1 million pounds Retirement Fund!

[dottiedodah]

Seriously how many people have this ? We are some way off Retirement ,but nowhere near this amount ! See on TV this morning this is the amount to be "comfortable !" We are in the mid bracket of around 20 k when Retired.

I saw this today and could have cried. Yet another reminder that I am skint. Great!

I will be extremely poor when I am of pension age, even more than I am now. It feels pretty bleak, I keep trying to do the sums based on different scenarios but the reality is I will never earn enough to have anything like a 1m or even 500k pension pot.

How can they say pensioners need £33,000 to live comfortably when the majority of workers don't earn that?! The average salary is what, mid £20k's now?

You are not as far off as you might think. £20k in retirement income has a very rough underlying value of about half a million.

Ugh my post was pretty self indulgent.

I do think it is generally helpful to encoursge people to save but I worry that auto enrolment may lead people to think they have provisions when in reality, the amount will be v small. 3% of a minimum wage job isn't going to get you much when you do retire.

My DH hopes to have a pension fund of around that amount when he retires in a few years. We realise how lucky we are that he has had a high earning job and been able to accrue this. If you are on an average salary there is no way you would manage it.

Having said that my DM (and DF before he died recently) manages well on a much, much smaller pension. She and my DF only ran one car, have no mortgage, a small house with low utility bills, no lavish lifestyle or luxury holidays etc.

Upon retirement, most people can live comfortably on amounts far lower than their wages. They're usually no longer paying their mortgage, won't be paying into their pensions, won't be paying for the daily commute or works lunches or works clothes. Probably won't be paying for life insurance (as paid off mortgage).

It's an argument I've had with many IFAs over the years who've been trying to over-sell pensions to my clients by trying to get them to invest amounts to get them the same income in retirement as when they worked (i.e. massive monthly investments to get to that mythical million as a minimum). It's crazy. Fair enough to give projections etc., but it's just scaremongering to suggest that a retired person needs anywhere near as much money as one working - in fact the pension investments themselves are double counted, i.e. you don't need to have a pension of the same amount as when working as you're no longer paying into the pension itself - a circular argument!

Another point is that you only need a "high" pension income for the early years of retirement whilst you're fit and healthy, going on holidays, buying new cars, treating yourself etc. As time passes and the ravages of old age and ill health start to manifest, you won't be going on holidays etc so you would just end up spending your money on care (which would be provided for you if you didn't have money). That's why draw down pensions and ISAs are arguably better, so you can take your money out in the early pensionable years where you can benefit from it, rather than, say, an endowment which pays out the same, smaller amount for the rest of your life (even when you don't need it).

If you have a predicted pension of £20k then your pot is massive. Last time I checked you roughly need a £1m pot to give you a £30k pension.

I was thinking the same, 33k is more a year than the average wage and on that people have mortgages, dependants and pension contributions

They're usually no longer paying their mortgage......

Assuming they've ever managed to get their foot on the housing ladder. Sadly, a large percentage of the current generation or two will be trapped between ever increasing private rents and a fixed retirement income.

It’s all a load of rubbish, a very small percentage of people will have that much, the average pension pot in the U.K. is £70,000,
1million pot at 68, say you live to 84 in good health, you would need to get through £62,500 a year to get your money back, an income of over 70,000 a year with state pension, nice, what would you do with that sort of money ?

Thanks ! Feel a bit better now .We are not poor by any means ,but may be left with a small mortgage ,although we both have pensions of our own plus state pension nowhere near 1 mil !

If your pension is predicting £20k then you must have around 600k in it (or be predicted to have that much in it by the time you retire). That's pretty high.

Those who have pensions of around 30k are either extraordinarily well paid and have hit the circa £1m pension pot or else they are public sector workers. Or private sector with old final salary schemes (so likely to be older since most of these schemes have closed).

For context my pot as of today is saying that to give me a pension of £20,600 I need £629k in it. I am 45 and want to retire at 65.

kjhkj Is that an annuity, you could do a drawdown, if you retire at 68 you will need ti life till 98 to get all your money out,

General guideline for money purchase/defined contributions scheme pensions is 3.5% - 4% drawdown for every £100K.

So, you'll need £100K to achieve £3.5K - £4K gross income per year.
And £500K - £570K to achieve £20K gross income per year.

Anyone who doesn't have a final salary/defined benefit scheme pension is at a huge disadvantage - even for higher rate taxpayers who may well be affected by pension taper rules.

Ironically, this has impacted the public sector far more by a country mile in that doctors and senior public sector workers in the judiciary and armed forces have breached the annual allowance limit as well as reaching the lifetime allowance much earlier than 68. Unintended consequences means that they cut their hours or take early retirement, many in their 50's!

kjhkj With state pension, you would have an income of over £30,000 (-tax ) what would you be spending that on in your late eighties?

With a pension pot of £150,000, ( average U.K. pot 70,000 ) taking 25% tax free, you could drawdown £9600+ state pension an income of nearly £19000, with reasonable growth your pot would last till your early 80’s, this doesn’t inc any savings,

I'm ashamed to say I know very little about pensions . I've been a carer for my autistic son for years and done voluntary work around my own issues. I know I have my stamps paid so get a state pension, but if you have a private pension do you get that AND a state pension? Or is the state pension reduced as your private pension increases like on a sliding scale?

Between my OH and I, we will own his flat ( he also has a tiny private pension) and my house- so we can always down size from my 5 bed to his 2 bed ground floor flat and rent the house out? Or sell it? Current rental rates would be £600 monthly or about £95k to sell. His flat would be about £450 monthly or £65k to sell. I'm only 40 but he is 56 .

It's all complex but my dad seems to do very well on his state pension. He owns a flat and him and his girlfriend clubbed together to buy a canal boat. They are bargain hunters and go abroad 4 times a year on a budget and have a brilliant time. I'm quite envious tbh.

Pension spending is the biggest slice of the pie! I'm 48 and I truly believe that we can't rely on the state pension, as it is, to be around in 20 yrs' time. There will be certainly be inroads - it's just not sustainable.

MyRaGaiaStarFishPieA You get your state pension on top of any income you have, you still have to pay income tax over a certain level

sansou, I agree, but how would they stop it and when ? They would have to give 50+ years notice, you cannot save for a pension in 20 years, unless you are putting thousands away every year, they could start to reduce it, but no party would get in with that on their manifesto

With state pension, you would have an income of over £30,000 (-tax ) what would you be spending that on in your late eighties?

MIL is in her 80s and in good health, still lives in the large family home with its associated costs (she's been updating a bathroom this year) and this year has holidayed in 3 different continents (Europe, Asia and South America) with her siblings who are also in their 80s. Most people assume they will be frail long before they actually will be (and FIL still travelled even when he was frail).

CountFosco They are the lucky ones, my parents died 76/83, with a few years of bad health beforehand. I work in the care industry and most people will have some life limiting problems in their late 70’s early 80’s, obviously there is always expectations to the norm

CountFosco I don’t want to be a doom merchant, but average life expectancy is 79- men, 82- women, I think that’s a good age to base your pension on

Ironically, this has impacted the public sector far more by a country mile in that doctors and senior public sector workers in the judiciary and armed forces have breached the annual allowance limit as well as reaching the lifetime allowance much earlier than 68. Unintended consequences means that they cut their hours or take early retirement, many in their 50's!

Absolutely. I have many consultant friends who are cutting back their hours for exactly this reason.