How are you planning ahead for retirement?

[ReadyPlayerGo]

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.

@EnterFunnyNameHere

Out of interest, for anyone who's recently used an IFA, how did you find a good one? I wouldn't know where to start but gave often thought it would be interesting to get an overview from one...

I asked a trusted (rich!) friend who is a solicitor who he sent his clients to/used for himself. The firm recommended is not technically a fully independent one, but we decided the recommendation outweighed that. It has been fantastic advice for us and well worth their fees.

@RaiseTheBeastie The civil service pension is CARE now, rather than final salary. So you get 1/54 of your salary per year of contributions. So if you earn 54k, you are getting £1000 a year in pension income. It is also pinned to state pension age, you can't take it earlier. You can commute some of this to a lump sum, otherwise there is no lump sum. The amount is revalued each year to stop devaluation via inflation.

Still an excellent pension for your contributions though. But it doesn't have the flexibility for early retirement built in, like many others do.

DH is semi retired and I'll join him next year. Our big tip would be to work in the public sector, he has a very good pension and got a significant lump sum. I've always been either self employed or private sector and although I've saved what seems like lots for ages the pot is annoyingl low. One good thing - and really worth getting a prension forecast for - is that somehow over the years I've paid SERPS and SS2 contributions that mean my state pension is £5k more than the standard one. I expect this may well affect man in their 50's and 60's.

To be fair, the state pension alone for a couple who've paid in enough years to get it is £1,555 a month. If you have no other income, you'd only lose around £200 in tax.

If you have no housing costs (mortgage paid off), no dcs at home anymore to fund, dont need to pay commuting costs or for smart work clothes, most couples could easily live off that and treat any other pensions / investments as the "fun/holiday money".

Many assume they'll sell up the family home, buy something smaller and invest the difference for a 2nd income.

We won't get the full state pension for both of us unless DH works until he's quite old as he lived overseas for years, he has paid more into pensions and other investments to more than off set that though.

Is it worth thinking about what your minimum income needed for your lifestyle is, then work back from what the government will give you.

@ReadyPlayerGo, something to consider is whether your employer would allow you to invest in your own SIPP rather than the company scheme. My employer pays both their and my contributions into my SIPP rather than a company scheme.

A friend of mine has been in her company scheme for nearly twenty years and the returns on the investment is very poor. Saving is great but you want good returns and pensions are one of the best at the moment.

Yoyo

I had some savings in an ISA, not earning much
So bought a small property out right & renovated with new kitchen, carpets, double glazing, decorated etc
Tenant moved in before the paint was dry !
I've never put the rent up & I charge under the local rent for the area

Yes I pay my taxes & I am aware of my responsibility as a landlord

I don't understand the moral high ground that some people take about owning multiple properties ?

If you have a pension, do you know exactly what stocks & shares it is invested in ?

What retirement?

Myself and DH are in our 30's and DH has an OK private pension. We rent as despite saving for over ten years we can't afford a property due to prices rising faster than we can save.

I can't see retirement being an option TBH and it's the same with a lot of our friends.

@gingercat02

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.

Being in receipt of child benefit only improves the NI contribution record for one SAHparent. It does not boost the NI contribution record for both parents, or for employed parents.

Unless older relatives sensationally rich, don't rely on inheritance for a retirement income. Residential care for elderly parents could drain their assets. Or, if a parent remarried then died their assets might end up with the new spouse.

We are paying off the mortgage as quickly as possible, hoping to be mortgage free by 40 though I appreciate we are lucky to be in a position to do this. We will downsize for old age, seen too many elderly family members struggle in homes they couldn't cope with.

I have a flat that I rent out and have nearly paid the mortgage off worth 400k that and my state pension, possible inheritance, good savings, an endowment policy from 1997 just paid out too. So I think I'll be okay

As soon as the teens move out I'm going to sell the house and the flat but a lovely house near the sea and live happily ever after 😀😀😀

Another vote for ifa here. We started planning with one in mid thirties. He went through what kind of lifestyle we wanted in retirement, how much that would cost and how much we needed to do it. Then set up a varied Savings/pension plan to achieve it. Feel as confident as you can do that we'll get about there.

@notagainmummy

Absolutely pay off the the mortgage. Repayments are a huge drain on resources.

Actually, that isn't necessarily the best advice. It's low risk, but mortgage rates are so low that repaying your mortgage earlier isn't the best way of making your money 'work' for you. You are likely to see a much better return by investing the money rather than overpaying on a mortgage (this is what we are doing, under the guidance of an IFA).

We're almost 60 and on the brink of retirement.

dh will have a reasonable workplace pension, I have a small final salary pension from a number of years working in NHS plus a SIPP that I've paid into for 15 years (out of 18 when I've been self-employed). We've also both saved into ISA's. Mortgage was paid off 5 years ago and we transferred the payments to a savings account.

Got a small inheritance but we feel secure enough in our savings and pension plans and passed the inheritance on to dc - it made a huge difference in their lives at a point that they really needed it.

Importantly, as we approach retirement, we have lived for 2 years on the same income as we expect to have. We know that we can pay for all essentials - food, utilities, car, petrol, insurance etc. and still have enough left over for a small amount of spending money each and repairs / maintenance e.g. needing a new washing machine, or small roof repairs. Anything major would have to come from our savings. Also from our savings will come luxuries - eating out, holidays etc. After 7 years we should get our state pensions, and these will pay for luxuries.

It feels like a great relief to know we can pay all our essential bills from our pensions, although I think we have cut back a little to make it possible.

We have recently opened up Junior SIPPs for our three children (the aged 13 to 8). Over 50 years, compound interest means that even modest payments we make now will grow to a meaningful amount by the time they reach pension age themselves.

We also hope that doing this will help focus them on the importance of growing their pensions as young adults.

At least you have a pension and are paying in to it! You should be proud of that.

I am 55 and have friends my age with nothing saved for their pensions AND they privately rent.

My own pension is a buy to let which I was seriously against at the time. We lived in our first tiny home for 20 years so we could have our rental property. It used to drive me mad because all my friends had bigger houses while we were in a 2 up 2 down. Now I'm really glad we did it.

Growing up and seeing my parents not have a penny saved for a rainy day scared the shit out of me. I started saving into a pension at 21 and have always paid in half my age as a percentage ever since and will do until I retire.

My DH and I didn’t go down the paying off the mortgage route, instead we paid a lot into pensions each month. We used some of the 25% tax free cash amount you can take at 55 to clear the mortgage. We’ve just retired but at the peak £2,300 was being paid in, this includes employer’s contribution.
About 15 or so years ago we thought about overpaying the mortgage but decided the tax relief on pensions made it better for us to put a large amount into the pension each month. One of the pensions my DH had was a final salary and would have paid 13k a year from 60 but he cashed it in recently for 635k. We read up a lot on doing this and took a lot of advice before making the decision. We have 2 more pensions worth jointly just over 650k. We took out 260k as a lump sum and then have allowed ourselves 50k a year income for the next 5 years and will review things then. We have another 15 and 12 years until the state pension starts.

I had a few years as a SAHM then went back to work part time in the NHS.

At the age of about 40 I got my first pension statement and was shocked at how low it was, so as soon as I got my first pay rise I started paying AVCs.

When my circumstances changed and I could no longer pay AVCs I opened a SIPP and have been paying steadily into that ever since.

I’m in a really good position now.

I'm 33 and paying 3% into my pension and my employer pays 5%. I know I need to increase this, but things are tight with childcare etc. Inspired by this thread I just whacked £25 into my pension... is it worth doing that when I can? It feels like it won't make a difference, but maybe over time it will add up

@ReadyPlayerGo and anyone else who is interested, there is a FIRE starter (Financial independence retire early) thread in Money Matters. Come and join us for geeky pension chat. We know how to rock and roll... there are various links, podcast and book suggestions there.

[quote FeistySheep]@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.'[/quote]
I think what PP was referring to was pension credit, housing benefit, council tax benefit and everything else that comes with having no private provision.....not referring to the state pension as such

Hi OP. Here's a book recommendation - it's rather an old one now, but it sets out the principles of how to build financial security very well, and how a pension fits into that...
Bernice Cohen - Financial Freedom: A 7 Stage Plan to Outsmart the Future and Fulfil Your Retirement Dreams.

260ddS0cks1nsure

I know what funds my ISAs are in. I really do not think I will ever feel okay with owning more than 1 property in my name for the purpose of buy to let, I feel it is investing in an industry that makes money out of the cost of something as essential as a roof over your head, if people are encouraged to see property as an investment not as a home house prices may continue to rise pricing more younger people put of the property market. This is an anonymous forum, I have many friends and family that own multiple properties and do not say it to them. These are my views we can each have our own opinions.

I put a fair bit into my work pension, and when my business sells in a few years I hope to be able to buy a house outright, or nearly (currently renting).

Then the plan is either to be mortgage free ASAP or if we've bought outright, save aggressively and retire as early as possible. Not having children so will either downsize at some point or equity release the house.

I am early 30s, single (for financial purposes at least) and childfree, intending to remain so. Earn a moderatly above average salary in the public sector which I hope to increase over the next 10-20 years before I retire. Have 6 months rainy day min expenditure fund saved.

I bought one of the cheapest houses I could find in my fairly pricey city with a spare room I rent out to lodgers. Assuming I don't upgrade the house and keep up my current levels of mortgage overpayments, I could be mortgage free by 37.

I intend to start a stocks and shares ISA this year that will take any savings above my mortgage overpayment limits which will be a long term investment. This is intended as a buffer if I decide to retire early.

My workplace pension is defined benefit and will be pretty good assuming my career either stays the same or improves.

My lifestyle choices obviously have an impact. I don't intend to marry even if my boyfriend moves in so rely entirely on myself and won't lose money to a divorce. I also don't want children so don't have to consider those costs or worry about school catchments when buying homes. I have always lived near atrocious schools I would do anything to avoid for any kids I ever had!