education, employment, or training (NEET).'

One million NEETS - the last thing we need people thinking that the answer to all our woes is more children when there are no jobs for so many that are already here.

OP you may not even live to pension age, why are you giving it so much head space right now? Go live your young life and have an amazing time before the world is completely destroyed by power hungry narcissists. You never know what illness, disability or disaster might be round the corner, you're 20 something years old, go make the most of it.

OP, you're not wrong to plan as if there won't be a meaningful SP. Who knows what the world will be like in 40-50 years? I'd bet on there still being a SP but paid fairly late and maybe with an element of means testing, but who knows? But it isn't something to panic about, especially as you are doing all the right things.

Splitting your money between your pension and ISA is very sensible- having both gives more flexibility and control. At your age you should be in 100% equities. Do not sit in the default pension fund wondering why your pot isn't growing faster. Basic global tracker or whatever your provider's equivalent is would be a sensible choice. Automate it so that your investments get topped up every month first thing.

What % of your salary is going into your various wrappers?

Make sure you've also done the basics- 3 months' expenses in accessible savings, paying off debt etc.

I'm 65 and when I was your age the state pension for women was 60 and for men 65. Now that has changed. I don't get my pension until 2027. And men and women are equal in getting their state pension.

Perhaps when you retire there will be a change and all those who are wealthy and avoid paying tax will be frowned upon so you can safely retire with a monthly income.

If she doesn't live until pension age, she may be pleased to have access to her s&s isa savings whilst she is in ill health.
I do have a disability which will get worse overtime, I am trying to do what I can now to soften the blow later
Better to prepare for needing to retire at some point than assume you'll die early or the world will be destroyed.

I totally get what you’re saying! I’ve always been a big worrier!
We do get out and do lots of fun things too! We go on lovely holidays and have the sweetest pets who occupy a lot of our spare time. Don’t get me wrong I don’t funnel everything into retirement which might not happen, I just don’t want to be unprepared :)

Thanks for this. I'm in my fifties and wish I'd been a bit more like the OP when I was younger.

I think your mindset is great OP. Like another pp said, I'd try not to go too ambitious housewise, don't be tempted to overstretch, and keep to your goal of having any mortgage paid off by 57.

I'd also think about how to bridge the gap between when you want to retire, and when the government decide you can access a private pension. That's been going up as the state pension age goes up. You don't want the state pension claimable at 75, private pension at 65, and not be able to stop work at 60.

Also, OP, make time and money for plenty of experiences along the way. Many people put their all into saving,deny themselves, and work extremely hard, only to die before the time they've earmarked for fun start.

I think you need to understand that the current state pension is largely unliveable-on already [though I totally understand many people are forced to try to live on it, and do not get pension credits on top]. I will collect mine in ten years, it will barely cover utility bills at today’s prices, let alone food and rent/accommodation.

But we knew decades ago this would/might be the case, just as you are aware that whatever you might receive will not be sufficient. So we invested in a property rather than rent and paid into private pensions and/or chose jobs where a company pension scheme was offered as a perk. And built up savings.

You are forward thinking, which is great, and there is loads of advice out there: build savings now, get on the property ladder as soon as possible (not ideal in this market, I know, but it will change so be ready with a deposit for when it does), look at private pensions (you can start small) and when moving jobs look at pension benefits along side holiday entitlement and base salary.

At the moment it’s 8% of my salary into pension, employer matches up to 5%.

I try to pay £25 into the LISA and £25 into the ISA.

obviously hoping to increase as time goes on, my current salary is only 25k to budgeting goes a long way!

Luckily don’t have any debts other than mortgage/student loan. Have a modest emergency fund, which I also add £100 to per month!

My plan is to only take on a bigger mortgage if it is the same % of our salaries as the current one! So if our salaries increase as expected then we can upsize, but not to a crazy extent which will cause issue.

Our current mortgage is only £500 per month so quite affordable. We wouldn’t take out anything that would stop us enjoying holidays, days out etc!

I do know there’s more to life than retirement, so I do try and balance living for the moment too! I don’t want to die before I get chance to retire or think back and wish I’d done more :)

This is what is says on GOV.UK. "You pay National Insurance contributions to qualify for certain benefits and the State Pension."

That is what I believed when I was working and paying NI. Sorry, I don't want to derail your thread. I hope there will be a state pension for you when you retire.

The problem with the state pension is that current taxpayers pay for current pensions. And the ratio of workers to pensioners is going down decade after decade (because people are living longer the state pension has been going up in real terms with the triple lock, so the cost of pensions compared with tax take is getting unsustainable

Worker to pensioner ratio -

• 1950s: 5–6 : 1
• 1960s: 4–5 : 1
• Today: 3 : 1 or lower

Plus old people living longer with multiple complex conditions mean more demand on the NHS.

She says this is earmarked for retirement along with her Lisa and work pension payments. I was advising that she should have one for shorter term savings/emergency pot.

I do have a normal isa and normal savings accounts too. I should probably have a s&s isa for more medium term savings as well, but in my mind they’re good for things that are ages away rather than things I might want in a few months!

p.s. I love the song your username refers to! One of my faves! 😇

There isnt a problem

Im correcting people who keep claiming 'there wont be a state pension'

Perhaps in a 100 years or so but not for people working now.

Im not commenting on the quality or quantity of it.