Pension worry…help

[Pensionworry1]

NC’d for this…basically I was a sahm and had a late career change 5 years ago. I’m 40…My current pension is at 33k…projected at 240k. I’m aware this is not enough
now I do have a separate extremely small pension elsewhere and by that I mean about 1.5k per year once retired.

it’s also worth noting that I’m still at the lower end of my career ladder right now and have no intention on stopping here. My wage increases about 4.5%annually, my company pays 10% and I pay 5% (I can’t pay any more than this as I have a mortgage etc) I usually pay some of my bonus into my pension so I might put it all in going forward (usually about 8%)…is there anything else I can do? I suppose that’s it really isn’t it? Should I be worried? I feel like I should be 😩

I think it’s the voting thing that makes people respond with a view rather than helpful comments. The questions was whether it was unreasonable for the op to think in this way - and people respond accordingly. I think the AIBU question is unhelpful here.

Sorry to read some of the rude responses on here. The good news is that you're looking into it now and that you still have lots of time. I'm slightly older than you and had a similar pension to you 10 years ago, it's now over 300K so a few years on a higher salary (higher rate tax payer) makes an enormous difference. The other tip which a lot of people miss, is to get yourself out of the default fund. It is way way too conservative, the adventurous fund is fine for most people in terms of growth and you could even go more ambitious than that with a global tracker if you wanted to. There are loads of great podcasts/youtube channels on pensions. I recommend checking out Making Money with Damien Jordan and James Shack. They cover the basics in a really accessible way. Wishing you lots of luck :)

Increase what you pay into your pension. Just increase it by 1% at a time. Increase by 1%, see how you manage, increase by 1% again etc etc.

I bet you won't even notice it.

OP it is quite reasonable to not want an impoverished retirement and you shouldn’t be chased away from your own thread. You have 27 years to get there, keep on at it and consider if you can pay more into it now with a view to a lump sum being used to pay off what’s left of your mortgage. It’s tax free on the way in and the longer it grows the better off you’ll be.

You are absolutely not being unreasonable to think about your pension!
I’m constantly worried about mine, and I’m 46!
Yes, a £33K pot isn’t very big at all, but you do have a few options — and some wise people have already outlined them for you.
What I’d do in your shoes is open a second pension fund on a platform of your choice (there are plenty — worth looking them up). I’d go for a high-risk option and put in as much extra as you can reasonably spare.
I wouldn’t increase your workplace contributions for now and only if you get a bonus or promotion, then you could reconsider.
It’s also great that you could potentially downsize in retirement, that’s a really solid fallback option.
There’s far too much talk about scrapping the state pension altogether, and if it ever came to that, most people would end up in absolute poverty unless they’d been saving aggressively and started young

It is really important to make sure your pension savings are invested in high growth low cost tracker funds. Your pension savings need to work really hard for you - most work pension schemes choose poorly performing funds - with higher costs.

Definitely spend an afternoon checking which funds your pension is being invested in and their performance. Put the choices into Ai and see what that says. A bit of work on this now could be life changing for you in 20 years time.

Find yourself a reliable financial advisor and get sound advice about your current and future situation

Your private pension is £33k a year. You won't starve on that. Unless I've misunderstood your post.

You have completely misunderstood. There is 33K in my pension…that does not give me 33K a year.

Jumped on and didn't read the whole thread.

Or haven't read the thread.....?

OP, this is Mumsnet. If you're anywhere above the breadline, you'll be completely torn apart. That's why I'm turning to extensive research and AI apps for help instead of using Mumsnet.

YANBU to worry, but you’re actually in a far stronger position than you think.
Honestly, £33k at 40 with only five years in your current career is impressive, especially with 10% from your employer. Most people don’t even get close to that kind of contribution match. You’re doing everything right: you’re contributing, you’re increasing it with bonuses, and you’re planning for the long term.

You’ve still got a good 25 years of growth ahead, and compound interest is your best friend. Keep your pension invested, increase your contributions when you can (even tiny bumps make a difference), and use your bonuses wisely, you’re already thinking like someone on the right track.

A projected £240k isn’t bad at all for where you are now, and remember, that figure assumes no major jumps in pay, when you’ve already said your salary rises each year and you’re climbing the ladder. As your income grows, your contributions and employer match will too. It snowballs faster than you’d expect.

If you haven’t already, check your National Insurance record to make sure you’re on track for the full state pension, that’s the other piece of the puzzle. Together, it’s likely to give you a far more comfortable retirement than the scary online calculators make it sound.

You’re absolutely right to be proactive, but there’s no need for panic. You’ve started, you’re consistent, and you’re clearly switched on, which already puts you ahead of most people your age.

Would your mortgage be paid off by retirement? If so you have nothing to worry about

Hearing others talk about it reminded me of the risk of not having a state pension in the future or dealing with a means-tested one. It's important to make your contributions towards the state pension, but don't depend on it entirely.

It's worth checking out other pension options besides the one your employer contributes to, along with your own contributions.

It's important to seriously future-proof yourself against worst-case scenarios.

A few personal finance points:

ISAs are a tax free savings product. You can (currently) put £20k in tax free each year. We currently get more interest on our ISAs than we pay on our mortgage so while it is tempting to pay off our mortgage in one go using the ISA savings, it’s better to keep the money in the ISAs and pay the mortgage off. We are thinking that we might use our pension tax free lump sums to pay the mortgage off when we reach 55.

If we go over the ISA savings amount in any year these savings will be subject to tax on any interest, so instead of getting 4% interest we’ll get 2.2% interest (after 45% tax) so it makes sense to use this money to pay down our mortgage instead.

Sorry to hijack the thread but I have paid into pensions since I started working and they are all over the place.

How would I identify all of my pension pots?

I've been in a public sector job last 15 years or so, so its the historic pots I'm worried about

List all your former employers.

Check payslips to see if you contributed to a pension.

Check employment contracts etc. All employee correspondence

If you still can't find anything, contact ex employers and ask for details of the pension scheme. Ring pension scheme and quote your NI number.

Totally agree with this, I'm amazed how young people worry about pensions these days, never entered my head, was too busy trying to keep a roof over my kids heads and feed them. Didn't actually start paying into pension til 46, I'm now on state pension and a small NHS pension of about 6k and manage fine. So long as you make sure your mortgage or rent free you'll be good, just enjoy living and be sensible about having some savings for emergencies.

Everyone saying 25k is good have failed to take inflation into account. 25k in 28 years will be peanuts.

Save more when you can afford to, possibly invest.

Maybe look at extra income sources that you could do a few hours a week when you retire. If you find something you like now you have time to make it profitable or become a professional at it.

The tricky thing atm is you can't rely on stock market growth. Inflation is eating it away.

You need to just stash away as much as possible, its the only way really. Look at what savings you can make in day to day life to get as much saved as you can.

Pensions generally grow with inflation if invested well though?

I have a tiny pension pot,and at 59 there's little chance of it growing much! What I did was pay off my mortgage as soon as I could then downsize to free up capital for a rental property. The rental property is basically my pension. There are plenty of ways to bump your income.

Totally understandable and a huge failing of our education system. Few people understand the true cost of defined benefit schemes that rise with inflation (never mind the triple lock).

As OP says she expects to have £250 k at retirement and modeled drawing a State Pension–sized income - approx £12 k/year. Sounds like a lot!

At the end of 30 years, based on that drawdown, that pot would be empty.

And... what will 12k buy in 27 years... if inflation is 2.5% per annum (and it's been much higher than that) then the state pension will have risen to 30k by the time OP is of age.

Her 250k pot will only be adding a third of what is considered just enough to live... She'll be another person talking about how she's worked all her life, saved and only has a small private pension on top of state (if it even exists) and can't really live.

It's a ticking time bomb. People keep imagining today's money will be enough tmrw. It won't.

Check out rebel finance school- this has been instrumental in me understanding pensions and my finances, what I can do to increase any savings, make changes to my existing small pension for the better and focus on what I want to achieve in retirement- I also have a small pot and started late as I just didn't get it- but really want to make sure I add what I can now whilst I can! Good look OP, never too late to make positive changes.