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?

Yes, that's true. She'd be better off putting short term savings/emergency pot into a cash ISA or high interest savings account to avoid having to sell funds from a S&S ISA if not planned.

Max out your company pension option so your company pays in as much as they will if you can afford it then if you can pay into s&s isa. Being young shares and similar are the answer as they are highly likely to beat other savings methods. We are a lot older than you and have savings in a variety of accounts to cover costs until state retirement age, 67 currently so we don’t need to take private pensions early except my final salary one kicks in at 65 (I’m younger anyway)

They won’t pay any more than 5% regardless of what I pay in unfortunately!

So because of that I’d rather take the option of investing in my own isas etc to know I can have the money whenever.

Obviously this may change as I earn more and may push into the higher tax bracket etc

The other thing to be aware of is sipps when you max out your employer pension, you could start an additional one, where if you pay in £100 it'll be topped up by government 20% if basic rate tax payer so £100 becomes £120
If you become a higher rate tax payer, you can claim the additional tax relief
Sipps are age restricted for taking money out though, so I wouldn't switch your s&s Isa to pay into it. But just something to be aware of maybe when you start earning more

This is helpful thank you, I’ll look into this when I have more spare cash for another avenue!

You pay NI a certain number of years to qualify for state pension, almost like earning points. But it's not going into a pension 'pot' for you or paying into 'your pension' - it's paying for the current pensioners, NHS, education etc etc.

It's great you're thinking about this so early. I wish I had been like you...four years to go and luckily for me I do get state pension. I do get workplace pension too, but I wish now I'd not have worked such part time hours for as long as I did/had seven years as a sahm as my work pension is tiny. If and when you do have kids, consider that carefully! You sound extremely sensible so I'm sure you will be fine. I do hope your generation does still get state pension but I have had this chat with my kids who are same sort of age as you

You are doing everything right.

Also if you two are right for each other and you have a long successful relationship which can mean a great effort sometimes that is one of the best things to assist. That’s hard to predict but all the people I know who have retired early without exception are couples. I’m sure single people retire early to but obviously it’s harder.

It sounds like you are doing great.

I’d recommend watching Rebel Finance on YouTube. The new (free) course starts on 1st June at 8pm.

Learn how to save, avoid waste, and live modestly.
Maximise income, minimise expenditure.

Don’t be tight, and plan for fun and relaxation as well, but don’t feel obliged to spend on things that don’t matter to you.

Don't trust anything any government says about pensions and retirement programmes. Over forty years the rules will be changed a lot or at least quite regularly. Think only about your own best interests. Save in your own name, read the business and financial pages attentively, stick to stuff you understand for most of it. But do save. And remember the oldest rule: if someone promises you anything too good to be true, it is bullshit and a scam. There is no free lunch, ever. Good luck.