To be worried that this is the value of my pension age 39?

[Unwiq]

I’m 38 and my pension is currently valued at 55k. I have been paying into it alongside various employers since I was 24. I am not practically 40 and it seems like absolutely nothing. How much should I have saved by this age? Does anyone know how I can get back on track or if it’s even possible now? Also, should it increase faster now it’s got more in it? Or will it take me another decade for just another few thousand?

You need to talk to a financial adviser and get professional help and advice.

That’s about £57 quid a week in retirement isn’t it

How much do you pay into pension every month? Anything you pay is before tax so it's worth paying more if you can. Will your employer pay more if you pay more? Some employers do pay more if employee pays more.

Get on the money helper website and use their pensions calculator. It will model your retirement income based on what you currently have and your future contributions. You can work out if you need to put more in for the lifestyle you want.

Don't rely on any government to support you in retirement. The way things are going the age to be able to claim pension will be up to 70.

You really do not need a financial adviser. Honestly, MN would tell you to get a financial adviser if you found a fiver down the sofa.

Pension calculator | Work out your retirement income | MoneyHelper

Start with a calculator like this and see what it tells you. Are you in a position to increase your contributions?

Yes, as you increase your pot you get more from growth eg

£10k pot might grow 5% in a year and you put in £1k= £11,500
£50k pot might grow 5% in a year and you put in £1k= £53,500

You also need to look at your finances in the round. Any other savings or investments? Home owner? Any debts?

You’ve got a lot of working life left yet - decades of compound interest and market growth. Put in as much as you can afford now and try not to worry too much - you’re in a far stronger position than many. If you’re not working full time then try to go up to that if your circumstances allow. If you were 68 and about to retire this would be different but you’ve got ages yet.

You are not yet 40 so you could open a LISA and also try to max out your workplace contributions. You have another 25-30 yrs to contribute.

Much more complex with inheritance tax implications now. You need financial advice, but yes £55k will get you very little.

can you afford to increase your contributions? The tax relief makes pensions a very wise investment. The sooner you can get extra in, the sooner you have a chunky balance to be compounding.

It’s good that you’ve been contributing so far but I did find I was able to ramp it up in my 40s as things like childcare contributions eased up.

As long as your paying in as much as you can afford then that's the best you can do so try not to worry about it too much.

So many people save absolutely nothing and seem to think the state pension will suffice so you are doing better than a lot of people. I'm maxing mine out now (I'm 47) and it does go up quite quickly when you start making the effort.

Mines about half that, and i'm slightly older

I wouldn't worry. I'm the same age and mine is about £3000 lol. The state pension isn't a lot but if you've paid off your mortgage by then, you'll be fine, so anything extra is a bonus.

To give you some idea of the figures.

A pension pot of £50k at age 40 will be worth c£160k in 25 years (assuming 5%). That said inflation means that will feel more like a pot of £80-90k because everything will cost more.

If you continue to contribute throughout though it’ll be much more. £100k at 65 equates to about £6k a year if it’s just a flat type annuity.

Pensions 101

you have a defined contribution pension - your employer is paying a %age of your wage and you are also paying a %age and this creates a pot which is invested and will hopefully grow faster than inflation over your working life. When you get to retirement age, you use the pot to buy an annuity which gives you a guaranteed income for life in exchange for your pot of cash.

how much your pot buys depends on various factors, but as a rule of thumb you’ll need at least £300k to generate a £10k per annum annuity. You will also presumably be entitled to the state pension.

what do you want your retirement to look like? that will determine how much of a pot you need and then how much you need to save to achieve that.

you might also be investing in other assists which you can use - for example you might being laying a mortgage on a family home in a more expensive area and you could downsize in retirement and free up money that way.

I'm a decade older and have 10k less.

Don't open a LISA if you are on universal credit. They'll count it as savings. Put more into your actual pension as they can't touch that.

Honestly that's not bad and some people will come here and say they have a £200k pot at 35.
The idea is that you will be able to increase your contributions over the next 25/30 years so concentrate on how you can up your pot either through work or via private pension. Every little helps.

You’ve got time, don’t worry. Pay as much as you can afford into your pension each month. Does your current place of work have a pension scheme?

I’m 50 and mine is 60k but my DHs is £450k and we are planning on aiming for 800k in total over the next 15 years.

This will give us I believe about 25-30k pa in a joint pensions before tax. we are going to aim to get about £3500 per month we have calculated with a paid of mortgage retiring at 68 this will be enough for nice food, decent short breaks and running a house and car and the ability to sell and downsize as well.

I preferred doing it that way and having a target, obviously so much can change but it seemed a realistic aim for us.

If was single and 40 I’d be aiming for about half so £400k pension pot, so you’d need to be aiming for an extra £460pcm into your pension to achieve this with moderate growth and retire at 68.

You end up being able to put more in as your outgoings reduce e g. kids become independent you pay off your mortgage. You just need to try to put aside as much as you can going forward. Every time you get a pay rise increase your contributions. When you can try to increase your income.

You need to understand compound interest, the more you have the faster it grows so you’ll see a significant increase if you keep contributing at a decent amount

I panicked about the age of 40, but we upped our mortgage and moved into a bigger house. That means we can downsize and raise cash tax free. I started a new job and started paying into the company pension scheme. I have also been paying into stocks and shares ISAs, so am hoping I will be ok. Try not to panic, your pot will grow. But start thinking how you can diversify and make money elsewhere.

Here's where the power of compound interest kicks comes into play.

If you added no more to your pot, and just let it compound at a conservative 5% for the next 29 years, you'd have £233,766.02.

If you achieve 8% interest, you'd have £555,369.72. This is achievable if you're in the right sort of pension fund.

Now, let's assume that between you, your employer and the tax relief, you add £300 per month:

At 5% interest you'd have a total pot at age 67 of £467,787.00. At 8% interest you'd have £964,763.12.

In short, it's time that is the magic ingredient in compound interest and you have plenty of time!

Play with this calculator to see what I mean: https://www.thecalculatorsite.com/finance/calculators/compoundinterestcalculator.php

Just keep pumping in money every month and it looks like you're going to be just fine.

It’s not great but not terrible. As others have mentioned compound interest will kick in and it should increase a lot just from that.

However to benefit from this you need to check what you are invested in. 20+ years from retirement you can afford to be holding riskier investments (with higher returns) eg equities. Personally I’d be careful to ensure I wasn’t in conservative / cash or bond heavy funds as you won’t get the returns you want or need from that.

You’re doing better than me, I don’t even have 55p as I’ve always opted out. They take enough from me in tax to be stealing another 5% of my pay.