Totally screwed regarding pensions and old age

[AbsolutelyPanicked]

Firstly I know this is all my fault. But I am starting to panic over my lack of pension and what the hell I’m going to do in old age. Im 45 and have absolutely no pension.

Background is I struggled a lot at school but did get good grades. Due to undiagnosed autism at the time I didn’t cope in college so went straight into work at 16. I worked in very low paid job for a few years until learning better to mask and improve my social ability etc. After a few years I went back to university to train to do a better job. The pay for this job 20 years ago was pretty great. But the vast majority of positions are self employed so you lose all benefits like pensions and obviously you need to save for your own sick and holiday pay. I started work almost 20 years ago earning £35 an hour. Being in my 20s I was frivolous with money but did manage to save to buy a nice flat. But I was burning out quickly and almost 10 years ago was finally diagnosed with autism. I have only managed to work part time since but I earn enough to pay my mortgage and bills etc. In all honesty, I never really thought about starting a pension. It simply didn’t cross my mind. Now, 20 years later, I’m earning £36 an hour. So a grand £1 an hour more than 20 years ago. But obviously (like everyone else) my bills and everything else has increased. I now can rarely save anything. If I take any time off I need to “pay” for that out of my savings. I am aware I still earn a decent wage. But no where near enough to save for a decent pension now with only 20-25 years until I’ll likely need to retire (from this job at least). I start thinking about it then think is it even worth starting one?

I feel like I’ve made such bad decisions in life regarding careers and finance. One minute I’ll think well I have my flat, I could sell that in retirement and move and maybe free up what money is left etc. Then I read about property prices needing to fall and think well then the thousands I put into that will all be wiped out then I won’t even have the equity from that. I honestly think I’m totally screwed. I’m definitely not suicidal etc but I do think that it would be a benefit to die before reaching old age then I won’t need to worry about it anymore. If I was to start a private pension now the most I could put away would be £200-300 a month. Would that even be worth bothering in a pension or should I just save it in normal savings?

I’m following with interest as I’m in a similar boat and have Autism and ADHD. I hope someone comes through with some good advice for you.

so many people are in your situation OP!

But you are only 45, which these days mean you have another 20, probably closer to 25 years to work - so honestly stop panicing and stop beating yourself up. It sounds like you're doing fine. It's a good you own a flat for a start, however even old people need somewhere to live, so selling it isn't a viable pension plan.

2 or 300 quid a month is well well worth putting away in a pension.

Do some educating yourself about personal finance over Christmas and make an appointment to see 3 financial advisers in the NY, pick a pension plan from there.

For now stop worrying, and enjoy Christmas x

A pension is definitely worth it and the most tax efficient thing you can do. You could still have a nice sum at retirement, plus your state pension.

Have you been paying NI throughout your career? (I’m not sure how it works for the self employed) If so, you should be entitled to State Pension, you can check your eligibility and how many more years you need to pay in on the Gov website. Ref private pension, if you were employed I’d say it’s a no brainer to at least start as you don’t pay tax on your contributions, again I’m not sure how it works if you’re self employed, sorry!

Almost the same age and same boat so no advice but solidarity !

Stop panicking and start making smarter financial decisions. Is £200-300 a month worth it?... well, it's worth more than £0, that's for sure.
We don't know what's going to happen with property prices in 20 years. No point writing off your equity based on that.
You will still have a state pension if nothing else. And with mortgage paid off, that would likely be enough to cover basics with your modest private pot covering the rest.
For what it's worth, I started putting money into a pension at 38. Will I have a luxury lifetyle in retirement? No. But better late than never.

Agree with better late than never. I’ve made some bad decisions too but started in my late thirties.

45 might seem too old to start a pension to now, but I can guarantee if you don’t, you will look back in 20 years time and think you were a fool.

It’s definitely worth starting a pension - compounding is your friend and the tax relief you get on your contributions is ‘free money’ that you are currently missing out on.

That said, I would also want to make sure I had some savings that were accessible ahead of retirement in case they were needed. And, that those savings were somewhere they would grow (i.e. stocks and shares not all just in a savings account or cash ISA).

While stock markets are currently quite high, putting money in regularly is relatively safe over the time horizon that you are talking about.

£300 a month between now and age 65 would give you a pension pot of c.£110k at 65 if it grows at 4% a year, c.£132k at 6%, or c.£165k at 8%. These numbers are before considering the tax relief and charges. Tax relief should increase the pot by 20-25% - so could give you £200k (before charges).

The average UK pension pot at retirement is around £137k (which is lower than it should be - but that’s because you are by no means the only person who’s put retirement savings on the back burner while getting through life).

The other thing to make sure is that you have been paying all your required National Insurance contributions - so do check your state pension forecast on the gov.uk site and make sure where you are with regards to state pension.

You are not screwed! Head over to the money board, you'll get some great advice there.

I agree with @theunbreakablecleopatrajones . You still have time. Let's say you put £300 a month in a pension for the next 20 years, you could have a pot of £150k to £170k to draw on. That would be around £10k annual income, after taking £37k as a tax free lump sum. Then add on state pension and you'd have £21k a year. Its not massive, but without rent/mortgage it would pay the bills with a bit left over

Do you have full NI contributions? Go to gov.uk and check you're on track for a full state pension. If not, prioritise paying for any missing years that you can.

Don't save the money in a savings account - the interest on cash savings is not sufficient for retirement planning. You do need to invest it either in a pension (SIPP) or in a stocks and shares isa.

If you have time over Christmas do as much as you can to learn about this. Rebel Finance on YouTube is often recommended as an educational resource and is a great place to start from

You’ve still got a good few years to contribute to a pension OP . Don’t panic just yet , agreed you’ve left it very late but everyone has to start somewhere .

At your lowest number, £200 per month is 2400 per year. Add on the tax relief, market movement and you will certainly have far from nothing by retirement. Sure it would have been even better if you has started earlier, but you can start now and still have many years to save.

Check your National Insurance is up to date, so you alt least get a full state pension. Use Government Gateway to do this.

you are in a better position than many, as you will have your own home. Can you get a lodger, and bung this money into a pension ? May not be possible if you need quiet time to distress.

@AbsolutelyPanicked 1st point is - yes it is absolutely worth starting one.

Others more qualified or knowledgable I hope will comment on this but I was able to back pay 3 years of NI to top up my pension. I am almost 20 years older than you though and I know the rules regarding pensions change a lot.

I would start now however little you can put in. If you are not planning to retire in the next 20 years then you can ride out the shorter / medium term property market and make a decision about your flat later on.

But also make sure you put a bit aside for readily accessible savings in case of emergencies.

I realise this will sound a lot but anything is better than nothing . Do not be too downcast - you aren't the first person in this situation and you won't be the last. You can't turn the clock back but better to realise at 45 rather than 55.

Best wishes 💐

Thanks everyone you’ve actually made me feel slightly better and that there might be hope. I have been paying my NI contributions and I checked government gateway earlier this year so I am definitely fully up to date with those except the 3 years I was at uni so as it stands I am on track for full state pension (as long as it still exists). I think I’m going to do my research and aim to get a private pension of sorts set up by February. As others have said even if it’s only worth an extra few hundred a month it will make difference. In a way thankfully being autistic I’m not a fan of doing lots of “things”. So even if my pension income is low I’m generally quite happy at home or just pottering about so as long as I’m not scrimping for money to put the heating on I’ll be quite happy! Don’t get me wrong I like having friends and being social for a few hours here and there but I don’t need to always be on holiday or away etc or going to theatres and cinemas and fancy dinners. So I’m hoping that trait continues into old age so I won’t need huge amounts of money!

Oh and I do have some savings already so I’m not too bad on that front. (Not loads but enough to cover most emergencies like new boiler/new car deposit etc with some to spare)

You have over 20 years still, start now.