Building up pension challenge

[Dashel]

Hi all,

One of the things that I have financially gotten around to looking at properly during Lock Down is my pension or lack there of.

I have a work place pension which is easy to log into and to make one off payments to, so I thought that now would be a great time to start trying to build up this pot as it’s not like I am spending normally, with hardly going out, no holidays or weekends away or meals out.

I wondered if anyone else out there would like to join me for support and to hopefully increase our pension pots to help have a more comfortable retirement?

A pension thread on here a few months ago, leads me to believe that I’m probably not the only one who has left it a bit late. I started this year with a work place pot of £3k so not going to keep me in a comfortable retirement unless it improves significantly.

Any money that I pay into this pot does get the 20% added to it (short of a lottery win I won’t be exceeding the £40k limit for the tax benefit) so I am hoping that I can finish the year on at least £10k but in an ideal world it would be more.

Thanks for reading and it would be great to have others for support and encouragement!

@PensionsYes I find that my DH is more inclined to listen to anything regarding this after a bad day at work. He goes along with some of my mad ideas, but not all of them!

Currently I am trying to get him to understand that I don’t want roses and the Valentines Day M&S meal deal. We both like to cook and have plenty of wine so it just seems excessive.

DH thinks we earn ok, have no mortgage or debt and plenty saved, so now is time to spend, but I keep showing him property abroad with a pool and point out it wouldn’t take that long really to get ourselves in that position.

I dug around in my pension portal and apparently I can contact them to make one-off payments so I've emailed to see if that's possible.

Slightly depressingly I have just explored my work pension portal... 2019 increased by about 2K 2020 decreased by £5.500 have just requested an current value. It's a good job I'm 45 this year.
Dont really understand the investment options but I'm in the one work selected.

@SuperLoudPoppingAction I’m really pleased that you can make one off payments and I hope that it’s easy to do. I find I am much more likely to pay more if I can pay frequent small payments rather than one large one.

DH has to get a letter signed by his financial director to change his salary deduction. I just need to send an email.

@HandlebarLadyTash I am sorry to hear about it going down, I don’t know much about that, but could it be tied into the problems with the virus? I suppose if a lot of the fund was tied into areas that have been hit hard, then it will reflect that. Hopefully things will start to improve soon and you have time for the value to increase.

A letter from DHs pension company has arrived and I had to stop myself from opening it. I know he wouldn’t mind but he will be home soon.

I can change my salary deduction within my portal but it confuses our finance officer if I don't let her know.

I probably get so much entertainment from playing with the forecasting tools on that and on the Moneybox app that if someone told me the money had vanished in a Brexit/covid haze I would still feel I'd had my money's worth!

@LaPufalina I love Mr Money Mustache, he was one of the first FIRE bloggers I got into, along with Early Retirement Extreme.

DH and I have just spoken to our workplace pension scheme to see if there’s any scope to max out our AVCs before the financial year end, which there is! We’ve opted to spread the payment over the next two paydays so we will be pretty skint for a month or two but it’ll be worth it in the end.

We are going to need to to do a tax return for the first time for tax year end April 2021, for CB and pension tax relief purposes. Does anyone know of a dummies guide to simple tax returns? I had a bad experience when I was 18 when I got a fine so I have palpitations thinking about completing one .

Forgot to say I have read the mr money moustache website before @LaPufalina but might have another read for more motivation!

I would definitely recommend the website for anyone who is interested, even if you don’t plan on going to that level, it’s a really good read

@Dashel I cant worry about it too much, this yr will be about building a decent easy access cash reserve. I can see retiring at 55 is a dream that wont happen.
Although husband is planning on working forever so I might be able to stop at 60. Again this depends on health of us...

I’ve been trying to call my pension provider (Vanguard) but they’re only open 1-4pm the last couple of days...

It’s not easy getting round to sorting all this stuff out - you have to be quite determined!

I highly doubt starting at 40 will give you much of a pension to take at 55, you might live another 30 or more years after that.

I have a defined benefit pension banked giving me 16k a year plus tax free lump sum at 62 and a defined contribution pot currently worth 50k that I’m putting 1k a month into and employer 450 a month.

I’ve been paying into pension 1 since From age 19 to 52, and pension 2 since I was 52.

DH’s pot is around 330k and he’s putting away 1500 a month plus employers contribution. We both have 35/35 years NI contributions from April.

Are you all planning to take your 25% tax free lump sums and if so, what will you do with it?

@Neenan - I’m not sure you understand the point of the thread... ?

@SeasonsInTheAbyss - no clue, hoping to have paid off mortgage by then. Would probably need to live off of it, so I’m guessing split it into an easy access account and some short term savings accounts...

And then obviously have a big old party / holiday.

What do most people do currently, Corona notwithstanding?

Wombat I'm so bad at understanding the lgp scheme.

What do you mean you give them 1000 and they give you 100 pension?

Is that 100 for a year? Ie 100 divided by 12 months?

I'm don't understand. I'm 40 and only now have small pension in lgp scheme but I'm low paid part time.

Neen please don't depress us, many of us have not been able to start saving earlier.
I'm going to open sipps for my dc however, so much easier to have something open to add too!
Possibly with vanguard but although I'm a fan of vanguard they pressure you to pay in 100 each month.

@Neenan My Dad left my Mum when she was 40. She had been either SAHM or p/t worker for the preceeding 12 years so didn't have a pension.

She went to work full-time, took on management positions she didn't enjoy or want to do and put enormous sums into building up her pension and took risks with investments.

It paid off and she retired a few months before her 60th. Since retiring she has been on many cruises, completed a leg of the round the world clipper race (gruelling), spent months on conservation work in the Australian rainforests and taught in India amongst many other hobbies and holidays.

Having had a victim mindset that said it was ''too late to start'' would not have enabled her to achieve this at all.

I think people who think a pension pot of 200k is enough to retire on at 57 are not fully informed.

I'm planning a pension pot of 650K ( without husbands pot) and I still can't afford to retire until 62.

I paid into a pension from 1993 to 2008 and I had an opted out scheme from the early 90s. Back in 2017 (age 57)) I got quite worried about my pension situation, especially as I'm single with a huge mortgage with no means of repayment (yes, I know....). I went to see an IFA and ended up merging my 2 pots together (total £111k) and investing it in a higher risk scheme to hopefully grow it faster. In 3.5 years it's now up to £143k with the aim of at least £200k by state retirement age. I could pay more into this and was doing so but had to stop when I was ill 2 years ago) I'm also paying about £60 per month into Nest via my business which I can increase if necessary). My mortgage is £170k and I'm about to inherit approx that much. Do I pay off my mortgage ? Or invest in my pension to eventually use 25% lump sum to pay it off ? (I also own half of a house worth £170k). I have a few small savings pots (I find Chip and Moneybox to be really good for saving without missing it but wonder if I'd be better putting these savings into pension instead) It's all such a dilemma.

@picknmix1984

I think people who think a pension pot of 200k is enough to retire on at 57 are not fully informed.

I'm planning a pension pot of 650K ( without husbands pot) and I still can't afford to retire until 62.

But this thread is about people starting to increase it and actively looking at their pension.

It might not be enough to live off but if someone finds they can't work due to illness before state pension age it will be a bloody good backup. If they die before they withdraw it then their nominated person will get it.

I think the attitude on this thread is great because you have to start somewhere. With withdrawal etc people have far more options now and it's a great savings vehicle due to tax relief.

Most people in the UK would manage at a massive push somewhere towards 200k but no where near 650k

I stated adding to my pension when I was 40. At that point I had 3k saved which would give me an income of about £2.50 a year! I’m self employed so not employer to top up.
I gradually started with £50 a month and now put about £250 in per month. I’m nearly 42. It’s growing but very slowly!

Personally I find a lot of people say they can't afford to retire on their pension but they are only looking at annuity rates rather than drawdown and keeping most of it invested.

Then also think about outgoings. What one person 'can't retire on' would be a great income to others. What do you want to do in retirement and how much would it cost after bills have been paid? I don't expect to be jetting off on long haul holidays in my 70 and 80s mainly because the travel insurance to cover medical conditions would be really high.

I am glad to see so many positive responses to the negative comments.

There are people posting in this thread are in all sorts of different financial positions and no one on here has posted their entire financial position.

Personally I have talked about putting savings into my pension and downsizing in due course as well making regular large overpayments. I also successfully paid off a large mortgage so although I have admitted to ignoring my pension until now, I’m not unused to setting myself tough financial goals and achieving them.

Besides even if I don’t succeed and am able to retire very early and I retire at 65 say, but have more income due to this, then what’s the worst case scenario?

I hope that myself and others will be in a stronger financial position because of this and have support and encouragement from like minded people.

@Lollipity your mum sounds amazing and very inspirational! I hope my retirement is a fraction as adventurous as hers!

To give everyone a giggle, I was reading the mr money Mustache forum and there was a thread about blokes peeing in the garden to save money, it’s freezing cold with snow still on the ground here and very windy so I did have visions of what DH would say if I told him he had to go outside every time he needed a wee. I’m guessing those blokes live in warm American states as otherwise you must loose money by letting more heat out of your house than money saved by not flushing the loo.

Hi all
Well done on upping the pensions! I have been doing the same recently, adding my first extra one off payment. I also opened a separate broker account to invest (obviously no tax benefits but means I don't need to wait till 55 to withdraw in case I can retire early).

Just wanted to say, for anyone interested in the FIRE movement with a reluctant partner, there is a great documentary called Playing With Fire (written by Travis Shakespeare). DH is reluctant too, whereas I am totally determined, and it opened his eyes to the pros of the fire moment, and what is possible. I think because he hadn't been doing as much research on it he wasn't inspired by the end goal but saw quite a few on the doc. Most of the podcasts are rather American as the fire movement hasn't really taken off in the Uk yet, but Choose FI and the mad fientist are also good! I am sure Choose FI Has an episode with mr money moustache. I have also started following lots of FIRE people on Instagram for inspiration ☺️ DH still finds the fire movement a bit extreme but we are both aiming to be able to only work part time in our 40s (if we want to- DH is lucky enough to love his job) to so have a common goal.

@BringBiscuits, it’s great that it’s growing!

I agree a lot depends on how much you want to spend when retired, do you have rent or a mortgage, do you want luxury holidays, how much you need to spend on bills and cars etc and also whether you have other investments such as shares or rental property or some sort of passive income or want to downsize your job.

I have a friend who when he retires from his day job, will do photography work, in normal times, he does quite a lot of weekend wedding photography. He would class this as retired because he loves doing this and doesn’t enjoy his day job and he would be part time.

Another retired friend also runs a part time handyman business as he loves helping local people and got bored being retired. Turns out he can’t sit still.

None of us can know what the future brings but a bit of prepping never hurt!

Your husbands pot of £200k isn’t really that much if you work out what that will pay out annually

A pension pot of £200k is huge (and unattainable) for the average worker. It really is.