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Original poster

DH and I don't have a pension, should we be worried?

61 replies

bouncy · 27/08/2006 17:01

not something that we have thought about until now, we have heard so many bad things about pensions.

We aim to pay off mortage by the time we are 50 (if not before)

Any spare cash we have goes on to paying off larger chunks of the mortgage.

Should we really have a pension or is it best to pay off mortgage and then save big when thats paid off.

OP posts:
blueshoes · 27/08/2006 17:20

Pensions are more than mere investments. They are a tax shelter. If you and/or dh are tax payers, you could be saving a hefty 22 to 40% of your pre-tax income by investing in a pension.

What I mean to say is that the comparison between paying off a mortgage v. investing in a pension, must take into account your/dh's tax rate.

Freckle · 27/08/2006 17:30

Also, bear in mind that, by the time you retire, the state pension may not exist in its current form. There has been a huge media campaign by the government to get people to take responsibility for their own pension arrangements and, if you choose not to, you may find that you can't rely on the state to support you.

Earlybird · 27/08/2006 17:36

How old are you and your dh? When do you realistically think you could have the mortgage paid off so that you could start saving?

Twiglett · 27/08/2006 17:42

you are also neglecting the miracle of compound interest .. money saved earlier is worth more than 30 years down the line

you get tax relief paying into a pension but get taxed on the way out

owning your house outright is great .. but if you have to sell it to fund retirement where are you going to live?

do you have any regular savings at all (apart from into mortgage?) I really think you should have some form of regular savings .. maybe ISAs in tracker funds

Twiglett · 27/08/2006 17:43

compound interest on fool.co.uk

SherlockLGJ · 27/08/2006 17:45

Will you inherit any money ??

MrsSpoon · 27/08/2006 18:05

Are you in a position that you could buy a second property as a buy to let and then cash in on the capital gain in your retirement?

sleepysooz · 27/08/2006 18:57

We can't afford to live, let alone putting away for pensions, we just got straight and the car has cost us £1,000 this year so no holiday again this year! we do own a house, thats my only consolation. Debts Debts Debts, that £1,000 will now take 2-3 years to pay back! and I'm supposed to have a pension!

My pension will be, the selling of the house and dh and I living in a mobile home, if it gets that bad!

SenoraPostrophe · 27/08/2006 19:02

yeah yeah - money saved earlier is worth more if your pension fund doesn't go belly up

I am completely unconvinced by pensions. I'll probably get one one day, or at least I'll buy a house (because if I don't have to pay rent then I need very little to live on). but would def prioritise mortgage payments over pension: compound interest works both ways, so as well as payments made now into a pension being worth more later, extra payments off a mortgage made now will save more later.

satine · 27/08/2006 19:09

But if all you have is the house you live in, you're one step away from losing it and being homeless. With a pension, savings plan or second, investment property, you've got a fall back if disaster strikes.

SenoraPostrophe · 27/08/2006 19:12

but being homeless with a house-worth of cash wouldn't be too bad. and property is way more likely to keep at least most of its value than a pension fund.

I just simply don't believe the UK govt will ever let pensioners starve. it doesn't make sense. at least, it doesn't make enough sense for me to live in penury now just in case. and I don't have a house either.

AngelaChill · 27/08/2006 19:15

Actually people who say they don't need much to live on once the house is paid for are kidding themselves. The house is not an asset it's a liability that needs constant maintence. Imagine being old and not having the cash to replace the heating system or replace a window, many OAP's live like this because they are home owners. They would be better off in rented and recieving housing benefit and letting the landlord take care of the repairs.

SenoraPostrophe · 27/08/2006 19:17

good point. I'll keep renting.

SenoraPostrophe · 27/08/2006 19:18

no I won't, i'll buy (one day) and then when we're old we'll let out the spare room to a nice young man and use his rent to pay the repairs. in fact he can do the repairs in return for rent. how's that for a plan?

sleepysooz · 27/08/2006 19:19

Actually if ever I'm down and out, what about breaking the law then you can live in a prison, at least you'd be fed and watered

Sorry just lost it there for a moment!

Tinker · 27/08/2006 19:19

Just sell house and then rent when retire?

satine · 27/08/2006 19:19

There are plently of pensioners who only have the state pension to live on, and some of them die because they are malnourished and frozen in the winter. So I don't have quite such a rosy view of what the state might do for me when I'm old. And even if you own your house, what will you actually live on? You'll have to remortgage, and then you don't know how long you've got to support yourself for - it could be 25 years. I know I'm sounding like a real prophet of doom, but I think retirement can last as long as your working life, and if you're living on pittance, it'll be a misery.

AngelaChill · 27/08/2006 19:19

I'm not saying don't buy a house but sort out the pension first IMO.

morningpaper · 27/08/2006 19:21

This reply has been deleted

Message withdrawn

Tinker · 27/08/2006 19:22

Keep working as long as poss. Part-time but must help your brain as much as your purse..

AngelaChill · 27/08/2006 19:22

The problem with renting as an old person is you need some sort of income to pass the credit checks for the landlord to give you a house/flat and the landlord can have you out with 2 months notice. Isn't this country great. We're considering retiring to Poland, it seems to be emptying by the hour.

SenoraPostrophe · 27/08/2006 19:29

angela: no you don't - all landlords I have ever rented from were content with a large upfront payment instead of credit check (dh had v bad credit). and those malnourished pensioners: admittedly i don't know, but I would bet a month's rent that over 80% are those who don't qualify for the state pension, which is small but adequate (if only just).

but fundamentally I'm not going to rush into getting a pension because it's not 100% secure and I know i can make better use of the money in other ways (eg paying off debt). If I was in a position that I wouldn't miss 100 quid a month or however much you're supposd to pay, i might consider it.

CountessDracula · 27/08/2006 19:33

I agree pensions are not the be all and end all.

If I were you I would try and put some into a pension and some into ISAs. The ISAs are more flexible so you can get to money if you need it.

Then at least you would have the benefit of some kind of pension and savings.

Is there a particular reason why you want your mortgage paid off when you are 50? I know you will save a lot in interest but personally I would feel rather frightened at the thought of only having the state pension to depend on.

acnebride · 27/08/2006 19:37

i would think your plan is fine, if all goes to plan, i.e. you don't have to remortgage at some point for a major expense. TBH I would hedge my bets a bit and try and tuck something away in a pension to take advantage of the tax breaks, even if it's £20 a month or something (I would struggle to find that at the moment, but i have an employers' pension). But I would agree that paying off your mortgage is a good aim.

AngelaChill · 27/08/2006 19:43

The other potential problem is if the housing market is in decline when you have to sell, most people can ride the highs and lows but anyone who is forced to sell could be in trouble.
I guess for me it's about spreading the risk, I don't like all my eggs in one basket.

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