Am I too old to start a pension?

[feelingthechill]

I've managed to bury my head in the sand about pensions for most of my twenties and thirties - and have never really earned enough on a regular basis to put money aside each month - but now, aged 44, I have a nagging voice in my head saying I must start to think about saving something, even if it's not very much.

The thing is, if I can only put £100 or so aside a month, is it genuinely worth doing so? I'm currently self employed so i wouldn't benefit from an employer's contributions, and I believe it would be a stakeholder pension (is this right?)

Whenever I've done a pensions calculator, it usually comes out as saying I'd need to save around £400 a month to make a decent amount, and I just don't earn enough to do this.

Is a small amount genuinely better than nothing? Or would I be better just putting the money into an ISA account or finding a good savings account? If a pension is genuinely a good idea, what sort of scheme should I look at?

Feel very uninformed about pensions but realise I'm facing a miserly state one at best if I carry on so any advice would be great, thank you.

Its never too late to start a pension

but you need to bear in mind how much you need to put aside to really make use of the tax break over and above the fees

I started my pension age 49, but am putting over ten thousand pounds a year into it (the money I used to put into my mortage)

pensions are grossed up for basic rate tax and then taxed when you take them out
and incur hefty fees

ISA go in out of post tax income and are untaxed when they come out and have lower fees

its a balancing game

I don't think your ever too old to start a pension. If you can afford £100 a month then maybe you could tax some professional advice and have a go with a medium-higher risk fund...means you could get a better return. I wouldn't recommend trying that without advice tho!

Where do you work? Not exactly of course! New laws, literally this month I think mean that all employers have to make contributions. I'm hazy on the details but it's worth finding out what the arrangements are.

Assuming you don't retire early, you've still got 20 years or so to make contributions and for your investments to grow. Anything that is a step towards providing an income in retirement will be worthwhile. You need to carefully consider the levels of investment risk with which you are comfortable. Whilst higher risk can mean potentially higher reward/growth, it also usually means bigger losses and you may need a longer time frame to recoup them.

Do you have any other savings? ISAs or anything? I tend to apply a rule of thirds to my savings - I put a 1/3 in a pension, 1/3 in a stocks and shares isa and a 1/3 in a cash isa. I then pretty much do thirds within those (not the cash isa!) of high risk, medium risk and low risk funds. If I had £100 a month to invest I'd probably do the same thing with three standing orders but I'd avoid anything with a high management fee and if you are employed and your employer will match fund at all I'd take advantage of that on a pension.

Doh. Sorry just seen you're self employed.

Thanks everyone for your replies. Feel slightly reassured that even a small sum may be worthwhile - just not sure how is go about choosing the right scheme. Is it best to go to an ifa? How do you know if they're any good?! Or is it something any lay person can set up once you've done a bit of research?

Thanks again - it's all food for thought and spurring me on to do something rather than trying not to think about it....

I'd definitely go to an independent advisor!! Look around and see if you can et investment fund reports for the last few quarters - ifa should be able to analyse and give you advice from there. Most people opt for 'lifestyle' generic low risk fund but dependant on your appetite to risk there may be something better out there!! Remember they start to disinvest your funds in approach to retirement so you may have less time to gain 'interest'

ISA's do NOT have lower fees than pensions

Cash ISA's are cheaper (if you ignore the interest rate), Stocks and shares ISA's can often cost more.