Parents think I don’t have enough money in pension

[Helena1985h]

Talking to my mum and dad about pension today. I’m 35 FYI.

They asked me how much I’d put away as were saying they wished they’d focused more on their pensions when young. I logged in and had a look and I have just under 55k.

They seemed to think that was way too small, and they’ve properly freaked me out TBH. Is that really not a lot at my age? I sort of assumed I was doing okay!

It’s fine for your age. I think above the national average to be honest. Keep going.

I'm 40 and would be chuffed if I had that. I guess there's lots of variables: how much someone earns, employer contribution, what you can afford, children, career gaps, inheritance etc etc

I hit £250k at 37. Had started at 23. So I sort of agree with your parents. But it all depends on your income to begin with and how good the returns are. You can’t save what you don’t have.

Have a look on money saving expert

I'm 40 and have zero

@EmpressCixi blimey! That’s a lot! I was too busy pissing about and travelling in my early and mid 20s to contribute to a pension. Well done you

I don’t know what you want from this really. Sounds fine to me. I think it’ll be more than average

@SouthOfFrance fair point, will go and have a look 👍

Most people your age don't have that much in their pensions. You are doing fine, just keep topping up and it will grow with time.

The power of compound interest means that the more you salt away earlier the less you have to contribute overall. There are lots of sites with calculations showing how it works. Early contributions earn you far more. It depends on your circumstances though as at that age and knowing the cost of interest over a long time, we were focused on paying off our mortgage as quickly as possible.

It could be better but it is definitely not too late to contribute more.

I hate the whole 'some don't have anything saved at your age'. It's not a race to the bottom

Your parents are right to raise this. It's not something you would always think of in your 20s and 30s but it is very important.

[quote Helena1985h]@EmpressCixi blimey! That’s a lot! I was too busy pissing about and travelling in my early and mid 20s to contribute to a pension. Well done you[/quote]
Those experiences stay forever. No point having a healthy pension but never have lived life. You’ll need good memories when older!

@EmpressCixi

I hit £250k at 37. Had started at 23. So I sort of agree with your parents. But it all depends on your income to begin with and how good the returns are. You can’t save what you don’t have.

Oh come on how many people can afford to put £17,000 a year into a pension hardly any at all. Unless we are missing some vital Info and you are on £200,000 a year in which case it looks small. An average wage it looks amazing.

@Rangoon thank you, I’ll do some more research on compound interest as don’t fully understand it right now TBH.

We’ve been very focused on paying off the mortgage too so far but I suppose as interest rates are low now this would be a good time to put as much as I can away!

Is this some kind of weird stealth brag?

Go see an IFA.

My dad reckons I should try and put away 7k per year into pension which would be 20% of salary so a lot!

Actually it’s probably a better time to do exactly what you’re doing and clear as much mortgage as you can imo! That’s future proofing you from rate rises.

You're doing way better than I am at 39! Dh has a great pension though, which I would get some of if we divorced or (God forbid) he passed away.

How I miss the idea that the state was supposed to pay everyone a decent pension.
Private pensions should not have to be 'a thing'.

We’ve been very focused on paying off the mortgage too so far but I suppose as interest rates are low now this would be a good time to put as much as I can away!

No! Interest rates are low so paying off the mortgage is good!

Pensions wise it depends on your salary, future earnings potential and other investments including property.

If you're on £9 an hour and work 10 hours a week, but have been concentrating on paying off a mortgage on a 6 bed house you can downsize from you're doing great. If you're on £60k a year and live in a 2 bed flat - not so great.

Basically you can't look at your pension in isolation to the rest of your finances. New Years resolution for you!

There is no standard. Remember you're aiming for your retirement income to be a percentage of your income whilst you were working. Therefore ppl with higher incomes will have bigger pension pots. You can't save what you don't have, and you won't be better off in retirement than during your working life.

If you can afford to increase your contributions, then you should. Have a look at some online calculators etc. But not at the expense of not being able to pay your bills today.

Pension planning is hugely important but as part of a wider picture.

Good luck

The question is what income do you want in retirement. If you work in a min wage job, are happy to do that until state retirement or close to and will have housing costs paid off then you’re fine. If you want to be able to eat out, have foreign holidays, buy new clothes and have spa treatments, you’re going to need more.

The rule of thumb now is that you need roughly £350k of capital to generate £10k a year of income in retirement.

It wouldn’t surprise me if you had more than the average, and it also wouldn’t surprise me if you had less than what would be recommended.

But as a pp said, it has to be put in the context of the rest of your financial situation.

I didn't have a pension until I got to 39. Luckily my employers put in 22.5% and I put in 6%.

Also, I'm on a final salary pension, so should be okay, but won't be able to retire early.

I'll get a decent lump sum payment and an okayish monthly income, but luckily my dh has a fairly decent pension too.