Worried about my pension prediction

[Suchagreedydoggo]

Does anyone else know what there's is and can compare?
Had three years out with Dd, but the rest i've worked.
I'm 48 and Chat help seems to be predicting (obviously can't be exact!) recieving around £1000 per month state pension, with a couple of hundred extra from private pensions, should also be able to downsize by age 67 and have some equity from that and have until then to get more, but does this seem enough?
Have a partner who does have a higher prediction but we're not married, so it won't count for anything will it?

You've still got quite some time to contribute. If you put in the maximum possible it builds up quite quickly.

I got a pensions advisor to look at my pension. He's reinvested it in to a new pension that should grow over the next 20 years. I'm also 48yrs and would recommend you get professional advice.

Have you checked your state pension forecast? What does it say? Are you on track to reduce the full state pension? Typically this would be the first thing you do to top up your offensive by backfilling ni gaps.

For your workplace pensions there are a gazillion online calculators that will help you understand what you're on track to receive and there are many variables to work through on the calculator.

Money helper is a good calculator to start with

AI is right. State pension is just over 1k per month assuming you have 30 qualifying years. Your private pension of approx 50k will give you a drawdown of £200 for 20 years. You still have 20 odd years to build up your private pension if you are worried it’s not enough. Pay in as much as you can afford. Guidance is 15% but if you’ve paid less in the past try and do more in the future.

It's good you're thinking about this now. You need to significantly up your contribution now. You have 20 more years to grow it. If you pay in £400 pcm into a SIPP the government will also contribute £100 so you'd have £500 going in each month.

Are you still paying into a workplace pension? I don’t think your situation is dire. You might want to consider pooling your other dc pensions into one but get advice on that. If you have approx £40k now and carry on paying in for the next 15 years, that could make a big difference.

Your private pension of approx 50k will give you a drawdown of £200 for 20 years

Only if she's drawing it down from a suitcase of cash under the bed. It's more likely to last 30 years than 20 at £200 a month.

it's so hard to know tbh. What if you can't downsize? What if you get less than you thought? You should definitely get married or a civil partnership. I would definitely be investing more money into a pension now. you've got time for it to grow.

I have a defined contribution scheme and barely paid in anything til I was 33. and then I realised how behind I was and now I salary sacrifice 17% of my income (which helps with tax too) and it's slowly growing. Would we have spare money now for holidays/home improvements/car now if I didn't? Yes, but compound interest is really important so getting a decent chunk in now will help me out later on.

It's so odd that Ai is saying we're in a really good place already and don't need to worry and higher than a lot of others 😦

AI talks utter nonsense. I have similar to you and it's nowhere near enough to live without serious restrictions. Luckily I have inherited a sum that will make that much better.

Time to start saving, OP.

AI is notoriously sycophantic.

You havent answered whether your work pensions are DB or DC ?

So, you have £45k total at age 48. I'm assuming this is DC Pensions.

How much is going in per month between you, your employer and tax relief?

What funds are your pensions invested in (and what sort of growth do they deliver)?

Only then can you figure out (roughly) what your pot will be worth via something like this: https://www.thecalculatorsite.com/finance/calculators/compoundinterestcalculator.php

That of course doesn't tell you the whole story. Next up you need to figure out roughly what your spending requirements will be. Then you can figure out if you're going to meet those requirements based on a safe drawdown, widely accepted as 4% per year.

If you can aim for around £275k or better, you can probably expect around £2k per month including state pension.

It probably makes sense to investigate marriage or civil partnership benefits - you may be entitled to a widows pension if he expression of wishes may leave all of his pension to his daughter if he goes first. Make sure you are tenants in common on your house deeds.

You still have 20 years to work so throw as much as you can at your pension in that time.

The first thing to do is to analyse what you need to spend in retirement. There are a number of packages out there that will support you in doing this. You have the great advantage of no mortgage which is really helpful, but what else would you realistically want to do? Couple of holidays a year? More gardening? Some new hobbies etc. Think about food costs and all the other things you need to spend money on notably covering all the bills.

You need then to understand all your pensions. Are they defined benefit or defined contribution? If they are defined contribution (i.e. a pot of cash), it might be useful to bering them together in one place where they will be easier to monitor and the fees will be lower.

Your options for the dashpots are either buy an annuity which will pay you a definite amount each month or drawdown where you take cash out of the pension fund each month. Your choice, annuities are at record highs at the moment, so may be a better option than you might think.

There is still time to do some major savings into pensions and you do get good tax relief for doing so and this can be carried back for three years.

A really effective option as you approach retirement is to ask your employer to pay a bonus gross into your pension pot. If they are willing to do this it is really quite useful.

If your previous workplace pensions are defined contributions (DC) pensions you can combine those into one pot and save on fees. I moved my previous DC pensions into my current workplace pension so everything is in one pot.

A simple pension calculator can figure out what you’ll have at the age you want to retire based on your current pot and monthly contributions. I use this money helper government one: https://www.moneyhelper.org.uk/en/pensions-and-retirement/pensions-basics/pension-calculator

Worth playing around with the sliders to see how much you’d need to add monthly now to have a comfortable retirement. AI won’t help you much, there are a number of variables to play with. The calculator above will also add your state pension from the age of 68 assuming you’ve contributed enough years by retirement to be entitled to full state pension. As other posters have said, you can check your forecast on the government’s website.

The retirement living standards have just been updated, you can use this as a guide to understand how much you’d need a year as a single person or as a couple for a min/moderate/comfortable retirement. https://www.retirementlivingstandards.org.uk

At 48, with only £45k in your pension pot I’d be worried and looking to increase my monthly contributions. You have time. Use the pension calculator above to figure out how much more you need to add every month to your pot to reach the level of retirement you want.

It’s good you’re looking into this now, I think this needs to be taught in school - it’s only through my own worrying and research that I know what I’ve shared above!

I feel scared now

Don't feel scared, just take action. You've had some very good advice up thread.

Just plough as much as possible of your salary into your work pension now (or private pension, whichever works out better for you tax-wise). I'd aim for at least 20% but honestly as much as you can possibly spare. It's THE most important thing to do now. You have twenty years of saving ahead of you, and your salary will hopefully go up year on year. A good idea is to see what you could possibly put away now and every time you get a payrise you put all of that into your pension, every single time. Compound interest is an incredible thing and twenty years is a long time.

But start now - plough that cash in today!

Ai often tells you what you want to hear. Also a large number of people do just live on state pension with a small private pension top up. It wouldn’t be the life I want in retirement though. You need to work out how you want your retirement to be and then work towards that. Estimated are around £300k pension pot for an ok sum each month, I’m targeting £500k and then we will have DHs on top of that too.

Well done for taking action today OP. You won’t regret it. I am in my 50s and we are looking at our finances as we approach retirement. We should be okay as I have been paying into my NHS pension for 30 years.

But I absolutely encourage all younger people I am close to, to take their pension planning seriously. I especially speak to the women having babies and wondering about taking time out of their career to make sure that they realise the importance. It is often not a big priority when you’re younger but when you get to my age, you see how much it counts.

What are your pensions invested in and what are the fees?
If you are in ‘default’ investments then you need to get out of them unless you intend to buy an annuity, that’s what they’re designed for and will reduce ‘risk’ as you get older, which could cost you thousands.
As a rough estimate, every £100k will give you £3500-£4000 yearly income, annuity rates may seem higher but once you add yearly increases, it soon reduces.
Too many people think DC pensions are like bank accounts, they don’t realise that they need maintenance if drawdown is planned, investments need selling to provide income, for example.

What information did you give AI? I wouldn't rely on it for my financial planning (or for anything for that matter!)

Don't rely on downsizing to plug the gap: the housing market is dire (dependent on area). Your DC might stay with you - forever!

At 48, time to look for a new job with good benefits - preferably a DB pension - you can carry on stuffing money into a DC.

How much have you got in the pot? As others have said prioritise getting money in there asap