Pension

[pensionplanning]

I'm 43 and have £6k in an old work pension and £17k in a LISA account so £23k. I'm self employed low pay and doing my best to contribute to my pension but it's not easy. What kind of contributions do I need to be making each month? We will be mortgage free by the time I retire and hopefully by aged 50 so I could maybe start to increase my contributions in the next ten years.

Not an expert but I don’t think current pots will provide much income after retirement so you are right to want to increase them. Basics are you on track to receive maximum state pension? You can use government gateway to check your forecast pension and see if there are gaps in NI record you could make voluntary payments for if so. There is another thread started I think by Dashel about maximising pension which has lots of useful advice. I would also consider maximising pension rather than trying to clear mortgage now as the earlier you save the bigger the effect of compound interest. Mortgage interest is historically low now and your money may work better for you if invested in your pension.
I understand the desire to secure your home but not much point in doing so if it at the expense of enough retirement income to be able to run it.

@pensionplanning Managed to find it but can’t get it to link sorry. It’s called “Building up pension challenge” and is on page 3

There have been other posts on here about pensions and there’s a rough calculator but I can’t remember the formula. Have a look back at old posts.

I started paying in 1% approx of net earnings when I was 21 and will still get well under a grand a month at age 60. Frightening.

So don’t get your hopes up.

You will have to pay in thousands per month to have anything half decent by 60. You can’t rely on it age 50, it’s just too soon to amass anything reasonable. Your £23k taken at age 50 presumably gives you well under £100 a month.

How much do you need to survive month now? It won’t be vastly different t go what you need in retirement

If you can’t pay yourself a pension you need to increase your prices.

Have a look at Mr Money Mustache, he doesn't post much any more but his old stuff is good.
His (and many investors') rule is that you can draw down 4% pa without impacting on your capital, allowing for growth and dividends. Every £25k you have would therefore give you income of £1k pa.

I’d put away every spare penny in your shoes. Sorry to be bleak but those numbers do not look good at all. You have 20yrs or so to correct it though, so put away as much as you can. If pension earns higher % than your mortgage loan, prioritise pension over paying off mortgage early. Don’t forget, most people downsize in retirement so you only need enough equity to buy a smaller retirement home outright, you don’t need to pay off entire value of larger family size home.

I would check out the team over @financielle on Instagram they also have a free community where they speak to women on this type of stuff

community.financielle.co.uk

It's also pension awareness day today!

We will be mortgage free by the time I retire and hopefully by aged 50 so I could maybe start to increase my contributions in the next ten years.

this is the wrong way around

pay into the pension firstly and the mortgage second, the interest rate is so low that you can keep pay and it doesn't cost a lot to borrow whereas the early you pay money into your pension the more it makes for you.

Mostly though people want to pay their mortgage of as they see it as debt and a bad thing, but when borrowing is so very very cheap it really doesn't matter as you will gain far more from paying extra into your pension now

www.aviva.co.uk/retirement/retirement-planning/why-it-pays-start-your-pension-early/

its all to do with compond interest and although the clip simplify this to starting at 23 or 33 years old

if you pay in more to your pension at 43 then by the time you're 53 you will have gained more - leaving this until your mortgage free and possibly 53 then it won't be to late but you'll have less time till retirement than you do now at 43 and you could also have an additional £440000 in your pension earning compound interest

Start as young as you can. Get used to paying it from day one, put as much as you can in when your kids have grown and you’re Mortgage free.

Current salary 40k full time (been working PT only 15 months) , 32 years defined benefit pension, 3 years defined contribution at 50% of my salary.

If I leave today, I will still only get 14K a year at 60 and 93k lump sum excluding any state pension.

Not an enormous amount for a lifetime of regular contributions and a good salarywith generous employer contributions.

If I leave today, I will still only get 14K a year at 60 and 93k lump sum excluding any state pension.

£14000 per annum would give you £23,600 on retirement per annum with a state pension so gross £1,966 without a mortgage payment

for many it will be more than they earn in fact you'll have a higher income than 57% of the uk

You would probably do better to put more in your pension now and take longer to pay off the mortgage.

You need to start by working out what your target is and then a plan for how to get there. I agree with PP that part of that plan is probably going to be putting more into pension now in preference to paying off the mortgage.

It's tricky to work out what you're going to need in 25+ years but these guides to what pensioners actually spend are quite useful as a starting point: www.retirementlivingstandards.org.uk and Which You say 'we' so I imagine you're in a couple but it's a good idea to plan as if you are going to be a single person (esp given the number of people divorced/seperated in their 50s and 60s) and then you'll be more comfortable if you are a couple.

Then get your personal state pension forecast and make sure you are definitely on track for the full state pension www.gov.uk/check-state-pension You say you're self-employed so triple check you are paying the right NI to get your years credited.

Once you've done all that you can see the shortfall you'll need to make up from private pensions. IF you come back with the answers to the Qs above people can give a view but you might also find this calculator useful to play around with to see what kind of pot you might need to generate the income you want. www.which.co.uk/money/pensions-and-retirement/pensions-retirement-calculators/income-drawdown-calculator-a5pj57u5134k

Hope that is helpful