Mid 30s pension values

[Nanananani]

If you’re mid 30s, work full time (not public sector please as it makes comparisons hard) roughly how much is your pension pot?

I was talking about it with friends at the weekend and both of them had no idea so just curious about both rough pot values but also is it information you know and keep an eye on?

I’m (just) 34 and my pension is worth 30k. I’m well aware of it but only really just started to realise how bad it is. I’ve been paying in 4% (and matched 4%) for 10 years. I currently work 3 days a week but will increase to 4 soon so I can up my contributions. I have a student loan and when that is paid off I’m going to flip the amount into pensions so I’ll be paying 17%.but that won’t be for another circa 4 years. I can’t pretend it doesn’t make me nervous! What’s your situation OP?

Thanks pombear, but if an opposite situation in that I’ve put a lot in since I started working at 21 and have about 130k pot BUT actually my mental health isn’t in a great place right now and I’m seriously considering some time out of work/career change/part time working which would mean paying in much much less from this point onwards

*bit of an

@Nanananani I had a thought - which is probably nothing - however, is your student loan repayment based on your gross income, or taxable pay?
I was just wondering if your pension outgoings are as salary sacrifice , and your loan repayment was based on taxable pay, if you upped you pension contribs, your loan repayment would go down accordingly? As taxable amount would reduce? I have to say, I know nothing about student loans, but just in case).

If I can remember back to my mid-thirties, I think we had an annual statement of what our company pension pot was worth (defined contribution/money purchase) and performance of the handful of funds you could choose, and potentially change your investment between.
I think defined benefit/final salary pension members had a similar annual appraisal.

It's all online to check as often as you want now, but think there may still be an annual letter.

& yes, I think it's really useful to know where you are and where you're headed - from as early as possible - so you can make adjustments, when what you do has a longer term to make a difference.

Think that was for @Pombear47

I do apologise - the student loan question was for @Pombear47

@Nanananani I see you are really asking for other's pot values, and I can't remember how much mine was at that point, but that your current value would be well above average.
Whether it's enough to rely on to grow and give you your adequate pension when you're older, as you are likely to be paying in rather less from now on, I don't think anyone else can tell you - apart from an IFA with their amazing software.

If you look at your pension pot online, does it suggest what the pot may look like at suggested retirement age, if you continue to pay in as you have been? Might give you an idea if where you're currently heading and whether you can make a dent in that.
(I would consider drawdown and investing into tax-efficient vehicles, rather than buying an annuity).

There is a good group on FB you could join, with a number of highly knowledgeable and very nice supportive people, who will be able to point you in the direction of useful resources:
Financial Independence UK

So, I would say you are currently in a positive position, and you owe it to yourself to look after your health and happiness.

Would your first option be to reduce hours and/or pressure of position with your current employer, to see if that helps you with your mental health?

Thank you @DoubleTweenQueen really helpful post. Unfortunately past time on my current situation isn’t an option would need to make some big changes.

Thanks @DoubleTweenQueen but unfortunately student loan is calculated before pension contribution deductions, otherwise yes I would be keen to go down that route!

OP that is a good value pot but it all depends on, as Double has mentioned, what level of income you would like in retirement. The good thing is that you have a long way left until your likely retirement date so will really benefit from compound increases in your pension pot.
How much do you earn now and what is it you’re hoping to do going forwards (and how much does that earn). Do you have any other assets which could be use to supplement your retirement income such as a property which you could downsize?
Whilst it’s great you’re thinking about the future can you sustain this drop in income in the short term? And crucially meet your current financial obligations such as mortgage or rent, council tax etc

As a side I’m sorry to hear you are having mental health problems x

I'm pretty sure that £130k by your age would stand you in good stead to have a couple of years out from active contributions if that's what you need. Don't they always say time is the most important factor? So your savings have 35+ years to grow.

I'm a similar age and have £50k despite paying in since I was 20!

The % that people need to save is much higher than people appreciate.

If you imagine a working life of 40 years, you might be retired for 30. Although growth occurs in these funds, just keeping up with inflation takes quite a lot of the returns. To save 4% of your salary and then expect a good retirement is not possible.

Final salary pensions represent about 25% of someones salary.... nothing like the savings people make now.

@Nanananani I would say to get your ducks in a row.

Talk to your GP regarding your mental health - it has been known for folk to be signed off with stress, for example, for up to a few months which if you can do that will give you a breather to possibly help you gain a bit of calm clarity about what you want and need to do next? - without a financial hit straight away? (Depending on your employer).

Have you had a look around at alternatives? Better for your mental health / confidence, and your finances, if you can manage a smooth transition, with a nice break between?

If you're struggling at the moment then support and a change to improve your quality of life very much warranted. Your pension pot is in a decent place at this stage.
Time taken to try something new and find what fulfils you, rather than trying to keep it all going as it is, would be time we'll spent and you have plenty of time to look out for your retirement.

And as someone who left a career behind, for a number of reasons, I feel for you and wish you well

Thanks so much @DoubleTweenQueen I’ve seen so many people get signed off then totally sideline and pushed out that even that is a scary prospect. I’d rather things were in my terms. DP could cover day to day living but our retirement would definitely worry me.

Just hoping I can get my ducks in a row, build and exit plan and know I can escape if needs be - that might be enough to help me cope a bit longer

@Nanananani Well, then, I think you will find that most on MN won’t have the provision you’ve built up so far. It’s a good position at which to take stock.

And I would focus on the now - short to medium term plans. Retirement can be worried about another day. Look at DHs pot also?

Myself and DH plan to leave each other our pots if one of us goes first, and ‘pool' for retirement, and I would get a beneficiary’s amount or spouse’s pension from his Final Salary provision if I survived him.

But yes - 30’s is a great stage to career change/re-assess. Possibly exciting even. We only get one life! x

£30k in a pension pot will buy an annuity at retirement of about £1k per year. So £600k will buy £20k pension. It's all very rough. Most people don't buy annuities now but 'draw down' from an ongoing pot at about 4% per year. This doesn't provide a guaranteed income for life like annuity so can run out..l.but is cheaper because of lack of guarantee.
Remember too that a full 35 years of NI contributions gives about £9.5k a tear too.

Re how much you need, remember pension contributions,NI and huge tax won't be coming out of income, nor student loans. It's also assumed you're mortgage free and free if big child costs. Given this, websites suggest £18k for basic retirement which will include some leisure and holidays and £27k for a couple. Boost by about 30% for a very comfortable retirement,

You need to know what you're aiming for and what it will require in pensions. Once you know that you can start to work out if you need to pay-in more. Most people will need to....but if you know at least you can address it.

I wonder if we can really rely on a state pension in 30years time?

The state pension might change, but I don’t agree with some people’s idea that it will be scrapped entirely for anyone above a certain threshold. To do this would be political suicide for any party for a long time.

Any changes would have to be of limited nature and announced far in advance of them happening. The younger people are, the greater chance they might not receive exactly what their prediction for their retirement age is. However, what has already been accrued would be harder to touch, in my view.

There is also the factor that out state pension is far less generous than most countries. This would have to be considered by government if attacking it.

I wouldn’t rely on it entirely…but then it’s not enough on its own anyway. However, expecting that you will get something from it seems realistic. We can only work with the systems as they are now…..changes to private pension tax relief or to the rules of public sector defined benefit pensions are all possible too, along with further increases to pension age.

All you can do is contribute and keep working. Those who keep doing this will be better off than those who don’t.

@Nanananani Agree with @WombatChocolate.

We can only do what we can! Life is expensive and saving for retirement is a balance.

I wouldn't overly worry about what might or might not happen in 30+yrs time.
You've made a really strong start and your pot has a healthy period in which to grow.

I'm 38. My defined benefits pot was frozen at the end of 2020. The amount given at the time for my pot was £591k. But I do know that can flex.

I've been moved into a Defined contribution now and I'm working out what extra AVCs I need to add in.

I work full time in private sector.

Wow @Bopahula a DB scheme is the dream!

I think you’re well ahead of the curve!

I’m 30, £44k. Last few years I’ve put 12k a year(ish) into pension.

Husband 34, £40k.

It’s worth pointing out that it depends what you’re hoping for in the end…
I’ve seen 1/3 of your current salary will make you comfortable and also 25x salary for final pot.

I get annual pension statements, 10 years ago I was going to get 12k a year, then it was 8k, now its 5k
In that time I have only earned more money & saved more into the pot, it's a depressing picture

You’re ahead of the curve and having such a large pot to benefit from compound interest will help here.

A rough calculator, assuming £130K growing 5% a year shows £450K after 25 years (taking you to age 60-ish). Drawing this down at 4% could give you £18K a year to live off. That’s a very back-of-a-fag-packet scrawl but gives you a starting point if you wanted to do your own sums.

And if you retrain you can build your pot even more, even if it’s at a slower pace.

There’s no point in hating life for 30+ years just to ensure you have a fantastic retirement. Personally I’d settle for merely a “comfortable” retirement if it allowed me to enjoy life along the way as well.

I have no idea but I have saved into a pension since I was 21. I don’t think it’s much.