To think I am fucked for retirement?

[Realstudd]

despite a decent job and income, I am absolutely rubbish at anything financial. I don’t understand pensions etc.

i became a single parent last year and I have one dc, 9. I am 42. I have 3k in savings but these are used for car stuff or emergencies and never get beyond 3k.

i looked at my pension pot the other day and it says 2,400… I’ve been paying in for over 9 years, 8 percent of my salary. My salary has always been over 35k and for a few years has been over 50. I don’t get how the pot can be so low?

the only positive is I have 140k left on my mortgage which I overpay so could be paid off in 6 years. But what good is that really if I can’t afford the bills! I feel like an idiot for not having planned ahead, I guess I will lose my home and have to go into rented to pay bills when older? What do people do? I go from feeling insanely stressed about it to accepting that that’s just how it is but I can’t picture my future anymore. What do you do in this situation?

It's a good start OP.

As a rule of thumb I estimate I would get 4-5% of my total pension value per year.

So for every 100k in your pension you might get approx 4-5k a year.

Keep going, and don't panic.

You can add to this the government pension of 12, 750/year, after 67. So you would be on 15k plus now.

Why on nothing? You get state pension of £200+ a week. That's enough to pay your bills on a mortgage-free house. Then you add your work pension ON TOP of your state pension.

https://www.moneysavingexpert.com/savings/discount-pensions/

I suggest you start here, this is a brilliant guide to start learning about pensions. Don't panic, you have time to sort this out, I wish I had had these thoughts at 42!

Defined Benefit is a final salary pension, quite rare now unless you work in some public sector areas. Defined Contribution is a workplace scheme where you pay in a percentage of your salary and your employer contributes too. This builds up a pot of money for retirement and you can choose whether to buy an annuity, which pays out until you die or use the pot of money to draw down from. If you've moved job several times, you'll either have several different pots of money or if a Defined Benefit scheme and less than 2 years the company might refund the contributions to you. The best thing is to see if you have any paperwork or emails from pension providers.

Take a deep breath, all will be well!

You are probably in a good position for your age and stage. At 42 you have a good 20 working years ahead and by the time you retire

• you will have had many more years to stash £ into your pension
• you will own your property outright, and have had no mortgage payments for many years
• you will qualify for a full state pension which is likely to be something not nothing, and in today's money is £1000/month

I would say

• trace those pensions so you know where you are and what you have
• focus on rainy day savings, then mortgage, then pension savings

So this particular amount (£2400) is the amount that has built up in your current employment.

as you can see it in your banking app I am assuming this is what is known as a defined contribution pension and you do not work for the NHS or council for example as they offer what is called a defined benefit pension.

You need to find out how much built up whilst you were working for your precious employers and consider bringing them together or at least knowing what pensions they are so you can keep an eye on performance.

Martin MSE has good information and a helpful forum if you need some guidance.

You are only 42 so have a long time to build a nice pension - no need to stress - you just need to do a bit of homework 🙂

If you’ve had 3 jobs and paid into a pension with each one, then you’ve got at least 3 pots. They could all be with different providers! Most companies automatically change your work pension to a private pension when you leave and send you some info but it can be difficult to track down. A fee will be charged on each one.
I ended up getting a financial advisor to track them all down and consolidate them into 1 private pot so I only pay one lot of fees whilst contributing to my workplace pension. The last time a changed jobs I made sure I transferred the old workplace pot to the new workplace scheme, so I’ve still only got 1x private pension and 1x workplace pension to manage. It’s a PITA but you’ll feel much better once it’s sorted

Gov.uk have a free pension tracing service..

www.gov.uk/find-pension-contact-details

• Sorry, not fill pension tracing, but will give you contact details for your pension providers for previous jobs

Definitely trace your previous workplace pensions - the amount you're saying is way too low for that to be 8 years' worth.

You can consolidate your pensions into one pot, which you will maybe find easier to look after and might reduce fees as well.

And learn more about your pension so you can see what the rate of return there is.

Look up your NI contributions and predicted state pension on the gov.uk website - you might want to add additional years to that if you don't have enough.

Then look at interest rates on ISAs (cash, or stocks and shares) vs your mortgage payments, and see which is most beneficial - saving in a tax free way or overpaying the mortgage. ISAs mean you can access the cash when you need it, so might be an idea rather than adding to pension. But talk to a financial adviser, and also make sure that you're getting the maximum pension contribution from your employer as well, as that's essentially free money.

If you already have a LISA they are good for getting a 25% govt bonus on up to £4k/yr, but not available to open a new one if you're over 40, so no good of you don't already have one.

What's your job? That will give a clue as to the type of pension you are likely to have (defined benefit or defined contribution).

I'd have thought £2400 is likely to be a projection of an annual pension from a defined benefit pension (with no further contributions and not taking into account inflation). If so, multiply this by 20 to obtain an estimate of the equivalent 'pension pot', which would be £48,000.

Defined benefit pension: you get a certain amount each month upon retirement.

Defined contribution: you pay what you like into your pension, but don't know how much you'll actually get monthly when you retire.

What you need to do:

Find out who your old pensions are with. You could then consider consolidating them.

'online banking says pot value is £2400'

Do you mean on the pension providers website, or your own personal online banking??

*op, I know all this terminology can seem really confusing, but this is where Google is your friend!!

Btw, you've done great at your mortgage overpayments!

Depends where you live

Honestly, get some proper financial advice. Pensions are complicated and I am hopeless with this stuff as well. A (very canny) friend recommended the guy I now use. He didn't charge anything directly but takes a management fee from the fund(s) he sets up.
I had money in a pot that was losing value (which is why I contacted him in the first place), but he explained the reasons and suggested a better product with the same company. He made all the arrangements and the investment started going up immediately.
It was well worth it for peace of mind. And do it now, while you're still young.

Are you in a union? Most unions will offer free pension advice. Worth looking at. I wish I had done it as I made a couple of rookie errors which have cost me.

If you've worked for three different employers and paid into pension under each of them, why don't you have files (digital or paper)? Did not you read the plan documentation? Do you not receive periodic statements from them?

You need to contact each prior employer ASAP and ask how to reach the pension manager. Ask them for a statement or how to access your information online.

Collate those statements with the one from your current employer.

Use some of the money you otherwise would use to overpay on the mortgage and engage an accountant or financial advisor (NOT one who works on commission) for an hour to sit down and sort through things with you. They will tell you what other information to gather. (Don't agree to long term ongoing money management; you want someone to set your straight and help you to start learning about these things.)

Buy a plastic file box and create files. Don't think you can keep it straight just by storing this stuff on your computer; if you haven't done so already. You likely are (like me) the sort of person who needs the physical paper in hand to keep yourself on track.

Devote one hour per week to educating yourself via reputable sites like https://www.moneyhelper.org.uk/en to educate yourself about savings, pension and retirement. Ask the financial advisor to recommend a book. This one looks decent. Money: A User’s Guide: The Sunday Times Bestselling Guide to Taking Control of Your Personal Finances

Never take financial advice or direction from someone who works on commission.

You have to keep on top of this stuff. There is no recapturing the time value of investing early. You still have 25 years to secure your older years but don't let many more days slip by.

If you do consider consolidating pensions from other employers, Vanguard is low-cost, very reputable and has some affordable advisory services. The big flash companies are flash because they charge high fees.

You will have three different pensions then. Use the advice above to trace them.

i imagine that’s the projected annual benefit as opposed to the amount in the pot.

You have to pay in 35 years to the state pension to get that, you can't expect a huge private pension after 9 years. Even £2.5k is going to be a good top-up on a state pension. As a PP said, you have 25 years till the state retirement age to pay into that private pension.
if you are an employee, your employer must legally contribute to your pension too. Are they paying that into the same pot or a different pot?

Why on earth would you switch to rented?! Rent prices are waaaaay higher than mortgage repayments and can increase every year on the whim of your landlord. Not to mention they can sell up and evict you. If you want to release some money, buy a smaller house and use the difference, but avoid rented if you are already out of that money-sucking swamp.

I assume you will have state pension on top of your private pension, no? So that will cover your bills and food and then your private pension is for other expenses like holidays or hobbies.

AS PP says this is probably just one of your pensions and you have some others which will all need to be consolidated into one, it's quite easy to do once you know what they are and will be far easier to keep track of.

Good advice here!
Can I also recommend this very readable book about financial planning.

Plan for Happy: A step-by-step guide to growing your money: Amazon.co.uk: Walkom, Adam: 9781915229397: Books

I wish I had read it at your age!

That figure isn't right for 9 years of employee and employer contributions. You need to ring your provider to get an explanation.

Have you changed jobs? Or have your work moved provider? If so you need to bring all of your pension pots from different providers together so you know what you have.

Pension pots are a bit like bank accounts. Each time you move job, your new company opens a new one for you. It’s your job to keep track of them and move the funds from your old pot to your new pot, unless you want to run them all separately.

So go through your old correspondence, or send a pleading email to old HR department, or use the government tracing service, to find the old pension pots and move them across.