Pensions - is it really worth saving very small amounts esp if you've left it late?

[FuckingFinances]

It nearly seems like if you have not started this in your twenties, or are not a higher earner who can funnel megabucks in once you are over say 35, there is very little point?

Frankly I don't really understand the various calculators well enough, I have several chronic illnesses causing fatigue and brain fog and don't have the energy to read or process a lot - these illnesses play a massive role in why my earning capacity has been so shite anyway - but it seems like you need a huge giant pot to get any kind of modest return?

I am self employed part time, and hitting 40 and won't be entitled to a state pension, I'm abroad but even if I was at home I wouldn't have enough contributions at all.

Just feeling depressed and a bit worried, financial stuff is so hard.

What is everyone else doing who hasn't managed to save enough?

I have a very small pension and now am also self employed. I think anything we can save is a bonus so am looking for a private pension I can add to. I found a great isa type one but you had to be under 40 and I’m just over.

It depends on how small an amount is very small. Pension contributions are tax free, and if you are employed, your employer has to contribute too - that's effectively free (and tax free) cash - something that's pretty rare these days.

You get tax relief on your contributions

If you're working, your employer will pay in

That's two lots of "free" money

So yes, it's worth it.

Sorry that was a pile of shit I posted as I just re-read and saw you are self employed. Probably no advantage of a pension vs anything you could put into an ISA under current rules.

They are not tax free, you have tax relief on contributions.

On taking your pension benefits 25% is tax free the remainder is taxed at your marginal rate.

Still excellent tax benefits though.

Well, as my income is variable due to self employment and then sometimes illness taking me out for long periods of time, it would be really variable month on month.

But say I could manage over the course of a year an average monthly saving of the equivalent to 150 pounds?

Embarrassed to write that.

Depends on the rules where you are however in the UK it is totally worth investing in a pension when you are self employed.

It's tax free and the government adds a tax refund to it so you are basically getting free money.

Could you contact an independent advisor? I found it so useful and helped reduce my worry and take action.

Typical retirement age for people of our generation (I'm 41) will.be around 70. So yes it is worth starting to save now, due to compound interest perhaps a stocks and shares ISA if you don't get tax relief from a pension? I don't know about eligibility for state pension but worth checking this carefully alongside any tax relief you may be eligible for.

You say you are abroad, is that where you intend to stay? If you need to retire because you can not work any more what will you be entitled to where you are? Also worth looking at what you'd get in the UK.

If you'd been in the UK id assume the question would really be 'will I be better off if I save a bit than if I don't' because sometimes those with small amounts are no better off than those who rely purely on the state.

If that is the question I don't know the answer but there are various helplines you could call or somewhere like the pension board on money saving expert might be able to answer.

In general you'd expect to be better off if you saved something than nothing.

It's an uncomfortable position to be in.

I always thought any kind of financial advice would be for those saving a lot more per month, including ringing a helpline.

Is 150 just too small to make any difference, really?

I don't know how it works if you have been out the country, but I think usually in the UK if you aren't eligible for a state pension, then your income is essentially topped up to the state pension amount via Pension Benefit. There may be someone else who can correct me if I'm wrong.

If you've been abroad for a long time, do you have any entitlement to their state pension? Most in Europe are better than the UK's.

But what's the alternative to saving nothing op? Working till you die?

How old are you now? Have you always been SE? Or an employee before? What was you plan for retirement years ago. Did you not plan? Did you never earn enough to plan properly and save? In which case should you really be SE if you aren't making that much?

You can top up your state pension for years missed!

Log onto hmrc and see

Also I started a private pension with nest for self employed and put in £300pm
Also if you have a good year you can put more in all profit based. So you put in an equal amount to the profit you make and the govt put in 20% if you are a lower earner.
You can top it up depended entirely on earnings/profit for 3 years back dated. From when you started it.

No - definitely not! It gets topped up by the Govt so is free money! Also if it’s invested the money should grow by the time you do retire. Look into opening a SIPP. Another option is a lifetime ISA (LISA), although you can’t pay into it while you’re abroad.

If you are self employed and abroad you should also look into making Class 2 voluntary National Insurance contributions, which will count towards your state pension if you ever come back to the UK.

If you are 40. Save 150 per month for 25 years that is £45,000.

Invest in a pension, but look at the rules where you live.

I'm nearly 40.

No I have never earned enough to save regularly. I have had chronic illness since childhood and it's caused a lot of health problems.

My health means I cannot do full time employment so I try to do what I can and that means self employment.

I have tried being an employee and always managed out because of so many hospital appointments and time off for sickness which became worse and worse the more I pushed myself.

I think you need to look at the rules where you are living, and where you plan to retire.

Yes agree I need to look at specific rules where I am but more generally I am wondering whether people do save small amounts.

What retirement savings options are available to you where you live, OP?
Typically govts give tax shelters for retirement savings, that alone makes them excellent savings vehicles.

Cross post, yes I save £70/month into a private pension on top of work pension & a 2nd work pension (old employer) that I don't know how to access (yet). The private pension was brilliant savings scheme when I was a low earner, govt actually contributed a bonus that was equivalent to tax I would have paid if I earned more, even though I wasn't paying any tax on earned income at all.

If you have paid stamps previously in the UK you can 'buy back' years for your UK state pension while you have been abroad. Look on the HMRC website for details.

Will you have access to a state pension where you live now? Some countries are very generous so with that, plus the full / partial UK state pension, you shouldn't be too poverty stricken.

But yes, even if you're only saving a small amount in a private pension, it will help. Compound interest over 30 years is no joke.

Interesting food for thought, thank you.

I really don't want to worry you more, but in the nicest way possible - if you're not going to get state pension and you don't currently have a private pension and little hope of creating a sufficient one, how are you planning to live once you get too old to work (which, if you are struggling with ill health now, might be at a younger, rather than older age than average)?