How much savings do you have - in cash and in your pension pot?

[suebfg]

I am 40 and whilst we have quite a lot in savings (over £150k and no mortgage), my pension provision is practically nil. I chose to pay off my mortgage instead of paying into a pension as tbh, I don't trust pensions.

But it does worry me that I have little saved for my retirement - mainly the equity in the house I guess.

Just interested in what others have done.

You can use carry back allowances, MsAverage.

Hargreaves Lansdown provides a SIPP product, I don't think there's a 50k minimum.

I think the best thing to do really is spreading money as much as possible. I wouldn't keep 150k all in cash, I would try and invest at least some of it. A buy to let would be a good option to start with? I would also say that starting a pension would be wise financially due to tax relief on some of the money from source.

We are 41 and 48, so quite old in comparison to many on here. We are lucky to have 3 properties mortgage free but this is because we bought when we were in our early 20s and houses were a lot cheaper back then.

We don't really have much in cash at all (5k or so?) but we have quite a lot in pensions, property and shares, which I guess it is all medium risk. We are planning to get more cash behind us in the next few years, that's the plan. We seem to have done it the other way round from the OP!

The maximum amount you can contribute in any one year is £50k, gross, which is equivalent to cash contribution of £40k. Ie so contribute £40k and you will get £50k tax deduction against taxable income, HMRC will give you the £10k extra to put into pension pot too. Your can use that £50k capacity for the previous 3 tax years, if you have never made any pension contributions. so potentially you could contribute £160k at once, HMRC top it up to £200k and you get tax relief for the full £200k. The catch is that you have to have taxable income of at least £200k in the year in which you made that contribution.

If you're still with me , as an example for the OP, say her annual salary is £60k. She could actually take £40k out of her savings, put it in a pension, HMRC would add £10k, make the pot £50k. Then, she would get tax deduction for the full £50k. Once you take into account personal allowance, it means she would pretty much have no tax bill for one year. Any tax she has paid, in my calculation, about £14k on a £60k salary, would then be returned to her by HMRC. End result, she now has £50k in the pension pot getting her a better return than cash in the bank, she's paid no tax in one year and, it's only cost her £26k (contributes £40k gets back £14k). That's what I meant yesterday that her money isn't working hard enough for her.

Sue, the above is neither financial or tax advice (after all, i am a stranger on the internet) but hope it helps.

ruby I have no problem with this thread wherever it is posted, but it started off in AIBU.

I am 28, DH 34. We have about 20k savings (which we build slowly but regularly). No debt, no mortgage either (renting). We'd like to buy a house in about 5 years' time I guess or longer... that seems most realistic.

If you don't know what country you're going to live in, how do you save for your retirement? Just pile up cash? We don't really have pension plans. DH has compulsory superannuation with his job but he won't work there forever (contract employee).

DH wants to buy property but I am wary of a house being your retirement plan. :S DH and I not fond of managed funds.

ie we live abroad. Unclear where we will settle long term.

Honestly don't know where to begin on saving for retirement properly, or do we just keep going as we are - saving cash until we buy a house etc.

State pension unlikely to exist by the time DH and I are in old age. Pensions area is changing massively. Is wait and see (and save) the best approach?

This thread is scary to read. I am scared for the people who have no provisions at all.

Obviously some are simply unable to, like the person earning 16k and living in London, but some people should probably be making more responsible choices.

On pensions depends on a lot of factors. I probably will work until I die. I stopped adding to my SIP as I lost faith. They keep changing the rules of when you can take the pension, they have raided pension funds (ACT Gordon Brown) andkeep changing the amount you can put in and keep reducing the maximum you can have in there before they start in effect confiscating it . They often have charges on the funds - indeed the new opt in unless you opt out pension for the working poor probably mean that there is arguably misselling by the state and many might be wise opting out in my view.

In the light of all that and that my father lived only 2 years having worked to 77 I think it is a bit of a risk to have one and you might be better with properties and savings which the state can interfere with less. Also remember your pension income is taxed when you draw it out so even though what you contribute is net of tax you are still taxed when you receive the income (as you are on most other income).

As many of us will have a state retirement pension age of 70 and will probably work full time until we are 70 or beyond pensions will anyway take on very different meaning.
If you have 35 years of NI contributions ( and that can include I think 10 years of childcare at home) you get £140 a week pension per adult.

(Thread title does annoy a good few of us by the way... It would never be how much savings do you have, but instead How much money have you saved (or how much in savings do you have, perhaps)).

A pension is just one vehicle you can use to fund your retirement. What you need to consider is accrual of capital. Your savings are just that.

You are right that £150k is not much to fund a retirement - for some people. It is however a great deal more than the average retirement pot, but only you can guage if it is sufficient for you - a cashflow forecast would help with this. When you wish to retire will also make a great deal of difference to how much you need.

Pensions are just a tax wrapper for saving (tax beneficial to compensate for the restricted access), but you could use ISA's just as well, but it's a question of your tax rate that should be considered here.

The issue that shouts to me is inflation. You say savings. Do you mean in the bank? If so 20 years will do a lot of damage to that money. In real terms it is VERY unlikely to have £150k spending power by the time you retire.

I would speak to a suitably qualified IFA and consider how you can protect your captial. If you are a higher or additional rate tax payer you should also consider a pension wrapper. The tax is a valuable addition to your savings. A cashflow exercise is also something they can do with you.

Suebfg- perhaps you should consider investing on a buy to let?
The real term of your £150k will decrease as interest is lower than inflation.
Saying that- as you're only 40- you're in pretty good shape (providing that you don't have public school fees to pay for yor kids)

Xenia, the lifetime limit will doubtless m

Xenia, the lifetime limit will doubtless move down again but at the OP's current level isn't a problem. I can see why you stopped contributing if you want to work until 70+ though.

I just want to say, getting a good financial advisor is worth your time and fees (that's why it's important to get a good one and based on recommendation) and getting a good balanced portfolio of savings, investments and pension (as well as anything else like equity in a house) is important to help secure a good future for you and your family.

I've had a private pension since I was 22 - as soon as I got my first job really - and I've been putting money into that and taking advantage of company incentives for 13 years into my pension. I now have a pension pot worth £130K+, and equivalent equity in my home and I'm 35. No credit card debts. My parents come from countries where there are no welfare states so you literally live by what you earn and retire on (and save).

I'm not rich or have a massive high earning job by any means but I think it's worth saving and putting away (and encouraging our children) to do the same from as young an age as possible. If you save regular, you almost don't even miss the money and it's a lot less painful if you start trying to save for your retirement when your 40, say.

My cousin works in the NHS. She commented that we may or in our children's life time not have an NHS or state welfare system. It's really creaking by its seams.

When times are tough, we could and maybe should cut back. I wanted to not bother submit into pension when I had my babies but I'm glad I did listen to my financial advisor and continued into my vehicle of investments.

It's an added safety net isn't it?

I think you a very very foolish if you are relying on inheritance to fund your own retirement.

Your parents may well live into their 90s and need years in a care home!!! The fees could be swallowed up very quickly even with good public sector pensions and a £400k house to sell.

bacon I too am freaked out by the people who write things like 'I live for today and don't worry about tomorrow' since they're probably expecting to be scooped up by the state. That said my DP was completely brought up with that mindset - part of the reason he finds it so hard to save, he really was taught to just enjoy and think about today. Hence money burns a hole in his pocket!

A recent survey just out from Scottish Widows reports that only 45% of adults are putting enough aside for retirement. "The average annual income Britons would feel comfortable receiving at retirement is 25,200. However based on current savings levels, an average person retiring at 65 is only like to receive about 3,860 a year in pension income. Even when topped up with the state pension, this would provide a yearly income of only about 11,400." The survey (n=5,200) also found that 1 in 5 Britons is saving nothing at all towards their old age.

Scary stuff!

Might be worth a cross post into Gransnet to see what advice those that are in their retirement have to say Mumsnetters.....

No pension (sahm) although I do wonder about starting a private one, but not sure it's worth it now...
No savings (thanks money pit of a house!)
No inheritance coming my way either (my parents have no money to leave and pils come from a very long lived line! :))
All in all fairly depressing.

Not that my pils will live a long time! That's not the depressing bit!

Wordfactory said on page 2 exactly what I was thinking. Leaving 150k sitting in the bank is foolish. You could buy a house or even two with that, without any borrowing, and earn a good monthly income in rent. Over a period of 10 or 20 years that would probably perform better than any pension could be expected to these days.

Post divorce I have very recently had a highly detailed review of my finances.

I have always prided myself on being quite canny but my FA laid out an exact forecast of my money between now and forty odd years time and I was aghast.

This motivated me to get over my mistrust of all pensions etc and do some homework, take my head out of the sand and get a plan.

The thing is your £150k is all safe and within your easy reach and control but its value is degrading at a huge rate.

I would enlist the services of a FA and start looking into it, at the end of the day if you dont like their recommendations you can remain as you are

weakestlink - its only foolish if not looked into properly... Ive done the same sums with my inheritance-to-be as I have with looking at pension plans and investments etc. Don't assume its all hoped for in ignorance.