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Original poster

If you are over 40…How big is your retirement pot?

225 replies

AnIndianWoman · 29/08/2023 08:29

Just that really. If you’re over 40 how much have you earmarked for retirement? My pensions are approx 200k and I have another 200k in stocks and shares ISAs. Even then I won’t come close to the £50-60k a year income we will need in retirement and so can’t think of stopping working before 70.

I was thinking of investing more but not sure what size pot I should be aiming for. I’m 40.

OP posts:
MrsKeats · 31/08/2023 08:26

Me and dh about 400k.
Plus state pension.

Margrethe · 31/08/2023 08:34

user24197 · 30/08/2023 23:25

This thread has worried me 😳 I'm 26 and only have £9k in my pension pot, no idea if I am on track or not yet!

You have a pension pot and you are saving. At your age, this is “on track.”

Keep going. It builds slowly and then the momentum comes. It’s the magic of early savings snd compounding. Don’t get discouraged, just keep going.

Mia85 · 31/08/2023 09:51

user24197 · 30/08/2023 23:25

This thread has worried me 😳 I'm 26 and only have £9k in my pension pot, no idea if I am on track or not yet!

I wouldn't worry about the absolute amounts at your age. The key thing is that you're contributing and see the value in it. That'll stand you in good stead as so many people don't think about it till they are decades older than you. That £9k will have so long to compound that it'll be worth the same as much higher amounts contributed later.

Mia85 · 31/08/2023 09:58

Borough · 31/08/2023 00:13

Sure but it's literally just spending money because if you have no other income everything else is taken care of, rent, prescriptions , bus fares, council tax, bit of a bung on your utilities, all covered. That's more spending money than lots of working age people have. And at 90 for eg how much spending money do you need? Of all the things I'd worry about, this isn't one.

For now, like I say.

A lot of those things are only covered if you are eligible for other benefits, especially pension credit. If you get the (new) full state pension then you won't usually be eligible for pension credit as the pension will meet the income threshold.

It'd be very unwise to rely on the state pension as 'spending money' especially if you are relying on government policy staying the same for decades just as demographics are making that policy increasingly unaffordable.

User5512 · 31/08/2023 14:54

suitcasecoveredincathair · 29/08/2023 08:30

Zero. My pension fund collapsed.

What exactly does this mean? They took all your pension when they went down??

suitcasecoveredincathair · 31/08/2023 15:07

User5512 · 31/08/2023 14:54

What exactly does this mean? They took all your pension when they went down??

Show quote history

Pretty much, yes. I will get back out of it what I put into it, which will be worth buttons by the time I retire.

Borough · 31/08/2023 19:40

You get pension credit if your income is less than £201 a week. State pension is £186 which is less than £201 so if the only income you have is state pension then you get pension credit. At that level (full state pension) the pension credit top up itself is about twenty quid a week but all the passported benefits add up especially things like council tax benefit and for the last couple of years the cost of living payments (£1200 a year).

Borough · 31/08/2023 19:49

So yes you have £216 a week spending money plus £1200 towards bills and your transport, council tax, prescription and dental charges covered. By way of comparison a full time worker on minimum wage takes home £1487 a month and from that would probably struggle to have £216 spending money a week after paying rent/mortgage and council tax.

watermeloncougar · 31/08/2023 19:56

People do obviously survive on the state pension alone- but personally I'd rather see it as a top up! It doesn't sound a great existence

MrsFiddle · 31/08/2023 20:00

The state pension is about 800 a month depending on your age and contributions. If you have no rent or mortgage then you have 200 for the council charge, 150 for utilities, 40 for internet, 40 for TV before you start paying the annual charges of TV licence, house insurance, a boiler service and other things. There's not much room in that is there and it's certainly not "loads" as one previous poster said. I wouldn't like to be reliant on that and that is why it is imperative that young people think about this from early on.

MrsFiddle · 31/08/2023 20:02

Borough · 31/08/2023 19:40

You get pension credit if your income is less than £201 a week. State pension is £186 which is less than £201 so if the only income you have is state pension then you get pension credit. At that level (full state pension) the pension credit top up itself is about twenty quid a week but all the passported benefits add up especially things like council tax benefit and for the last couple of years the cost of living payments (£1200 a year).

Thanks. I didn't know about this.

Borough · 31/08/2023 20:14

It's certainly worth knowing about as the additional payments it gives access to are really quite substantial.

I mean a person would struggle paying council tax on £216 a week, but they don't have to.

Borough · 31/08/2023 20:17

watermeloncougar · 31/08/2023 19:56

People do obviously survive on the state pension alone- but personally I'd rather see it as a top up! It doesn't sound a great existence

As I said, it gives you more discretionary spending money than a full time worker on minimum wage or even the first couple of rungs above that.

So yeah not untold riches but more than the government itself deems working people require.

Userwithallthenumbers · 31/08/2023 20:47

Aged 50, Somewhere around £500k in my main pension, plus a small amount more in an employer pension. H has a bigger pot, plus a final salary military pension to draw on. I plan to enjoy retirement as I have hated working!

skinnytobe · 31/08/2023 20:52

Mortgage free.

NHS pension.

But also 170k (current value) house which we will see. DH has a great pension too

Mia85 · 31/08/2023 21:15

Borough · 31/08/2023 19:40

You get pension credit if your income is less than £201 a week. State pension is £186 which is less than £201 so if the only income you have is state pension then you get pension credit. At that level (full state pension) the pension credit top up itself is about twenty quid a week but all the passported benefits add up especially things like council tax benefit and for the last couple of years the cost of living payments (£1200 a year).

This is a legacy issue not one to plan for. Lots of pensioners are in the this kind of position at the moment and it means that those with a very small private pension can be worse off than those with just a state pension because pension credit is the gateway to the additional points you mention and those can be fairly valuable.

However, government policy is explicitly designed to prevent this from continuing in the future. The NEW state pension is set so that it is above the means testing threshold for pension credit. This means that anyone with the full state pension will not be eligible for pension credit (save for specific circumstances such as severe disability related additions) and so for the additonal benefits you identify. See for example p16 https://www.nao.org.uk/wp-content/uploads/2016/11/Introduction-to-the-new-state-pension.pdf whcih gives this as one of the key reasons for introducing the new state pension. You can see this in the current figures. The new full state pension is actually £203.85 a week (https://www.gov.uk/new-state-pension/what-youll-get) which is slightly above the £201 limit for pension credit.

No-one should look at existing older pensioners and assume that the same rules will apply to them because they won't. Of course policies can change but if you are eligible for the full new state pension there should be no disadvantage to also saving a private pension even if small.

https://www.nao.org.uk/wp-content/uploads/2016/11/Introduction-to-the-new-state-pension.pdf

BinturongsSmellOfPopcorn · 31/08/2023 21:29

As Mia says.

But even for those who do qualify for extra benefits, they don't necessarily cover the full cost.

Council tax assistance, for example, is at the discretion of individual councils whether they cover the full cost or just give a discounted rate (amount of discount is also their choice). As councils constantly get their funding cut, they are less and less able to set aside money for this type of thing.

Housing benefits have caps that may be below market rates.

Free prescriptions don't cover all medical needs. Over the counter meds are no longer prescribed in most places. If you need things like incontinence pads or stoma supplies the amounts prescribed are likely to be less than needed. Or of unsuitable types - my father had Parkinsons-related incontinence and could only be prescribed pads, not pants; pads and tremor are incompatible, but to get pants prescribed you have to have dementia.

Labbingtons · 31/08/2023 21:46

We’ve got a bit more, I think about 750000 between us (some from an inheritance). I’ve just worked out on a compound interest calculator that on a 5% return over 20 years, saving a relatively modest 2k a month (assuming we retire at 65) that would be worth 2.8 million, and be making a return of £138000 a year.

And, as we fill our ISA allowances each year, quite a lot of that will be tax-free.

The point is, a moderate amount now, carefully invested, can easily become large amount in 20 years time.

watermeloncougar · 31/08/2023 21:53

@Mia85 totally agree. It's nuts to rely on benefits; you're existing on the whims of the govt and we all know the goalposts can and do move often. It's a depressingly low bar to think that someone relying on pension credit is in an enviable position

TheWayoftheLeaf · 31/08/2023 22:12

Who has 50-60k in retirement? Don't people usually aim for closer to 20m?

TheWayoftheLeaf · 31/08/2023 22:12

20k not m!

LondonLovie · 31/08/2023 22:13

£60k a year in retirement?! Wow that's significant above average, in which case, you better get saving if you want a yearly income of that level.

Fanlover1122 · 31/08/2023 22:16

150 k, DH has a final salary which is currently 75k a year and increases with inflation, and mortgage free. Contemplating early retirement.

Borough · 31/08/2023 22:22

Yeah I agree it's depressing that people on pension credit have more disposable income than full time workers. In fact it's nuts.

But then so is this thread. The OP's niche (to put it politely) situation aside, these figures being bandied around are not representative of the country as a whole. The average 64 year old has a pension pot of just over £100k. The average 40 year old has £30k. And given that we're a low wage economy with a high cost of living that's not going to change any time soon because people on low wages in a country where everything is expensive can't afford to make decent pension contributions.

watermeloncougar · 31/08/2023 22:47

You seem to be obsessed with a bizarre comparison: that it's better to be an OAP on pension credit than a worker on minimum wage. How about both scenarios are pretty crap? Your argument simply reinforces the fact that it's better to aim higher.