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!

@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.

I’m similarish to this slightly less and I started a lot later 😬 I still worry I won’t have a good pension!

Def put more into your pension - your parents are right.

But my personal rate of return for those years was 15-20%, then I lost money in the 2009 crash. My pension went down by around 20% in value but it wasn’t that big as I’d only been saving since 2004. But then it recovered and the returns have been average 15% each year since then. It’s long term so I was invested more aggressively than I am now as retirement is closer.

You are forgetting the power of returns on investment. I’ve been with a new employer for awhile now since I was 39 and have just left that pension pot to grow with nothing added to it except the returns on investment. It’s over £400k now and last quarter it grew by over £30k...again with zero pence from me being put into it.

Those returns seem incredibly good!

I'm at 300 k at the same age been salary sacrificing the maximum for the last 6 years though. Plus we have had a massive bull market.

@Totalwasteofpaper
Well done you too. I just logged on and my 12 month rolling rate of return is currently at a whopping 23.8% ! Have never seen it that high before.

I think people don’t realise the “interest” from investments (I have a SIPP) is a different beast completely from a bank savings account.

as usual, mumsnet and its hugely skewered demographic are giving a false impression. If you want actual statistics rather than random anecdata from a tiny percentage of the upper middle classes it's easily googleable. For example www.telegraph.co.uk/financial-services/pensions-advice-service/what-is-a-good-pension-pot/
You nearly have as much as the average person retiring already. Which means the vast majority of people your age have significantly less than you.

Obviously the average doesn't necessarily mean as comfortable a life as you might expect, but seeing as people do manage to survive just on the state pension anything else is a bonus. If you're 35 you've been working full time, for what, 14 years max (maybe less as you said you went travelling). Given state retirement age will probably be at least 70 by the time you retire you've got another 35 years or so to add to that, if you want. Plus any other investment options, downsizing on your house, etc etc. I wouldn't worry, personally. There will be millions of people your (our) age retiring having only ever rented and with only the state pension so you'll be better off than most. And that of course is if we aren't all underwater due to climate change by then

Gosh this just feels like a kick in the teeth for those of us struggling to pay basic bills, let alone pay into a pension!

I think you are doing great, just keep contributing and you'll be fine - also maybe consider getting a stocks and shares ISA to supplement your future retirement income.

I was going to say that this thread is dripping with privilege.

But I don't think it's that.

For those of use who grew up in poverty and / or whose backgrounds are solidly working class, not having this kind of knowledge (as there was never anything to save) could have been life-changing at the start of our own working lives.

My DF works a zero hours factory job. My mum was a cleaner. I'm a professional but will never be well off - perhaps my DCs will fare better financially.

I have sufficient credits to qualify for a state pension if it still exists.

If not, I have access to controlled drugs. If the NHS still exists.

Have you used a pension calculator to figure out what this is likely to amount to at retirement age?

@Fruby

Gosh this just feels like a kick in the teeth for those of us struggling to pay basic bills, let alone pay into a pension!

We're all at different income levels and entitled to discuss surely? Your post will feel like a kick in the teeth to those who can't pay their bills and are spiraling into debt.

I don't understand half of this thread. Save £500,000 to get £23k per annum back. What the hell is that sum, that sounds crazy expensive for a crap outcome!

I have no idea what my pension is and unfortunately it's not something I can prioritise when I have a fuck ton of debt that will take years to pay off. I'm just thankful I opted in and was too lazy to contact hr and opt out after my first pay slip years ago, so at least I know there's something there.

@dundydee

They have been incredible the past few years. I fully admit that it’s been a bull market.

I’m 36 and only started a job few months ago that pays into a pension. Think I have about £100 in it. 😂

In these conversations, it always feel like it’s a race to the bottom.

Just because other people might have zero pension provision or less, doesn’t mean what you’ve put away so far is good, or you should be satisfied wi5 it, just because it’s more than they have.

The key is knowing what they could get you in terms of yearly income in retirement and what you might need. Of course you have to see it in context of your age and the trajectory if you continue at your current rate, in terms of what you’ll have when you retire. And then consider if it’s enough.

People suggest £18k for a single person can give a moderate retirement and about £26k for a couple. Bearing in mind that £30k can buy an annuity providing retirement income of about £1k (although most people do t use annuities now) you can see the sort of pot size you might need. You also should factor in the state pension that will contribute towards your overall pension income.

There’s no wrong or right and the fact you have more or less than others doesn’t really matter. Just because others are in poverty in okd age, won’t make your own poverty if you find yourself in it, any less horrible, just because others suffer it too.

Don’t freak about your parents’ comments, but resolve to spend some time in the New Year looking into what the trajectory from your current position is, plus how much you might need. If this shows you’re not putting enough in your pension, then you can consider if putting more in is possible, or what the consequences of your position is. Information is power, so gather some, so you know what your position is and can think medium and longer term about adjusting to being about best outcomes for you.

The same can go for anyone who isn’t sure they are doing enough for their retirement. Lots might not get to a good pension, but ignoring the matter doesn’t help. Everyone can look into these questions of what they might need and what their current provision if carried on will provide. And most people have some elements of choice and adjustment which an be made if they choose to do that. Or they can just keep ignoring and find that later on there is far less choice and option. Of course some have more choices and options but most people have some degree of choice about what happens with some of their money.

@dundydee we have been in the greatest bull run in modern history. Those returns have been realistic for anyone with a growth portfolio (not realistic for conservative portfolios or cash savings).

For the OP, don't think about what everyone else has. Look at how you want to live in retirement, and work backwards from there to see how much that retirement will cost and what you need to save now to pay for it. When you run the numbers you might be surprised - I did in my early 20s and it kicked me into investing aggressively.

Maybe a little low. A pension pot of about £1m gets you about £40k a year when you retire. It kind of depends what you want to earn when retired and as others have said, how much you have available to save a year now.

Sorry, I actually regretted pressing send immediately after typing that comment. It was just an emotional reaction to reading this thread. Of course everyone is entitled to discuss, and it is very eye opening for me to realise this information - how different peoples money worries can be. I hope no offense was caused by my comment 😕

But to have a specific growth portfolio isn't that more common if it's a SIPP for example. My employee ones are probably quite conservative but I can't change that.

If you log into their website, most pension providers let you project what your pension will be when you retire at a given age, on the assumption you continue to make payments of £XX, increase them, or stop them. Do that.

It's not what it's worth now that you need to worry about, it's what income it will get you in the future when you hope to stop working. And the income you need in the future is very much based on what salary you're used to living off, and whether you'll have paid off a mortgage by then or still have property costs.

A lot of workplace pensions are pretty poor, one reason I moved into the public sector. However even that isn't what it once was

@WinoAnon

I don't understand half of this thread. Save £500,000 to get £23k per annum back. What the hell is that sum, that sounds crazy expensive for a crap outcome!

I have no idea what my pension is and unfortunately it's not something I can prioritise when I have a fuck ton of debt that will take years to pay off. I'm just thankful I opted in and was too lazy to contact hr and opt out after my first pay slip years ago, so at least I know there's something there.

The pension industry is all about saving a lump sum during your working life, with which you buy an annuity at the time you retire. The annuity converts the lump sum into a guaranteed annual income. £500k saved up will buy you an income of £23k a year for life if you retire at 65. That income will rise with rising prices over your retirement. Whether that's a good deal or not depends on how long you live and how much prices (and therefore your income) go up by. If you're gone by 75 you lost the bet. If you make it to 107 you cost them.

@WinoAnon

I don't understand half of this thread. Save £500,000 to get £23k per annum back. What the hell is that sum, that sounds crazy expensive for a crap outcome!

I have no idea what my pension is and unfortunately it's not something I can prioritise when I have a fuck ton of debt that will take years to pay off. I'm just thankful I opted in and was too lazy to contact hr and opt out after my first pay slip years ago, so at least I know there's something there.

Your pension pot has to provide income for however many years you are alive after retiring... that's why £500k gets you about £23k - it's each year.

Apparently you can take about 4% out a year in income before you start cutting into the capital.