Concerned that my pension pot is on the lower end of what it should be...

[hyperbole001]

I'm 36 and have to be honest, I haven't given a great deal of thought to my pension. I probably started paying into one from 2009 onwards, but have had various jobs over the course of my employment history, and until recently hadn't put any effort into trying to track them down. Naively, I had assumed that the govt would be able to do this by simply using my NI number but doesn't seem to be a straightforward as that.

Anyway, from those I've been able to track down and have contacted, I've estimated that my pot is currently sat at around £26k. Does this see on the low side for my age, and should I be consciously trying to increase my contributions?

Pay anything over higher rate tax into your pension. You will just pay it to the chancellor otherwise.

Whilst you are correct that higher rate taxpayers save more tax by making pension contributions than people paying tax at lower rates, ‘the chancellor’ doesn’t get to keep all the tax himself, you know. It gets spent on hospitals, schools, policing and state pensions. Anybody contributing to their own pension should be doing so from personal responsibility, not from resentment at supporting the less fortunate with their higher rate tax!

Sorry to hear that @SpideyMom. I hope things get better for you soon.

Tbh I don't think many people are going to be getting £30k a year in retirement in the future. Everyone is having to spend so much on housing themselves now and pensions are not what they were. So people have less to put in and they will get less out than those who retired 20 years ago.

FlowerArranger my DH cashed in his final salary pension that would have paid out just over 11k a year for 635k, sometimes it’s worth it. This boosted our pots from 750k to almost 1.4 million. We’re 52 and 55.

I've seen so many threads on here over the years and the amount people are able to put it sometimes astounds me. I know my pension will be low but I also know I am paying all I can into it right now.
Cost of living is rocketing in my opinion and as much as I would love a comfortable retirement we also need to he able to live now. I already have absolutely no social life as all my wages goes on livng

What’s your idea of “happy and comfortable”? I want to maintain my current standard of living which includes nice food, holidays, day trips etc etc.

The £18k is a average over the entire pension period. At some point you're just not going to be fit enough to be doing holidays and day trips or driving. So that £18k May in reality be £24k for ten years, then £12k for the next ten.

@SwimBaby

FlowerArranger my DH cashed in his final salary pension that would have paid out just over 11k a year for 635k, sometimes it’s worth it. This boosted our pots from 750k to almost 1.4 million. We’re 52 and 55.

That seem like an enormous amount to get for it. £11k a year for an average of 20 years life expectancy surely means it was only worth £220k. How come he got three times that? and how do I get mine valued?!

Well this is depressing

Yep. I’m 50 & no pension to speak of (perhaps 3k from the 90’s). I’ve never really been able to makes ends meet in the past or the present day - so at least the silver lining will be that I’m very used to being broke should I make it that far!

It was a finally salary that started at 60, we asked for a valuation every 18 months and it kept getting higher. Then the last one offered a bonus of 60k if he accepted the offer.
I read a good article in Which was saying the cash amounts being offered at the moment id higher than it’s ever been. A relative of mine got nearly a million for a 16k a year at 60 final salary pension.

No amount of pension advice is helpful to people who simply don’t have any more spare cash to pay into it. FWIW OP my friends range from mid twenties to 40ish and we’re all open about talking about finances, I don’t know anyone who has a six figure pension pot. I don’t think it’s realistic for my generation and future generations with the rise of living costs and stagnation of wages.

Agree @TedMullins.

Also, more people are going to be renting throughout retirement in the future. In their case, there is little point in having a pension at all if all it does is take them to the pension credit limit because everything they've got will just go on rent, which would otherwise be paid for by LHA/UC/whatever is in place then and it won't improve their standard of living at all.

Sorry, that should be pension credit+ rent+ council tax. So unless you're going to be getting substantially more than, say, £1000 a month from your pension, as a renter, it's probably not worth your while having one.

You might want fewer holidays when you’re in your 80s but your outgoings could easily be considerably more. Who do you think is going to fund your old age care? It’s not something the government seems keen on. I am anticipating having huge social care costs in my later years.

Generally when retirement planning, the older you are the less you spend your money on.

Care needs need evaluating as well of course, but 4 hours of private care a day costs around £70 a day, which is less than £4k a year and once you need carers several times a day you won't be gallivanting abroad a couple of times a year or spending £10k every five years replacing your car.

If you go into a home then it's largely irrelevant how large or small your pension is cos you won't see any of it.

The people at work on final salary pensions all cash it in because the annuity rates the company offers are much worse than drawdown options.

The average amount to be 'happy and comfortable' on £18k is less than someone on £65K pays in tax. While it's reasonable as a place to aim for those on an average income it would feel like a massive drop for some of us. DH and I currently spend that amount on the fun stuff, and if I wasn't working I'd be wanting to do more of that not less. Although I suppose a holiday for two in term time is a lot cheaper than a holiday for 5 in August.

[quote ChairOnToast]@titchy those care costs are based on 2021 prices (and probably outside London and the SE). When I’m the age I’m likely to need care it will be 40+ years from now and those costs could easily be 3x what you’ve quoted. And who’s going to pay for the costs of going into a home? I’m not trying to be negative but my grandmother ended up in a nursing home that cost over £3k per month and she wasn’t entitled to any government support so had to sell her house which was only worth £180k. A few years in a home would have wiped out every penny she had. I think people massively underestimate what it will cost to grow old in the UK. Unless we have a dramatic shift in how we fund adult social care this is only going to get worse.[/quote]
Well yes if you have a house you sell it. I'm just commenting on the amount of income you need to see you comfortably through retirement, and pointing out that expenditure decreases as you get older generally. And pointing out that an average of £18k a year will enable most people to live very comfortably.

I'm not talking about making provision to enable your children to inherit - that's a completely different topic.

And of course the £18k is 2021 prices. Pensions are index linked so should broadly go up in line with carer hourly rates.

£30k would be nice.

Good luck then!

I've been paying into a pension since 2004 and I earn well above average (higher rate tax payer) and even with the state pension added in I'm realistically aiming for £18k a year

£30k is totally unrealistic unless you are saving huge proportions of your salary each month

The people at work on final salary pensions all cash it in because the annuity rates the company offers are much worse than drawdown options.

I don't understand this. Why would someone with a final salary scheme care about annuities?

And the vast majority of people in the uk don't spend £18k a year on 'fun' FFS how gauche can you be?

I’m not a financial advisor but I read somewhere once that as a very general aim, you should be contributing half your age as a % of your salary throughout your working life (employer contributions are included in this).

So if you’re 30 years old, you should be paying 15% into your pension. This could comprise 10% from you and 5% from your employer.

At 40, your contributions should total 20%, etc.

I have absolutely no idea of the efficacy of this but I’ve tried to stick to it as a rule of thumb.

It’s half the age you start contributing.

Yeah care home fees covered by sale of house. As a pp said you're not after spending money at that stage. Retiring at 68 (probably will be 70 before too long), you're not going to have many years to be getting holidays and the like, once you become difficult to insure.

@Vetyveriohohoh

Generally speaking your pension is a much more tax efficient way to save for retirement than an ISA so if you’re able to save that much I’d definitely consider increasing your pension contributions

Bear in mind that a pension fund can go down as well as up, (according to performance of whatever the fund manager invested in). As many discovered top their cost a few years back.

With an ISA you always own the investment so will at least get back whatever you put in ( though inflation will reduce its value).

@titchy

And of course the £18k is 2021 prices. Pensions are index linked so should broadly go up in line with carer hourly rates.

NOT all pensions are index-linked .