Pensions - it's impossible now

[SouthWestmom]

Dh and I earn a lot between us. On paper we do really well.

But this hasn't been since we were young, and we met late, had four kids and have a mortgage until our mid 60s. We have a dc at uni so have to pay on top of her minimum loan. There is no spare cash lying around.

I started up an old pension of stopped and set it at £30 a month just to have something.
I've just done a pension calculator and even if I could pay £300 a month it would only achieve a pension of £2500 a year.

Wtf do people do? Is everyone else sorted?

There was a long thread about this recently - scary stuff. What do I do? Pay a heck of a lot more than you do, for my whole working life, have only 1 kid and a small mortgage... Pensions don't come out of "spare cash lying around", they're a core expense. On the bright side, you're so far from alone that I think the idea that there won't be state pensions in a bit can't turn out to be true, not unless they take the vote away from over-60s first (joke). What I'm expecting is that there'll be a means-tested pension so that all you who spent the money I've been dutifully putting into my pension will be almost as well off as I will. Forgive me if I hope you won't be that well off! Rant over.

Don't you have a work pension? We're similar - university costs, mortgage till late 60's, but both have work pensions. Certainly worth making cut backs to sort one. £2500 is £250 a month which you'll need...

You say you earn a lot between you, but £30 a month into your pension is nowhere near enough. Does your employer contribute?

Agree relax itll be oh you having savings/paid into private pension, you get no state pension. Paid nothing/spent it all...? Here have state pension, pension credit, attendance allowance, anything else? (not whingy or bitter much me!) this of course is not aimed at the armies of family who are carers or those unable to work due to health needs;

I earn a pittance and I put more than £30 per month into my pension.

When I was younger and had no workplace pension and I looked into a private pension, many of the providers wanted me to pay in more per month than I actually earned, in order to provide a small-ish pension in my old age. The rest of them set their minimum payment at a level that far exceeded what I could afford to pay and still be able to eat and keep a roof over my head. That really was impossible...

Pensions are far more accessible now than they were in the past. Anything will be an improvement on £30 per month though.

If you have a large mortgage then you could probably move house/downsize and free that up.

We have good pensions but a tiny house worth 200k in a crap place. You makes your choices...

Our mortgage is big because it's over 13 years not 25.

I had several years out due to a disabled child

I get the rants, feel free, but it's not always spending money on fun.

I was thinking about what to do really.

And most low paid workers and self employed can't even afford a pension! All the money goes on existing!

Work do pay into a pension but I started a private one I revived .

I have no idea as it seems pointless - the Work one will surely just be pennies

For context, I earn between £20k and £30k a year (self-employed, too many maternity leaves, one of our children disabled, one at university, etc) and am putting £500 a month into a pension. It goes out first, with all the other non-negotiable expenses like mortgage and council tax. £30 a month goes absolutely nowhere, I'm afraid.

If you both earn well, you must have a truly crippling mortgage not to be able to put more than £30 a month aside. Does your other half have a better pension and do you know how much of it comes to you if he pops his clogs first? (This is a worry of mine, as we're each entitled to our own pension plus half of the other's - so if DH gets £20k a year and you get £2k, he'd be left with £21k in your absence but you'd only have £11k.)

Are you higher rate tax payers? If so, anything you put into the pension will be worth a lot more than you think.

OK, crossed posts. So you have:

• State pension (do you have enough contributions? Easy enough to check, and you can back-pay some years' credits)
• A work pension - whoopee, free money, if they're contributing! Ask for a forecast. Also see if they'll match an increase on your part.
• A private pension at £30 a month - see if you can up it a bit, and keep doing so.

Do you also have any ISAs or other savings accounts?

Where were your contributions while young, OP? Even during my poorest supermarket worker years on minimum wage, I used to set aside a minimum £80 monthly payment. It meant seriously tightening my belt for day to day living as a single parent, but I did it because my employer matched my contribution.

I've only had one child because kids are bloody expensive. The fanciest clothing DD and I wear is out of Primark or cheap charity shop finds. DD has never done any expensive clubs, we don't have luxury holidays or fancy days out. I shop in Lidl, drive a 10 year old car and budget very, very carefully. I know it's the same load of boring, rehashed lines many use, but I've always cut my cloth accordingly, meaning I can always afford to put something in my pension pot each month.

Can you look over your outgoings and see if there is anywhere you can cut back a bit? Can your DC at uni get a job/overdraft facility to cover a portion of what you are paying? If you and DH are both earning very good salaries, something's going wrong somewhere if you only have £30 a month left for your pension

Nothing is hopeless. Anything you can put aside is an improvement on nothing.

What about taking advice from a qualified adviser? They might be able to help.

You may not have much in a pension pot, but you will own your home. You will better off than many as you won't have to pay rent and can sell it off to get more cash.

Thank you I think you are right about taking advice. It's hard now with young children to also be thinking about retirement.

I started a pension young and then had to give up work due to one of the dc. So that's when it stopped. Then, debt from a divorce, renting, training to get back into work all took over and I'm suddenly 45.

Yes, but you're not 55 (or 65). You do have some time on your side.

Thank you. Ok I will dig out the paperwork and have a look at the work one.
Wish I could just combine them as it seems silly to have tiny bits

Well, it sounds like you need to prioritise your pension now. You’re 45 so still young enough to do sth about your situation. I think that in your position, I would extend the mortgage to 20 years so that you can pay more into the pension. Remember that it comes out of gross earnings so it’s very tax efficient + employers will often match greater contributions. If you carry on working, you’ll be entitled to the state pension as well. All that alongside downsizing to a cheaper property and it’s likely to be ok.

To answer your question about what others are doing - DH and I are 37 with our first child on the way. As we haven’t had any children or career breaks, we’ve been putting a lot of money into private and work pensions. Even if we cut back on the contributions when we have children, we’re still set to retire early on quite a lot.

Can't extend the mortgage - dh is ten years older than me.

I need to look at what I can do but the problem is my job doesn't feel stable so I worry about paying in and then having to stop as that won't improve my pension over all.

Once your mortgage is paid off, you can put the money you were paying on the mortgage into a pension instead. This should make a big difference.

I don’t know what your work pension rules might be, but if paying in irregularly won’t help, then a SIPP (self-invested pension) would be a good option. You can pay in whenever, however much you want/are able to and when you retire, you can do draw downs - pay money out as needed as opposed to having to buy an annuity.

Also have a look at whether then taking a 25% tax-free lump sum + downsizing, could generate enough money to buy a flat to ent out - that could top up your pensions very nicely.

You can consolidate your pensions. Check that you won't be losing out on guarantees etc though.

A work pension is often the most tax efficient way to save as you get the standard tax relief, your tax is reduced by salary sacrifice, some employers pass the ni savings on and of course employer contributions (under auto enrolment rules this is 5% minimum from 2019 but your employer may have a more generous matching structure in place). Also consider bonus sacrifice if your employer offers it for all of the above reasons. All this can add up and make a real difference, especially if you take action now to give the money a chance to grow.

Thanks mini. I'm going to dog out the paperwork and see if I can put the private one into the Work one then. At least it's all in one place

I would put as much as possible in to your pension now and increase it when your DC don't need supporting any more. I think there's an option to delay taking the state pension and receive a greater amount if you're in a position to work a bit longer. Also drawdown is likely to give a better return than buying an annuity.

Well thanks to everyone I have logged on to my work pension and have asked to transfer my private pension to the Work one. Then I can make payments to it.

What happens if I leave though? Does it freeze?