How are you planning ahead for retirement?

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Every tax year end, I review my pension pot online and scare myself!! I’ve always saved towards my pension, but the calculator showing my predicted annuity at age 65 (just over 20 years away) is no where near where I’d like it to be. Every year I’ve been putting 10% of my gross salary in and my employer also puts 10% in. I think I need to increase this.

I brought the topic up with 6 of my closest friends recently and all of them seem blissfully unaware and unconcerned about their future pensions or retirement. We’re all of a similar age, 3 have been SAHM for the past 10-15 years and don’t work or have anything saved other than state pension. Although even then, I don’t think they know they haven’t put enough NI contributions in the pot to get that full amount.

I’m planning to find an IFA to get some advice. Wondering if you’re planning for your future retirement? Or do you not worry about it?

Also, if anyone has any financial planning books that they’d recommend, I’d be grateful to hear.

In the words of Homer Simpson, "My lifestyle is my retirement plan."

Book recommendation:

"Enough? How much money do you need for the rest of your life?" by Paul D Armson.

IFA is a good idea.

We went through everything with one initially over 20 years ago, with the upshot being I am semi retired at 55, having gone very part time and taking my pension early, Dh will do the same in a couple of years. Life is easy, we will never be millionaires, but we can live a comfortable life with a good balance. All due to £1200 spent on blooming good advice.

My plan is to die young

Erm, I'm not I don't have enough to pay into a pension so it'll be the state pension for me.

Most people in my family don't see their 70th so I will be "fine"

My uncle is going to retire with £5 million. I hope I have £500 😔

@DynamoKev same. Or win the lottery...must remember to buy a ticket

Myself and DH both pay into our work pensions (our employers are public sector and contribute a lot more than we do). We save in ISAs £10,000 a year equally split between us. We greatly shortened our mortgage term (effectively paying off our mortgage early and when it is will potentially use the extra money each month to help DC through further education etc).

Beyond that's interesting.. What did advisor suggest ie.. Putting more money away or making shrewd investments?

55 and stopping work this year.
Recommended the IFA, I don't have the knowledge to manage my retirement savings actively but IFA does and his fee is more than covered by the increase due to his advice.
My funds increased slowly for many years but then seemed to leap up, have been lucky but also with very diverse investment if one thing goes down another is likely to have gone up.

Re the SAHMs among your friends, OP: if they are, or were, claiming Child Benefit for a child under 12 they should have been receiving NI Credits.
I would advise them to check their NI record and, if they're eligible for credit but haven't received any, apply for NI Credit now. If not eligible, they might want to make some voluntary payments to buy back any missing yearsm

Op you sound way ahead of most with retirement plans.
It's so hard to predict and many people become widowed or divorced at the last hurdle.
I have teeny work pension that may give me 20 a month, I'm not sure if I should pay more into it because its lgp.. And I have a teeny sipp..
I guess its larger purchase or costs that will be the issue when elderly eg new car, boiler... I'm hoping my sipp will be used for that sort of thing not to live off.
I'm hoping if I am still with dh and in our house the mortgage will be gone at least... Dh pension pot is far far more than mine but still not really enough to both live well on.. We will be scrimping..

I work in a school so have a decent local authority pension but this is as far as any planning goes for me.
I tend to not worry about it, my maternal grandmother died in her early 50s, my paternal one in her 90s - I try not to think or more importantly stress about the future.
I'm a homeowner, have a pension and will almost certainly inherit money along the way.
Am I naive to think that's enough planning?!

I, like you, keep an eye on my pension. I hope to retire at 60 with the 1995 section of my NHS pension and another small stakeholder pension. This won’t be enough to see me through the 7 years until I get my 2015 pension and state pension so I do need to plug the gap with additional savings or add to my stakeholder pension. At the moment we are, rightly or wrongly focused on overpaying the mortgage and saving for children to go to University. I am however very conscious that the more I save now the more likely I am to be able to achieve my goal of retiring at 60. It’s all a balancing act - enjoying life now and saving for the future. Time will tell if I have it right.

Peckham some funds have done extremely well in past years eg Scottish mortgage but that's slowed now and people not sure if it will rise again.

Agree with previous poster.. Have diverse investment in every country almost and every sector.

DH has opened a SIPP. I have recently opened a LISA. I need to put £4000 in a year to receive a government top up of £1000. Even then I will probably not have much, but with DH pension and the two homes we own (not extravagant homes, my parents are living in our second home foc before anyone piles on about private landlords making money off people and we own that outright)

We are self investing the SIPP and LISA so we hope to make a bit of interest on them. But we have another 25-30 years of working.

I am very aware of my precarious position as a sahm and even though dh is great with money and sharing I am trying to get back to work to earn my own money (youngest just started school but he has sen and is on a reduced timetable with many, many appointments and assessments going on). I have told DH that if he decides to leave me I will be going after 60% of everything, otherwise I'm screwed.

Like you op, I am baffled that people don't think about these things. The reason we are currently financially supporting my parents is because they have never thought about these things and have no savings, no pensions and are currently in ill health four years away from being able to draw my father's state pension. My mom still works and they live paycheck to paycheck. My dad gets pip and mobility and they just manage but can't afford rent. They also have many debts that suck up a lot of money. We have tried to advise and help but it's like talking to a brick wall. They don't see anything wrong with it.

A think a rough rule of thumb is that you need to save a percentage of your earnings that equals the age you started saving. So 20% is right for someone who started saving at 20. If you start saving at 40 you'd need to save 40%.

On the other hand, I get the impression that many people save next-to-nothing and rely on whatever the benefits system gives them.

Rely in old age on what benefits provides, I meant.

If I earned enough to pay in tons of money into a pension I would do it. However, as I don't, I just pay what I can, and I don't worry about it. Worrying won't change anything and will only ruin the years when I do have enough to live on.
If I earned more I would probably work out roughly what my pension needed to be by the time I'm mid sixties, and divide it up by years to make sure I was paying enough.

DH also has good work pensions. I hope to work in a school so hopefully will get a work pension when I start working again.

To pp who said they are relying on an inheritance, this is my parents, but no sign of DGM going just yet. She's in better health than they are!

@RandomLondoner aren't we all paying into NI anyway - that includes the state pension? If you don't pay your NI you don't get full state pension, so 'rely on benefits' is a bit of a stretch. I'd more describe it as 'getting back what you paid into the mass pension pot.'

I was awarded pension share on divorce and invested it in a SIPP. Depending on the type of funds you have ie equities, gilts, bonds you can see very good returns. Mine made a lot last year despite Brexit and Coronavirus. But it depends on the level of risk you are willing to take. Mine is spread across about twenty funds and is 70/30 equities to bonds/gilts, most of the equities are at the higher end but not stupid risk level.

You may want to investigate your work pension as they can be very conservative funds which don't generate a lot of growth. My partner has a very good work pension but he has specified more high risk funds for his investment.

I also have a small final salary pension from donkeys years ago that I can access at 60. Definitely worth getting an IFA to have a look at your finances if you are wanting to retire as early as possible. As another pp said child benefit pays NI for the stay at home years.

I'm in the NHS scheme which is very good (not as good as it was). I'm 52 next week and have just booked myself on a planning for retirement course at work. I have nearly 30 years in my plan at varying hours and only one mat leave so I'm hoping I will be able to retire at 60 but hopefully a bit earlier and not wait for my pensionable age of 67! The child benefit has always been in my name (even though we pay it back now) so that tops up my NI for the state pension too.

@Mummypigisalwaysright if you are a non-taxpayer you might also want to consider opening a SIPP. Non-taxpayers can pay up to a maximum of £2880 pounds into a SIPP and receive the government 20% tax relief top up (so a maximum of £3600 a year) every single year up to the age of 75.