What will happen to those of us who can’t afford to pay in to a pension?

[whatnooow]

I’m starting to get a bit worried about how we are supposed to support ourselves as we get older as we basically live hand to mouth each month.

My DH and I are minimum wage workers and had to come out of the company pension contributions about 7 years ago to be able to get by, day to day. we’re both early 40s and are both knackered already. Another 30 years will definitely kill us off!

Will we just have to work until we drop dead? What if we can’t work due to ill health, but not actually disabled? Luckily we will have paid the mortgage off in about 20 years, but how will we survive, pay bills, buy food etc?

Neither of us will receive any inheritance. Time feels like it’s speeding up and I’m very worried.

If you have sufficient National Insurance contributions you would receive the state pension and pension credits if your state pension is not the full amount.

Is there any scope to progress at work?

thanks @Parker231 I imagine that the state retirement age will be above 70 when it’s our turn. I have seen some posts on social media etc saying that state pension probably won’t even exist in the next 30 years or so. It’s very worrying for those of us who are low earners, and always will be.

If you've still got 20+ years until you retire them you have time to plan for retirement.

When our DC were small I didn't build up a pension. It wasn't until they went to secondary school that I was able to start paying into a pension. And then 10 years ago my salary increased and I started making AVCs. I've now got less than 10 years to go to retirement.

We paid off the mortgage last year but I am now paying the money I was spending on the mortgage in increased AVCs. My pension prediction is now £24k pawhen I get to retirement age, plus the state pension. So about £36K. DH is in a similar situation.

Even if you can afford to pay in a small amount, it will benefit you in the long term

You'll have state pension of you have enough qualifying years (check here www.gov.uk/check-state-pension) and it sounds like you have some additional pension built up somewhere even if you haven't paid in for the last seven years.

If you can't work due to ill health, but you don't meet the criteria for disability, you might have to change jobs, be on universal credit in the meantime and go through the whole support to find work process. But that might not happen, so no point wondering round with your umbrella up in case it pisses down.

You are lucky enough to have a mortgage, so if it is paid off in 20 years, you could maybe downsize if that's an option and release some money.

Ultimately, no one will let you starve but it might not be a comfy retirement.

State pension.

Then, if you want to stop earlier than it kicks in, you should be able to save a little once your outgoings have gone down.

Or downsizing your property.

ETA: but opt back into your workplace pension if at all possible, it should be a very high priority on your outgoings. You are throwing away 'free' money from your employer

Why have you resigned yourself to always being a low earner?

Is there really no scope to move beyond minimum wage?

Thanks everyone, I know I need to make this a priority now.

We can’t afford to retrain at the moment, so for the foreseeable, we will be on minimum wage. To be fair, minimum wage is actually brilliant compared to what it was 10 years ago, but the cost of living has obviously made it irrelevant anyway.

Thanks for your help

You’ll get state pension if you have enough NI credits. If you’re only early 40s now you’ve got a while to go, could one or both of you re-train to get a career with a better salary and pension contributions? You’ve got enough time to build up pensions if you can aim for it.

Can you get some kind of low effort side hustle? Or do a degree that will lead to a better paid job? You could get student loan and study part time. I know you said you’re knackered but one or both of you need to push through and take some kind of action to get a higher paid job.

You don’t need to retrain to get a better job, surely there are management and supervisor positions in your company?

but yes, there will be something. It might be means tested but there will be a state pension or pension credits or something.

in the meantime though you’re missing out on free money from your employer if you don’t pay in. Could you plan to opt in when min wage rates go up in April so you don’t feel it as much?

Have a look for free courses / paid apprenticeships. You sound quite defeatist

OP you don't necessarily need to retrain to get a higher paying job. Is there scope to progress in your current workplace? For example, if you are a retail worker you could become a supervisor and then a manager.

One of my friends used to be a care worker in a residential care home for people with learning disabilities. Minimum wage and hard work. But once her DC were at school she started to progress. She became a care home manager. She did have to do some studying and exams along the way, but they were part of her job and so paid for by her employer, and she was given study time.

Ten years on she is Regional Manager for a care home group, is a higher rate tax payer (by quite some way), has a company car etc. She's got no A levels. No degree, but she's very good at what she does and she has ambition.

The graduate market is flooded plus if retraining may mean relocating towns, counties or countries . Much harder when older but more when you have a partner. I relocated 300 miles but I was in my twenties and single.

If the state pension and all benefits remained the same as they are now you would work till whatever age you can take that pension or if unwell enough and allowed to go on a benefit like ESA. But I think benefits like that are only going to get harder to claim.

Before we had children DH and I had lodgers for a few months, not ideal but money for old rope. It’s also tax free.

What do you live in? Will there be an option to downsize and release equity.

Obviously if you are in a one bed flat in the cheapest area already, not an option. but sometimes its an option.

some retirement flats are even cheaper than normal one bed flats and they don't all have terrible service charges.

My friend lives in a park home as that was much more affordable too.

If doing minimum wage and no mortgage you might be able to semi retire and work part time.

But it is a worry and I cant dismiss that.

Is there no possibility of promotion for either of you?

Can you move to a different minimum wage job with room to grow or that offers training?

You can’t both be in your 40s doing the same job that a school leaver does. You need to figure out what you need to get promoted

I feel for you, OP. It is a worrying situation.

The only advice I can give is for you and your DH to rejoin the workplace pension scheme as soon as possible. By opting out of the pension scheme, you've effectively refused to accept a pay rise. Remember, if you're paying into the pension scheme, your employer must pay into it too on your behalf. So you'll be getting extra money paid in every month.

It's also worth remembering that no income tax is payable on pension contributions, so you'll be paying less tax every month if you're making contributions to your pension through the payroll.

Is there anything that you could cut back on in order to be able to afford to contribute to the pensions? I don't know your personal circumstances, but I would say that it's worth going without some things in order to secure a better future for yourselves in retirement.

Ignore my contribution to the thread, it was rubbish 😂

I’ve read the other comments and yeah, getting a degree (unless an employer is paying for it) probably isn’t a good idea.

My advice is outdated, it’s from the late 2000s when we were all told to go to university so we could get high paid jobs. So we all did as we were told and ended up with loads of debt and no “well paid” job at the end!

I think the side hustle could be a good option though, depending what you choose to do.

You absolutely need to pay into your company pension from the minute you start a job so you need to start paying into it ASAP, OP. It's the advice I would give to everyone. It's the reason auto-enrolment was brought in. The government knows people can't live comfortably on the state pension alone.

Also, as others have said, something's not right if you're still only minimum wage level in your early 40s. What's the reason for that, you haven't said? Lack of opportunity where you live but you need to stay where you are for some reason? Carer responsibilities? you can't stay at minimum wage for the rest of your life so you'll need to make a plan now.

Also, are you saving absolutely everywhere you can in all your outgoings?

I’ve had to come off it too as it was making a difference but once DD finishes uni I’ll go back on it.

Ideally I’ll start saving more aggressively once I’m an empty nester.

The state pension will exist or basic benefits will exist unless people vote them away. Pensioner poverty is already a real problem though

given that life expectancy has stalled there is no reason to increase state pension age much further

it is ridiculously tough to be in a minimum wage physical labour job in your 50s and 60s

The thing to watch is that if your pension is really small and you need to retire early then it’s not worth saving

why? Because every penny that you take from the pension- and you will be forced to take it - counts against any UC so you are better spending now.

Yes, that money that would otherwise just disappear into the ether as a tax payment every month would instead go into an investmenta fund somewhere, and grow, making you money for your retirement.

Obviously it's a choice between not eating now, and having more money when you retire then I can understand you opting out. But if there are any other savings to be made anywhere at all, and you make a payment into your company pension instead, you should.

Don't bother asking here you won't find the answer you want.

As soon as your Dc are independent / adult you start saving the money that it cost to care for them.

Once your mortgage was / is paid off you save the money you would have put into your mortgage

Once you are retired you look at whether it is possible to downsize your house or move to a cheaper area once you are not tied to jobs and save the capital.

If you are unable to continue to work until state pension kicks in, claim other benefits.