Pension Panic - WWYD

[lollypoppy123]

I'm having a belated retirement reality check at age 50.

I've had my head in the sand for a very long time. For context, I had a long time off work due to cancer so have, stupidly, not been paying into my pension. Now I'm 50, back working and I only have about £50k in my pension pot. My husband has closer to £300k in his. I'd love to retire at 62 but realising this is a fantasy.

Our outstanding mortgage is £200k and has ten years left. It's up for renewal this year. We have £50k in savings. Should we put those into our mortgage at renewal or would it be better to invest that in our pension?

I know that nothing is guaranteed so it's not so much asking for advice as WWYD. I can't sleep at night for worrying about the future and want to start ploughing as much money into mortgage / pension as possible but don't know which one to start with.

No cruises but we've worked really hard all our lives and I imagine heading off to Europe in a campervan for six months or finally doing that gap year in SE Asia. I'm such a fantasist. Which is why I assumed I'd have won a big prize on my Premium Bonds by now enabling an early and luxurious retirement.😩

Start using the power of compound interest and get a S&S isa going. Whack in some ££ on a direct debit.

MSE has good advice on investments and SIPPs. You've got time to turn it around but you need to start now and live more frugally and put that money away for the future.

Check your state pension & pay for missing years to top it up to the max.

400k won't go far if you need 60k a year. Obviously you can add on any pensions, savings and state pension to make it go further but that's only really 10-15 years of money with those in the mix.

Thank you. I will check this out ASAP.

Pensions are generally better due to tax relief but not sure how it works for ltd companies. I suggest having a look online to check the fees on your private pension are still competitive. If not then transfer to another provider.

i recommend the Meaningful Money community on Facebook/Youtube and the pensions board on the MSE forum as great sources of pension information for various circumstances.

@lollypoppy123 - I was short of NI contributions and have just topped them up - very much jam tomorrow not jam today but if you can afford the one off hit I think it is worth it. After April as other posters have said the number of years you can pay in arrears goes down - so just a thing to think about. I did it but each to their own.

Have a look at www.guiide.co.uk - it lets you put in all your details and plans and forecasts whether you will have enough.

I would not have £50k in premium bonds if owed money on my mortgage. I'd pay off £45k at mortgage renewal.

Yes a S&S Isa isn't a bad idea. I looked at one the other day that said if you put £200 in per month at an 8% return you'd have 117k in 20 years.

I don't think your Asian gap year is remotely out of teach - probably cheaper than a year here!

If it's any help, I was self employed (sole trader) and a similar age to you when I started really thinking about my pension. I saw a financial advisor and got my various pots from old bits of employment consolidated and started paying in (not loads!). It grew enough to let me stop work at 60 when covid wrecked my business. So you still have time.

This is very helpful and exactly what I want to hear. Sorry about your business but hope you are enjoying unplanned early retirement.

Thank you. TBH I was glad of the excuse! Retirement is much more fun.

Assuming you've got an accountant to help with your limited company accounts, I would sit down with them to discuss options. If you have money built up within your company, what are your plans for the business on retirement? Selling it? Liquidating it? Passing it on to family? All of those will have a huge bearing on how you might fund your retirement, so, after checking your NI contributions are sufficient for a full state pension, I think that should be your next step.

As others have said above, being a director of a limited company can, under the right circumstances, make funding an adequate pension a lot quicker than it might otherwise be. Good luck sorting it!

If you account for inflation and periodically increasing the amount you put in you can easily get 200k at the end from a conservative 7%-8% forecast.

Compound interest and dripping in money is really powerful and also leverages the ups and downs of the market in a very helpful way for long term investing.