If you’re in your 40s, how much are you focused on and planning for retirement/ pensions etc?

[Peterrabbitismybrother]

Firstly I appreciate many are living hand to mouth and are not able to save, and being able to save for retirement is a privileged position.

If you are in your 40s, and are in a position to save for your future, how much are you focused on this, what’s your strategy (eg ISAs, pensions), and planned retirement age etc?

I’m mid 40s and would like to have the option to “step down” my work a notch in my 50s, with full retirement not later than 60. Although I might carry on if I am enjoying work when that time comes. (I currently find work stressful but I have primary age DC and juggle a lot so guess that’s the norm!)

Some of my friends always seem to have the latest and greatest (eg tech, cars, holidays) and I do wonder how much they are focusing on the future, although I would never ask them.

Why?

I can understand striking a balance if you wanted to ensure you have plenty of available savings but pensions are a better long-term plan.

You do end up paying income tax later.

My mortgage runs til I’m 72, but I’m hoping to pay it off with inheritance or we’ll just sell up and downsize if we’re too tired to keep up our current level of income.

I don’t have a great pension, but DH has a brilliant one and is a high earner, so I’m not too worried there. We both have ISAs which we don’t touch.

I’m 40, £640k left on the mortgage, £80k in savings, not including pensions.

Early 40s and have pension savings etc but with the way AI is progressing and the potential impact it’s going to have on whole industries and how we work certainly in the next few years, this idea of pensions and saving for the future will be unnecessary certainly in the context that we understand now.

I wouldn’t be surprised that the next 5 years will see a huge shift towards a form of universal basic income for many obsolete careers roles from white collar jobs and even many blue collar roles.

Maybe I’m being naive but to me the idea of needing a pension in 15 -20 years is almost ludicrous given the speed at which AI will be changing the way we work and live.

Ive been obsessed with retirement since my early 40s. I have focussed on paying off the mortgage/debts and pushing money in each month into a high interest savings account/Isa.

I will be retiring in 2 years at age 55.

That's a sweeping statement. Pensions can also decline in value BTW. Im not saying to not have a pension. My ISA returns are higher than my returns on the pension. Yes I have paid tax on the money im putting into my ISA, but it could easily grow to £1mn over many years and I can draw at any time and at any rate tax free.

There are advantages to both.

ISAs = accessible; no tax on gains you make
Pensions = tax relief on contributions, which for higher & highest rate tax payers means the equivalent of a 40+% advantage.

Most pension schemes don't prevent you taking your pension as long as you're over the legal minimum age to access, which is currently 55 (but increasing to 57 in 2028). Some schemes may require employer/trustee approval for members who want to access their pension before 'normal retirement age' but if it doesn't cost the scheme anything the employer/trustee wouldn't usually have a reason to refuse.

Not really that focussed. We did a financial forecast and it was looking okay. ATM we still have young kids & a mortgage so we don’t save other than our pensions. I’ve actually been putting in to my pension since I was 21…not with any specific goal but just because I figured it was a good thing to do! We do have some money from inheritance saved though & we aren’t planning to spend that unless there’s an emergency so we have a bit of a back up.

We are 45. I had cancer (clear now) but got a hefty insurance payout. He used that to almost pay off our mortgage (5 bed so investment to downsize in future when the kids move out in 20-30 yrs 😂), pay off a chunk to my parents that we owe money too, new bathroom, wood burner, building works etc. but the amount of people that are shocked that we havnt blown it on a holiday or new cars!

financial stability is our main aim for retirement, so the more we pay off mortgage etc we can relax more on number of hours worked etc.

I’m also going to pay for NI too up as there are gaps where I wasn’t working (disabled son/cancer etc) so I’ll get full state pension.

There should be no difference in the performance of the pension / ISA though. They’re both invested in the stock market. Mine are both in exactly the same funds. If you had different investments in each though then yes there will be a difference

I’m 49. Save about £500 a month into ISA and a bond. Paid off the mortgage. Have an nhs pension, a teaching pension and a really good final salary scheme pension from a previous job which I can take at 55yo. I don’t buy new cars or have expensive holidays. Having a secure future is definitely a priority.

I have no control over where my pension is invested it. I can choose my ISA, could even move it to optimise. Unless your pension is growing double digits you aren't getting the most out of your ISA.

I agree with everything you say about AI, but don't get your reasoning that it'll make pensions/investments, saving for the future unnecessary? Quite the contrary, I’d say it’ll be even more essential to look out for yourself. Why does AI mean you won’t need a pension? I’d be even less inclined to rely on a Government universal income.

I have very little tbh

That's what you open a SIPP for though? You have full control over a pension, just as you do with ISAs.

Yes but often at a lower rate unless pension payment are huge. If you’re a 40% tax payer you’ll save on 20% tax.

It’s a tax wrapper so the returns are entirely unrelated to being isa or pension. Definitely a plus that you can access at any age though and don’t have to think about the tax implications of taking it out.

Just read your further posts. Seems odd that you can’t choose your funds within your pension if it’s dc and not db. You can always open a sipp in addition to workplace pension if it’s that restrictive (if you wanted to take advantage of the tax breaks)

I’m 45 and really focused on retirement planning. I paid my mortgage off at 40 and ever since it was about replenishing savings and saving into a pension. My employer operates salary sacrifice so for the first time ever I’ve been able to put in the annual allowance and used a little of my last 3 years unused allowance which feels good! I guess I’ll keep doing what I’m doing for a few years?!

Ugh I think about it a lot but not in a very productive way. I earn ok, low 6 figs, DH low earner (lower than national average). We owe £220k on mortgage on house worth £1m. We have one DC. My pension is good, db and I’ve been in public sector roles since I graduated. DH has a small private pension. I actually love my job so I’m not desperate to retire but I’m
conscious that could change. I really need to get a handle on our financial plans as need to think about paying for university.

I'm 52, so a little older, but what I would say (having really focused in on retirement savings and planning this past year), is that you need to have a figure in mind for how much you and your DH think you will need per year to live the kind of life that you want to live in retirement and that is what you need to aim for in terms of income from your full savings pot - pension, property, ISAs, investments, etc. There are lots of online resources that can help you figure out how much you will need in retirement and a financial advisor can also help you work it out, but a good starting point is your outgoings right now.

If you can take your mortgage payments out of that figure by retirement, great, but add up all other other things and take an average over a year or two for: bills, vehicles, house maintenance, replacement of white goods, home furnishings, pets, clothes and shoes, socialising, holidays, gardener, cleaner, birthdays and Christmas, etc and use that as a guide to figure out (plus taking into account inflation), what sort of income you will want/need to achieve a comfortable and happy retirement. You still have plenty of time to save, so now is the time to start thinking about how much you're saving per year, whether it will add up to the kind of figure you're going to need and if not, how much more you need to be saving. The further you are away from retirement, the more time your savings have to grow, so money put away now will be worth more than the same amount saved in your 50s.

I’m 38

i have slowly started to pay more attention to pensions.

the open university did a free online course that was really interesting and only a few hours long if you’re interested.

we arnt rich/ high earners.

I pay in 5% of my wage to a db pension
husband pays in a bit more but actually will probably end up with a similar amount.

in addition we put in £5 each a week into a Lisa - this we will probably review in the distant future, but the general idea is that we can use it to supplement our income if we wanted to drop hours at work after we are 60.

we should be ok in retirement- a little bit more then the bare minimum but less then comfortable. We will have paid off our mortgage in about 8 years and both the children will have left home (possibly haha) so plan to look more seriously at it then .

I always watch these threads with interest, especially when people with a more modest income comment with hints and tips.

it’s always worth checking your employer pension for perks , at one job husband had , if we made 8% payments into his pension, the reflected life insurance payout was more cost effective then taking out a different insurance, so it made sense at the time to make the over payment.

https://www.open.edu/openlearn/money-business/retirement-planning-made-easy/content-section-0?active-tab=description-tab

I think in ten years there will be too many people simply unable to work because the jobs will just not exist in the numbers needed to meet demand. Perhaps it will be a financial renaissance of sorts? UBI was long touted as a financial fix for a shifting society, it never really took off because we still needed people to work, AI is the missing piece of the puzzle.

There’s talk out there of people possibly being able to live beyond current life expectancies from the potential medical advances from AI, so if we’re living until 110 or 120 then our pension pots will need reconfiguring dramatically.

I am like you and immediately default to pension payments for spare cash, largely for the tax treatment (HR taxpayer). However there does come a point where it is not "worth it" because you'll end up with a pension fund that increases faster than you can ever spend it.

That's where ISAs and other savings, even though they may be taxable/be from taxed income come into play. Also if you need to bridge between stopping work/pension paying out.

Of course I appreciate this is a very niche, very nice problem to have, but it is still something that needs consideration.

I doubt it. Because if so why isn’t it happening for all the people who have been made redundant or can’t get jobs because of AI and technology? The rich corporations and business owners will just get richer as overheads reduce. They won’t voluntarily slash their profits by helping pay for a universal benefit. The govt won’t be able to afford to as less people will pay income tax so they’ll be stuffed.