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!

@blueshoes - I live in NZ. Of course many people here do have savings and we do have the Kiwisaver scheme which many people now pay into, but that only started in 2007. If people don't have any form of savings they live on national superannuation, which is the same amount for everyone. I just don't hear people constantly talking about how much they have put by like they do on MN.

[quote gofg]@blueshoes - I live in NZ. Of course many people here do have savings and we do have the Kiwisaver scheme which many people now pay into, but that only started in 2007. If people don't have any form of savings they live on national superannuation, which is the same amount for everyone. I just don't hear people constantly talking about how much they have put by like they do on MN.[/quote]
I am not familiar with the NZ system but the state pension in the UK is one of the lowest in the developed world. Maybe that has something to do with it.

On mumsnet, you get the occasional thread on pension. I don't agree that it is constantly talked about.

There is generally far too much ignorance and burying heads in the sand around pensions that it can only be a good thing for women in particular to think about their financial security in old age as they live for longer and often take years off work that they could be earning a pension.

@blueshoes - it's not "the occasional thread", I've only been on MN for two years and have seen numerous ones. National superannuation here is hardly enough to live a wild life on, and as I said people do have savings, pension schemes etc. However, I wouldn't have a clue how much any of my friends have, and no-one has ever asked me. Prior to Kiwisaver many people didn't have any kind of retirement savings - including me - and it didn't bother us. A lot of people do live solely on national superannuation.

@KloppsTeeth

I’m mid 40s and I have £0 in a private pension. I am fucked. This is because a plan I had was stolen when I was early 20s and we lost the lot and then I had a disabled child and have been his full time carer ever since. I have no chance of ever having a decent standard of living as he will need care all of his life and I am too old to find work to earn enough to pay in. Life can be really shit for people like me. If you can save, please do as you never know what will hit you.

I am so sorry. I can't imagine how hard that is, day to day and also with no prospect of improvement in sight. How carers are treated in the UK is disgusting and I hope that our political system changes so that you and your son are provided with the security and standard of living you deserve.

Bonfire--it's not too late. Sign up now!!

This is why people are saying it is useful to have, say, a million pounds saved by the time of retirement. You don't have to buy an annuity, you just have to have the money invested in a reasonably balanced way.

If you have a million pounds, and assume that every year the interest rate goes up by four percent on average, you can take four percent of a million dollars and spend it without guilt and without diminishing the million dollar nest egg ever. So that means that you can spend, in addition to your pension and whatever else you have saved up, 40,000. If you have saved up 500,000, you can spend 25,000 per annum. Etc.

@gofg if you go on different NZ sites though there is a fair bit of discussion about retirement savings. I don't hear it discussed in person much because money talk generally isn't considered polite but it definitely exists online.

There have also been pension schemes and private pension scheme in NZ for a long time, although many those have been wound down now and most new hires only get KiwiSaver.

I do know a few kiwis who rely on NZ super but most older kiwis I know have pensions and/or stock portfolios and/or bonds and/or annuities. They pretty well have to in order to have a decent standard of living. The Massey Uni study showed most retirees spend more than their super, so that is either coming from savings, reverse mortgages or debt.

NZ super is also calculated on you owning a mortgage free home. For those curious, it is $22,721 per year after tax for a single retiree or about £11,582 - nothing to sniff at but not much really if you want to go on holidays and dine out etc.

[quote Helena1985h]@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![/quote]
Why would you priorise paying off very low interest debt faster than needed at the expense of pension savings that are likely to grow at a faster rate and attract tax relief that adds at least 20% to every pound you invest?

That doesn't make much sense.

I think that is ok but try to do 20% when you can. In the US so here they expect to carry on making a similar income even in retirement so there is a pressure to have saved 1 million minimum as a couple- I kid you not that was the advice my husband got his first week here. I am playing catch up and at almost 50 I have about 150k which is considered low here but I will get 50% of my final salary after 20 years so I am relying on that more. I think you need less money in the UK. Our propert taxes alone are 8k a year and they never go away even when the mortgage is paid off. You are doing ok but try and put more away when you can.

@CakesOfVersailles - I imagine it is talked about on sites about money management, but I still can't see people in general being so focussed on pensions. I do realise there have been pension schemes around for decades, all I am saying is that I find people in the UK seem to worry about retirement money more than they do here - or at least more than anyone I know.

My (divorced) parents were mortgage free, and had some savings, although I don't believe they were in any pension scheme - my mother certainly wasn't - and both managed exceeding well on super and said savings.

Don’t panic, panicing really doesn’t help anyone.

What sort of income will you need in retirement?
Do you want to retire early? If so some people use their pot to cover the gap between retirement starting and being old enough to claim the state pension.
Do you own property? If so, is it a forever home, or could you downsize/move somewhere cheaper and use the equity as a lump sum.

I have a decent pot at the minute, I contribute quite a high percentage and my employers contribution is generous, by pot is also performing well which has really boosted it. My plan is to retire at 55, my pension is important for this, but my mortgage is more important. We’re currently on track to pay it off when I’m 43, so we will then have 12 years mortgage free where we’ll be saving what would have been our mortgage payment.

@bonfireheart

I don't have a pension but do have equity in property and decent savings, plus life insurance. Am entitled to civil service pension via work which I opted out of, but everyone says is amazing. This thread has given me much to think about!

You’re saying no to free money.

Pension contributions reduce your tax liability, not only that but your employer contributions would be significant.

You’re essentially seeing a £50 note on the floor every week and choosing not to pick it up.

@Bubblty

Is this some kind of weird stealth brag?

Go see an IFA.

Of course it is!

Yes, stealth boast - classic. Possibly not really intentional but still.

@gofg pensions are not discussed anywhere near as much IRL in the UK as they are on MN! I think it’s a Mumsnet thing, not a UK thing…

I'm 38 and have £0 in a pension. Get a grip OP

Anyone here got a pension as a self employed person?

I am self employed

No pension, I lived abroad many years, and have had years where I earned nothing

Instead I have a flat I rent out. According to most mumsnetters this makes me evil though, as being a landlord is a bad thing to them!

OP: it is very likely that your money will work much harder for you if saved into your pension now rather than overpaying your mortgage.

Money into your pension increases because the government pay you back the tax - you get a free extra amount paid in on top of your contribution.

In a good reputable fund your money will earn more in interest / yields than in other savings. And the interest added to your pension will be higher than the rate of interest you are paying on your mortgage. (At present)

Every penny you earn in interest / increased investment value then earns its own interest, and continues generating more interest like this for as long as you have the fund. So much better to put money in early and let it work hard for you over the years.

Never opt out of a workplace pension. A contribution from your employer that will earn its own money for years and years…

I agree with your dp tbh. 55 won't see you much at all, I'm 50 and will have over 250 by the time I'm 58 which is when I plan to retire. That will give me approx 30k pa until I'm 67, then I'll get my old age pension added to that.

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

Your dad is right. I started putting 400 a month away into a personal pension when I hit 45 to get me to my required amount to retire on. The gov contribute a further 100 a month and I can claim 100 via self assessment. I was paying off 400 per month off my mortgage but my financial advisor recommended I did this instead, this way I get my pension pot up, I can pay the remainder of my mortgage off early at 55 when I take my lump sum. Plus I get the extra 200 a month tax relief and gov contributions.

I have a pittance in professional pensions schemes. When I say a 'pittance', I mean the combined income would not pay a meagre rent. I am sort of approaching 'retirement' age (about five years off) but I have started one or two extra jobs that I can continue post retirement age, because I don't think I can live comfortably on £137 a week, especially when I have additional care needs for my sons.

I admire people who have a good pension scheme or who have saved/invested so their older years can be comfortable. However, the real problem is that pensions, like all other welfare payments, are far too low in this country. Poverty amongst the elderly is rife in this country. Indeed Age UK estimate that over 2 million older people live in poverty in the UK.

OP, perhaps your parents are frightened that when you are older, the only people who will be able to 'retire' are those who have invested heavily in a pension scheme. The rest will work until they drop, or have their life expectancy shortened by ill health acquired through abject poverty.