Vanguard private pension

[Friedbanana]

I just started a private pension with Vanguard recently at the age of 30 (I’m self employed and wasn’t organised enough to start one earlier) And I plan to put in about 40%-50% of my income away over the next few years to help build it up and also to not have to pay the higher tax rate. I chose the 2050 retirement fund but I will only be 57 by that point, and I’m wondering if that was a silly move? I won’t sustain a similar income level up to this age due to the nature of my job, so maybe it does make sense to be able to access it early? But are you even allowed to access private pensions at this age? So my question is do I continue putting money away to this same fund or also start paying into the 2060 retirement fund? Thanks so much for any advice!

What fund you put it in doesn’t determine when you can take it - legislation does. At the moment you can take a private pension at 55 but that will rise to 57 in 2028 and could rise again (likely when/if state pension increases to 68, but it could be independent of that).

Target date funds like these gradually move your assets out of equities and into safer assets as retirement approaches. I’m not familiar with the specific funds but you might want to check how the allocation changes - if you plan to buy an annuity it can make sense to work towards a specific date. If you plan to draw down your funds but keep invested in the meantime it may be more appropriate to keep some funds in equities for the longer term and gradually move to safer assets during your retirement.

Second the above advice.

I listen to the Meaningful Money podcast (highly recommended) and they always say you want a global multi asset fund and at retirement leave it invested but drawdown using the 'cash flow ladder' principal, ie predict your expenses over the next 2-3 years and move that into cash so you remove the risk of stock market fluctuations as it historically has recovered from even big blips like Covid and Truss and Trump stupidity in this timescale.

I agree with the 2 previous poster regarding this fund being designed for someone who will take all their money out to buy an annuity on retirement in around 2050. Your suggestion of splitting the investment between this and the 2060 fund will help but I would think about going further to eg use the 2070 fund as well. You will limit the potential growth if you put too much into safe funds too early but it all depends on your appetite for risk.

You also mention putting 40-50% of your income away into the pension. Is this on top of putting your tax away too? (I get the impression you've been self employed for some time do assume you're doing this already. )