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!

I don't have any formal pension at all, as a divorced former SAHM. Property is my pension.

@ChristmasCurry

No one I know with a pension is taking out an annuity, all are taking a pension drawdown instead.

Better returns, more risky, that always seems to be the dilemma when it comes to money.

Started at 28..100 per month.
Increased each year by double. When mortage finished at 50 put that amount in. At 63

Increased each year by double you say? So at 29 £200 a year. At 30 £400? By my calculations at 63 you'd be paying £1,717,986,918,400 per month

Guess it depends on how long you plan to live.

Obviously some people are not going to be able to put money by - like the woman caring for a disabled child - and I have the greatest respect for people doing important work like that. But for people who can scrape up a little bit of extra, it all helps. Some people just don't know about how to build up a pension or retirement fund. And about emigrating, my parents were immigrants and still saved a bit for retirement after discovering the streets were not paved with gold.

@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.

I'm not sure where you are coming from - that's 23k a year for approx 25 years or more .

Annuities are not a recommended source of pension now . If anyone is getting divorced don't take property in lieu of pension either .

Sorry doubled per year. Paid 36000 last year.

@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.

You need to understand that £500K & £23K before you declare it a crap outcome!

Firstly: tax relief. Assuming that you’re a basic rate tax paper, you only need to save £400K to get your £500K pot - and £100K is tax relief, guaranteed no risk. So that’s pretty good, right?

Then the interest… no-one can guarantee that the stock market will grown indefinitely, and it certainly won’t grow every year. But as long term investment, the stock market has performed consistently as delivering growth. So you didn’t even have to save all that money yourself.

Then, however you got to £500K, you’re not swapping that for £23K pa. The point of draw down is that you draw off the interest every year - without touching the capital. So what that £23K represents is the money you can spend every year indefinitely and STILL have £500K sat in the bank.

Is that starting to look like a better deal yet?!

I’m using £23K as that’s your quoted figure. That 4.6% of the £500K though - so not a crazy figure.

@Bagelsandbrie

That is a LOT of money! You’re doing really well. Lots of people like me - aged 41- have no pension whatsoever. None. (My lack of pension is due to chronic ill health and caring for my disabled child). I don’t think your parents have a grip on reality.

OP is 35. Her parents are probably 20 to 30 years older and well aware what their income will be when they retire in a few years. IOW they are likely to have a far better grip on pension income, than someone with no savings at all.

OP I think £55k is OK but it's definitely worth putting a higher % of earnings in.

I dont understand why posters are saying 'I have no pension', snidey comments etc. It's important for women to pay into pensions, no need to sneer at the OP.

Also perfectly valid for those who've put lots into their pensions to discuss it - this isn't a race to the bottom for women.

It’s none of their business and with the way the world is going climate change etc

I’d say enjoy your life and spend your money

I'm mid 50s, worked my whole life, was in what I thought was a pretty decent pension scheme then got made redundant. I was lucky enough to get a new job straight away but the new works pension scheme is rubbish, I've gone from thinking I would have a pension I could survive on comfortably to being seriously worried that I now will not have enough to live on.
If I were you I'd put away as much as you can, you never know what life is going to throw at you

53 and have £49,000 workplace pension - I am very worried! State pension will probably be 80 years old as they keep pushing it forward!

Just to add I also put all my redundancy money into investments, it's not going to help much though

Current pension is 180 a week if you have full contributions . It's not very much !

I’m the same age as you, and I’ve got the grand total of £200 in mine. I’d say you’re doing great!

Then, however you got to £500K, you’re not swapping that for £23K pa. The point of draw down is that you draw off the interest every year - without touching the capital. So what that £23K represents is the money you can spend every year indefinitely and STILL have £500K sat in the bank.

Is that starting to look like a better deal yet?!

I’m using £23K as that’s your quoted figure. That 4.6% of the £500K though - so not a crazy figure.

This seems pretty risky to me. You could be retired for forty years or more. Who knows what will happen over that time. Forty years ago Margaret Thatcher was in power, we had three channels on the telly, Charles and Diana had just got married, and the internet wasn't even a word. There have been several enormous market crashes and recessions. Interest rates and inflation have fluctuated wildly. And even then we've been lucky because over all that period we've overall had a bull market.

Indexed-linked annuities are expensive because of the risks involved. I'd rather pay someone else to take them.

Do posters really think that climate change is a reason to ignore pensions 😳
Many of the so called gold plated public service pensions have both high employee and employer contributions, I pay 10% of gross into mine.
MN in general has a ridiculous attitude to pensions, and all women, regardless of income should be educated about the reality of potentially 30+ years of grinding poverty ( i am assuming anyone under about 60 now will be working to 67 years minimum).
If you are a carer for disabled children, then yes, you won’t be able to afford to pay into a pension ( part of the disgrace that views caring as low level) but anyone else needs to be putting paying into a pension well ahead of a daily take out coffee, or weekly takeaway dinner. This isn’t privilege talking, it’s reality.

@Rangoon

If a pp understood compound interest they wouldn't have thought that the person who had the impressive pot at 37 after 14 years saving had to put in £17,000 a year. The early contributions would have been earning interest and then that interest would have been earning interest and so on. I think Einstein once described compound interest as the 8th wonder of the world.

Pensions don't earn interest.

One strategy is to get the mortgage paid off relatively young, and then put the money you're not having to pay into a mortgage into additional pension. If you're concerned, speak to a financial adviser.

Well I am early 50s, and have £950,000 in my pension pot, so £55K is a bit average @Helena1985h Maybe you should think about upping the amount?

@AuntyBumBum

Doesn't it totally depend on how much income you want to have in retirement? Assuming you retire at 65 and want an RPI indexed-linked income (prudent unless you intend to die soon after retiring) then you need to save £500k to get an income of £13k pa according to this: www.hl.co.uk/retirement/annuities/best-buy-rates

But annuity rates are currently very low, and who knows where we'll be in 30 years.

That's not prudent, it's bonkers. Nobody buys annuities atm because the rates are so ridiculously low. With drawdown £500k give a much better standard of living in retirement than the figures you gave, it just requires people to have self-control.

That's not prudent, it's bonkers. Nobody buys annuities atm because the rates are so ridiculously low. With drawdown £500k give a much better standard of living in retirement than the figures you gave, it just requires people to have self-control.

And over several decades, quite a lot of luck on the markets and the economy and someone to manage the strategy if they lose capacity! (Or ideally a short life expectancy )

@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!

How is it a kick in the teeth that people who can save are doing so? That will mean less pressure on public funds for those who can't.