Pension- will we be ok?

[ineedtostopbeingdramaticfirst]

So dh and I have a joint income of around 72k we have a house which has about 15 years left to pay on it. We are 40 and have 1 child.

We have recently checked our pension pots. Doing an online calculation dh is predicted 25k a year at retirement and mine is 12.5k plus11.5k each state pension so an annual pension total of about 55k.

Obviously it's less than we have now but we will have no mortgage and no children.
But everything is likely to be more expensive in 28 years time.

If we can afford to we will increase our payments but does this sound ok to live on?

Live on yes of course.
10 expensive cruises a year? No

Sounds plenty. Most pension pots go up in line with inflation so that's not the literal amount you will have, just an indication in today's money.

That sounds excellent. You'll be a comfortably off pensioner couple.

It sounds fine to me. I'd increase pension contributions if able to once mortgage is repaid.
We're also planning on putting money into ISAs so we can withdraw tax free when we retire to help during our pension years
I'm a couple of years older than you and I hope I'm wrong but I'm trying not to bank on getting a state pension. I think changes will be coming in the next few years and my opinion is that state pension will definitely be targeted even if you have full contributions

That sounds amazing ☀️ 🚢

It is a worry about the state pension. I keep thinking they can't just take it away but who knows .

Yes we hope to increase mine with any pay rises and once we pay mortgage off we will be in a good position to pay more into both or invest some money potentially.

What retirement age did you put into the calculator?
You may not both want to work until you are 67 or 68, so need to calculate taking your private pension at whatever age you plan to retire, and remember that you won’t get state pension for some years after.

But you can put more into your pension and / or ISAs once your mortgage is paid… except you might be looking at supporting Dc at uni then!

DH and I are at retirement stage with about that income and as we speak it looks fine. We also have a mortgage free house worth £700k and accessible savings of about £100k.

We were surprised at how much it's built up over the years - the kids left home a while back and we paid the mortgage off early because we went for a sensible house rather than the biggest mortgage we could afford. That allowed us to build up savings (although they are more "not spendings" - we didn't have a savings plan). Our earnings have been comfortable rather than spectacular.

So I would say keep an eye out, but don't panic, you're probably doing OK.

Age 68 for retirement

Tho ex colleagues retired have taken several three months round the world cruises they reckon it is cheaper than living at home !! Maybe take a look.....

Pensions are index linked. It sounds a lot better than most people. Keep paying in and it will mount up. Don't forget you'll get a lump sum too.

my concern is the gap between having to stop work - redundancies, physical health etc and the state pension. At 67, if state pension exists it sounds good.

If it’s a private DC pension any lump sum will come off the overall pot and reduce available annual payments though.

25% of your pension pot comes tax free whether or not you take it as a lump sum. If you take 25% of your pot as a a lump sum the rest of your draw down (over the personal allowance) will be taxed. The personal allowance is only a little over the State Pension atm.

If you take a lump sum of you don't need to spend it you can I vest it to get more interest. Plus you'd have a nice amount if you needed something.

Are those the amounts you have already accrued (I.e. if you never contribute again this is what you get at 68) or what you get if you contribute for another 28 yrs and the pension scheme stays the same?

If we continue to contribute at this rate so don't increase it.

Mmm, don't bank on being able to keep going at your current rate. I'd always viewed 65 as the earliest we'd be likely to retire, but DH is suddenly old, exhausted and unwell in his mid-50s and seriously considering semi-retirement.

prepare To retire at 60….that way you have options……im 59 now and was totally exhausted with work …..i dropped to 2 days a week at 57 …..I will stop completely at 60…..I’m nhs so was able to take my full pension at 55 …..my savings and lump sum will tide me over until state pension at 67……could I work until 67? Not without it seriously impacting on me…..I want to travel, enjoy my GC, be there for my aging Mum, potter in my garden, go to festivals, enjoy spending time with my friends, my partner and dog, my AC …and sometimes just having nothing to do and all day to do it in…..I’m not waiting until I’m 67 and knackered to do all this

I think if it worked out the way that you are hoping then it'd be a very decent pension income for most couples (see e.g. https://www.retirementlivingstandards.org.uk - note their numbers are post tax) BUT I would think that assuming it will work out this way is risky because there's a reasonable chance of one or more of the following happening (sorry!):

1. Health meaning one or both of you want to stop or slow down before 68.
2. Redundancy and not being able to get an equivalent job in the future
3. Pension scheme being downgraded or (if it is DC pension) investments underperforming so that it doesn't give you as much as you want.

Add to that the risks that you might be single by retirement (sorry again!) or the state pension might erode/disappear/be means tested and there's a lot that might change. For all those reasons I think it's not sensible to plan for the best case scenario.

Have you checked what you've already built up? Is it a defined benefit pension (i.e. guaranteed a certain income each year of retirement) or defined contribution (i.e. building a pot)? If it's defined benefit, does it have good inflation protection.

It's ok, not brilliant but perfectly do-able given no mortgage or DC.
You kind of don't need to worry about inflation as all the figures you mention are as at today's money.
The biggest issue (for me) is whether you will both want to work to 68. You may want to create additional funds / pots with the aim of allowing you to stop earlier or cut down, or work simpler.

@Mia85 I know none of this! Time to do some research.
I want to focus on increasing mine over next years as if we split or dh dies I don't want to be vulnerable.
I work part time in a fairly easy job so I think I will be ok till 68

I could increase my hours if dh wanted to reduce when we are a bit older.

I would start by getting to really understand your pension and your current position. Start with the answers to the questions in my post Have you checked what you've already built up? Is it a defined benefit pension (i.e. guaranteed a certain income each year of retirement) or defined contribution (i.e. building a pot)? If it's defined benefit, does it have good inflation protection?

You'll feel so much more in control when you've got a really clear picture of where you are and how your pension works. I have a spreadsheet I update every year that tells me the current position as a single person and as a couple, with and without the state pension we've already built up. It then predicts what we'll get in the future if we carry on in the same schemes. Sounds complicated but actually takes a few minutes to update each year now it's set up and it means I have a good idea at a glance of what our position is.

We are mid fifties and dh 60 and earn almost 70k between us and don't even have forecasted pensions of that much. You have another 20+ years to add to it ! I think mine is estimated at 11k a year and dh at around 7k. No idea why his is so low , he's been working full time for years, clearly not a great occupational pension scheme, unless he's read the forcast wrong !
We do own our house outright though and could downsize so i don't worry too much. Our prospects for living long lives aren't looking that great to be honest.

Your figures sound fine but if you can afford to top up then go for it.

A tax efficient way of paying into a pension is by salary sacrifice if you are a PAYE employee. Worth checking. Benefits employer and employee.