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?

@Catza

In fact, my employer contributes an equivalent of £3 an hour towards my pension which brings my total hourly rate to £26,52. An equivalent private appointment would cost the public anywhere between £90 and £350. So I am happy to finance my own pension if you are happy for the NHS to be fully privatised.

In reality, the employer (or Treasury) contributes far more than 13% to your pension given the cost to service it once in comes to fruition.

Yes, more than happy for the NHS to be fully privatised, if that matters.

Is the one you can see on your online banking defiantly the one you have with your current employer? It's highly unusual that it would be linked to a bank if it is. Can you see a contribution history on there?

Agree. Just to add, when I joined my first company pension scheme in around 2007 I remember the scheme rep who visited our office advising against contracting out. I think you’d probably have to go back a lot longer than 2016 to find a high proportion of people who are affected by the contracting out issue.

I guess I will lose my home and have to go into rented to pay bills when older?

I really can't understand this 🤨 If you pay off your mortgage in 6 years, how will you lose you house when you're older? It's your house, not the bank's.
Stop panicking, you're not thinking rationally!
You're young, you've 20+ years to pay into a pension.
Go talk to a financial adviser, they'll help you understand what position you're in now and what you need to do to maximise your pension for retirement.

It's not that unusual. My current work pension is with Scottish Widows & I can see it in my Halifax online banking screens as they are part of the same group. It does show the monthly contributions in the transaction screen - as you suggest, checking that would help work out if it's a current pension, or one from a previous employer.

You aren’t that badly off, and if you want a higher pension, contribute more than 8%. I increased my contribution by 1% every time got a pay rise until I hit the maximum allowed (in the US, there is an IRS limit on how much you can save). That way I simply got a slightly lower pay rise instead of trying to manage on less pay.

Ah that makes sense if it's linked to a pension company

This, if your mortgage is paid off in 6 years you’ll have no mortgage to pay and that’ll free up more income while you’re still working as you’re only early 40s.

You could put more into your pension then, or eventually downside and buy a smaller property outright where your outgoings will be much less. Theres no reason whatsoever to think selling your house and going into rented is necessary or even a good idea at all.

It's unusual that all 3 previous employers will use the same pension providers and judging by how little you seem to know about your current arrangements it's also easy to believe that you didn't actively transfer all the past pensions into one?

Eg

Employer 1 used Scottish Widows, total pot = £xxx which delivers an annual return predicted of £yy

Employer 2 used Aviva, total pot =.... annual return predicted ....

Current Employer uses Standard Life, total pot
=....., annual return predicted =

Which of the Employer schemes can you see in your 'online banking'?

You are likely to have 3 separate accounts / log in / portals to access all of the pensions

Can you post a picture of what you’re looking at with identifying details removed? I think only then will people be able to tell you what the £2400 is. Don’t forget you’ll get state pension as well.

@Realstudd don’t forget you may be entitled to a state pension of up to £12,150 per annum (2025 rate).

So I’ve logged into another pensions account and it says:

shortfall: 1890

projected total retirement income: 890

target retirement income: 2,546

’all values shown in todays terms’

what does this mean? Currently 890 a year or a month?

@FusionChefGeoff i can see Scottish widows on my online banking and my earlier post above relates to a avivia which I’ve just uncovered but don’t understand

A year.

But it's not your only pot. As well as these three employers did you have any others when you were younger? There may be other pensions lying around you've forgotten about.

OP I was like you and didn’t understand all the terms. We went to a proper financial adviser (personal recommendation) and asked for a one off session to sort out retirement planning. It was reasonable (I think £250 but many years ago now). He gave excellent advice. He traced all of our bits of pension and gave us a printed booklet with all the information clearly set out. The best thing was a graph showing our ages and predicted income. It was so helpful and made things clear and immensely reassuring too.

I strongly recommend you do this now while you are young. Don’t panic. You are on a great salary and have done amazingly well to be nine years from mortgage free. When it’s paid off you can put more money into savings and pensions, but ask the FA if it would be better to put more into pension now and less into mortgage as earlier payments might be more effective.

Also check what your employer is contributing. Now I’m retired I realise how valuable this is so it might impact your job choices in the future if you know it will make a difference to your quality of life when older. Many people are living long retirements nowadays.

@VanGoghsDog if it’s a year what is the point? 890 by then will be worth much less too? It’s going to make no real difference at all.

Thanks @Hollyhocksandlarkspur i might try and find someone as I have no idea what I am doing at all!

Which one is your current one (the one you said you had been paying into for over 9 years?). You should be able to check the contribution history on each of them to work out which one is which.

You really need to do some research. Personal financial literacy is a life skill every adult needs.

That 890 is a snapshot today. Ignore it; it's not relevant to your future circumstances.

You have 25 years for your investments to grow.

They will grow two ways:

1. because you will continue to contribute
2. investment returns as the stock and bond markets produce profits

You need to get a one-off appointment with a reputable fiduciary financial advisor AND you need to do appropriate self-education.

www.citizensadvice.org.uk/debt-and-money/financial-advice/getting-financial-advice/#:~:text=All%20financial%20advisers%20should%20be,not%20happy%20with%20the%20service.

Spend some of the savings on a session with a financial advisor. Take all the paperwork and login details etc for the pension thing and discuss it with them. Could save you tens of thousands over a lifetime. If you're bright enough to earn £50k you're bright enough to understand pensions. Rein yourself in and get to grips with this now. And google "financial phobia" (it's a thing) and how others got over it.

Your pension pot should be invested in the stock market. The pot should grow as the value of your investments grows.

Once you have located your different pension pots, you should check which investment funds your pension is invested in. A fund means a group investment in lots of different things. A fund for a pension is typically invested in shares in thousands of companies. It may also include other investments.

Is it £2400 per year? Or £2400 in total? (It can’t be in total, because 8% of £35k is £2800)

And is that for all of your pensions combined, or just your current company?

You’ve got another 25 years to contribute, it will go up.

Mine says similar - nhs worker. I have only been paying in to this pension for 5 years but pay approx £370 a month into it.
so I’m assuming it is wrong to be honest! I’ve paid far more in to it then what’s on the quota plus what the nhs pay in to it doesn’t match up.

if you put in 8% of 35k that is 2800 a year in 20 years with 5% Compound interest that will be £7,595, because each year you are reinvesting the interest and earning interest on interest
then next year you will have another 2800
( maybe 2900 as you have a payrise and 8% is now 2900 ) for 19 years =7255
if you continue to put in 233 a month which is 8% of 35k this is ignoring any promotions or even inflation rises in wages which there will be; at all at the end of 20 years you will have around 58K (2800 x 20) of contributions but because of compound interest your pot will be £103k almost double what you put in
it will be more because you won't still be earning 35k in 20 years time

compound interest calculator link https://www.thecalculatorsite.com/finance/calculators/compoundinterestcalculator.php

103k will give you approx an extra 5000 on top of state pension
this is 50% more than standard, well worth having

This is your hypothetical annuity, not your total pension pot. If you log on to ESR and go to your pension statement, it will show you your total pot at the bottom of the graph that tells you annuity, dependent pension, sum on death etc.
Mine is about 52k after 4 years. 18 months band 5, 6 months band 6 and two years band 7. Annuity is about 2,4k

I don’t want to sound horrible … but you really need to do some reading to understand the basics of this. You should know the difference between DC and DB for example. You should be able to understand the info in your pension accounts.

Strongly suggest you do some reading on say the Which website and listen to both the excellent Meaningful Money podcast and also the Which podcast to learn the basics.

it’s not hard. Put in a bit of effort and come up to speed. This is really important and actually enpowering. You’ll be glad you did.