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 😩

Not "most people" - 15-18% of pensioners only have a state pension.

🙄 She's not talking about a £240k pension, she is projected to have a pension pot of £240k which needs to last her entire retirement. Rather a big distinction! £240k is not a large pension pot even now - and that's before taking into account inflation between now and when OP actually retires. And since when were people banned from asking for financial advice just because poor people exist?? It's not a race to the bottom FFS.

TBF have a look at money saving expert they have a really long thread called ‘how much to live on’ ask the question there very helpful people who will guide you. Think there is also a pensions thread, think you might get more helpful feedback who will share their experience, unlike some people on this thread.

Depending on when you went back to work after being a sahm, you might want to look into whether you are missing any years of NICs and if so, explore whether you can pay up any missing years and whether this would be advisable, instead of paying any bonus into your pension scheme. I think there is a limit on how far you can go back though with NICs.

Don’t engage with @HoskinsChoice he/she did same to me when I started a pension post. They will just pull you apart. I can only assume they have not planned very well themselves.

You should be ashamed of yourself. It’s not the OP fault you don’t earn enough money that’s your fault. Are you totally blind to the fact others that have things work very hard for maybe you should stop being such a nasty jealous person maybe things might change.

You get that £240k is the pension pot and not the yearly pension, right ?

They are also on other threads making similar comments and insulting OP’s. I’ve reported.

Agree. You can feel the bitterness coming through in the posts 🙄

You've saved me a job then 👍👍

I’m embarrassed for you. A pot of £240k will not get the OP a large pension. Probably around £13k per year at today’s annuity rates and what will £13k per year be actually worth in 25 years time?! Not very much.

OP was clear that it’s 25k when combined with the state pension,ot 25k as a stand alone penny.

In today's money, my combined pensions (state, employer, private) are projected to pay out about £9k/yr. And I do actually know that will be enough for me.

Anyway, I don't think "worry" is the helpful response. But there are lot of good suggestions on this thread if you want more in your pension pot. Best Wishes.

OP, try not to panic. I had a similar sized pot when I was 40. I am turning 50 soon and now have £200k approx. I have gradually increased my contributions as my salary has increased and also actively managed my investments - moved all previous work pensions into a SIPP and chosen higher risk funds in my current work pension. Based on my current contributions, I now have a projected income of £77,000 per annum (including state pension) if I retire at 67. And I plan to continue increasing the amount of my contributions so will hopefully be more than that.

don't worry OP, you're still relatively young and thinking about this now!

These videos are helpful

n

What's the point of raising this? What's the relevance of these comparisons?

Apologies if it has already been mentioned, but I really recommend looking at Rebel Finance School.

They run a free annual course (no catch, no selling of products, totally free apart from the “cost” of your time) which whilst aimed at people who primarily want to retire early, also gives you a good grounding in how pensions work, the power of compounding, etc.

They have a website and their videos are up on YouTube.

https://rebeldonegans.com/finance/rfs/

This is great and I will be taking a look too! This is what MN should be about 👍

This might not apply to you, but when I was approaching pension age, I was able to top up my State Pension contributions because I had some missing years.

It is very dependent what type of scheme you are in and what is the expected annual payout? How far out is that from your annual expenses? The general rule on riterment is 25 x your expected annual expenses = 4% drawdown. So if you expect to spend £20k per year in retirement you need to £500k broadly speaking. If you take early retirement you can take some as a lump sum but this will further decrease your annual drawdown amount. However, if it’s a defined benefit scheme (like nhs, teacher pension etc) you’ll be provided with a fixed amount that never runs out, however old you get.
is your projection based on never putting anything more in, or continuing to contribute at the rate you are? If you still deduce you need more in pension, or want to actively work towards retiring earlier - you need to contribute more. How far can you reduce your outgoings now so that you can spare a bit more money. The most important thing you can do is lower your life expenses, annd in turn you will reduce the anmount you need in retirement. Instead of putting this in pension, you might consider a S&S ISA in index funds. Even if you contributed £100 per month to this for 25 years at average 7% return, you’ll have an extra £70k tax free. Personally I chose to add bonuses to my isa rather than pension as 1) it is technically accessible if I ever want to draw out, pension is not (although I would need to sell shares to obtain cash) 2) most pension schemes are very conservative as they are designed to cover everyone at the start to the end of career, this means that the actual compounding value can be very low if you look into it. Finally you can also look at what you pension is actually invested in, you can chose to change to moderate or higher risk investments until you reach your 50s, then revert back to a more conservative fund.
pension bee and money box will provide you a small amount of free advice on this sort of thing.

Im aiming for at least a £400k pension pot by the time I retire.
I started seriously investing at age 41 post divorce.
Started with 5% matched by employer at 5%
Each time I got a pay increase I increased my contribution by 1%
Im now paying in 10% and my employer 6%
Im hoping that, plus being mortgage free, will be enough for a medium level retirement.

I think you are doing the right things and you are lucky to get 10% from your employer.

Hope it is useful! The thing that totally blew me away was one of their examples of how compounding works:

If you were in the lucky position to be able to put £10k into a pension (invested in a basic Global Index Tracker so nothing perceived as high risk) as soon as a baby was born and never pay another penny in, the steady year on year growth means that by the time that baby reaches standard retirement age the pension pot would be worth £6,000,000!

Depending og your job there shoukd be pension advice available. In theory in 20 years you wont have s mottgage to pay or childcare etc and that frees up a lot og money. There is state pension at 67 and dont forget the equity in your home. You may downsize. Also you retire snd get a fun job for pocket money

You can get a good insight by using a chatgtp type tool. Just type in how much you currently have in your pension and how much you expect to contribute (including employer contributions) per month and when you want to retire and it will tell you your expected pot. You can then change the percentages to see the differences. Compounding makes a huge impact - that’s why it’s important to pay in regularly from an early age.

if you can afford to lock away the money, it’s better in a pension than an isa due to the tax relief especially if you are a higher rate tax payer.

get some good financial advice. I’ve only recently started paying more for managed pension investment but the costs are more than offset by the increased returns.

most of all, ignore all the people on this site who make out like you are ridiculous for worrying and that you have plenty. If you can afford to plan for a wealthier retirement, why wouldn’t you?

Hmmmmm