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.

I’m 45 and have made a real push to understand our finances and get them in order over the past month or so. The book How to Fund the Life you want has been the catalyst I needed.

I now know what is in my different pension pots and what I can expect my income to be in retirement. I have a S&S ISA which all the rental income for my BTL property goes into, with the aim that it will be mortgage free in 10 years.

I have a S&S ISA set up which I pay into regularly for the sole purpose of the kids futures eg uni fees or house deposit.

I set up a Monzo account and have different pots for holidays, car, safety net etc.

We’re not quite in a position to do it at the moment as we also want to live and enjoy holidays etc, but we are hoping to use any pay rises to put into overpaying own mortgage.

Honestly? Not very much. I have a private pension I pay into and that’s it. I’m in a good position in that my mortgage is paid off.

I’m too busy having a good life now, both my granddads planned for retirement, they both died within 3 months of retiring. My grandma died at 59. My best friend died at 32. I’ll enjoy life now, fully, and worry about the future in the future.

I am about to retire.

i have a DB pension ( not as much as it could have been due to being a single parent and having to work part time for a little while).

During the last 10 years I have paid into an AVC.
I also made the decision not to move and increase my mortgage - instead I have paid it off and have been able to save. If I had moved I would have had to sell now to downsize to something cheaper or stay working.

I’m pleased to have the freedom to leave given some tragic circumstances in the last two years.

I have started to look at Rebel Finance School (Facebook/YouTube) as a way of educating myself. This is a great tool to learn about finance. My regret is not learning sooner as time is the greatest benefit even for very small amounts (but options still available). Definitely considering giving my adult DC’s a small monthly amount to put into a SIPP (with the added 25% return by the government).

From starting in a grad job I paid into the company pensions at the most advantageous rate (company match or over pay). Plus in my 20s I threw an annual bonus in, then in my mid 40s I had a redundancy payout that made sense to put into my pension to reduce tax that year.

So in my 40s I knew I was ok. But from my early 40s to my late 40s it feels like I've gone from a bit worried about his much is in my DC pot, to thinking I may have over invested in my pension compared to other things. Especially because my earnings are at a point where paying into a pension avoids punitive tax.

The pension isn't available until 57 for me. I do expect to take the tax free lump sum. If I'm lucky it'll be the max allowed. BUT governments mess around and that may not be possible.

Large pension pot disadvantages include inheritance tax, tax on withdrawal, and the MPAA for drawdown whilst still paying in (if in still working in a well paid job)

An ISA is tax free to withdraw and for gains. But who knows if ISAs will be needed about with? Sitting the risk is a good approach.

Alternatively I wonder if I should have spent more on life earlier. Health starts to decline even from 50.

Finding the right balance is a tricky call.

The idea behind pensions is that you pay in now while paying a higher rate of tax, and then draw down when you only pay basic rate. So if you’re a higher or additional rate payer, you get tax relief on the way in at 40% or 45% and only get taxed at basic rate on the draw down (or 0% for the first chunk taken). Additionally, the tax relief gets added to the pension pot and benefits from tax-free compound interest. Then you add in employer contributions too.

Unless you need the flexibility draw down earlier than permitted under the pension rules (age 55, soon to be 57) then investing in a pension really is a no-brainer.

You have clearly never seen a well performing ISA. I don't dispute what you say, but there are some very well performing ISAs out there that more than offset that. Add the compound interest over 10+ years et viola. My ISA grows way faster than my pension. You won't be able to retire early with just a pension.

Just the fact that you save a bit of tax today doesn't automatically mean its the better investment in the long-term.

I think maybe you don’t understand financial products. The ISA or the pension isn’t the product, it’s just the wrapper. Funds available to invest in through an ISA wrapper are also available to invest in through a pension wrapper. So you can absolutely get exactly the same returns, through investing in the same underlying funds, through a pension as through an ISA.

Also, for higher or additional rate taxpayers, it’s not “a little bit of tax”. Simplifying a bit, I invest around £50k in my pension each year. I’m an additional rate taxpayer so it costs me £27.500 to invest £50k. I earn returns on the full £50k. If I invested the same net amount through an ISA I’d only be earning returns on £27,500. Plus my employer contributes roughly another £10k, which they wouldn’t if I were investing through an ISA. I also get returns on that £10k too. As I said, it’s a no-brainer.

As things stand now you’re right, but if you think long term then once the true impact of AI onto jobs and unemployment figures becomes too large to ignore (world wide not only here) then governments will need to start thinking outside the box.

Time will tell but one thing is for sure Gen Z and Alpha are not going to settle for working mediocre jobs for minimum wage once all the decent jobs are rendered obsolete.

Agree completely. The tax element can be very significant, particularly for anyone earning higher rate, additional rate and especially for anyone in the 60% tax trap. Layer in employer’s contributions and it becomes silly not to take this up. A pension can normally invest in exactly the same products as an ISA - so ISA returns do not beat pension returns. They are just different vehicles for handling the underlying investments.

That said, a mix of both is best as ISAs are accessible now and are also an important bridge for people wanting to retire at say 50 but who can’t access their pension till 57. Which is exactly the approach I’ll be taking.

I'm not quite 40 but pretty focused on it. I'm public sector so use AVC system to create a bridging pot between when I want to retire and not getting hammered by early take of public sector.

I do save into ISAs as well but that's my savings pot for something needs fixed on the house and the emergency salary fund.

I'm 47 with an 8&3yr old so I'm still very much in "Mum mode" but I've had a public sector pension for 26yrs , part of it being final salary so I should be ok, my Husband has a public sector pension too, we should be about the same as we are now when we retire but no mortgage

Our mortgage won’t be paid off till I’m 63 … (and DD in fee paying school till then too)so can’t even hope to retire before then. And if she wants to go to uni would then have to help financially so can’t realistically see myself retiring anytime soon.
Have a workplace pension and a private SIPP I opened a couple of years ago with Vanguard when I discovered you get top up from the government for doing so !

We are lucky that I have a good nhs pension as a senior nurse & my husband has a good private pension. We also have a good amount of money in stocks & shares isas & we both have the maximum amount in premium bonds each. Also very lucky through inheritance to have paid our mortgage off on a 4 bedroom house 6 weeks ago at the ages of 42 & 44. We also plan to go part time in our 50’s & completely retire at 60

We are 42, I should have a decent NHS pension (done 15 years, plan to stay until I retire). We have 3 primary age children so still have childcare costs at the minute, but we are hoping to have our mortgage paid off in next 5-6 years. My partner has shares in his company that in the next 10 years should start to mean he gets a reasonable yearly bonus. We are hoping to use the mortgage money and the bonus money to save for retirement - will likely invest some but not sure where/how.
We do however want to try and keep some for the kids to put towards house deposits, though we do have some inheritance money that will come to us eventually that we might use for that.

Will see how things look in a few years time, youngest should start secondary school at same time as we pay off mortgage so will see where things are up to then! For now we are just saving bits here and there to put towards paying off mortgage!

I'm 49.
Planning on being able to retire at 55 if I want and am on track.

Mortgage free at 40. This was due to inheriting a rundown house and reaping the benefits after doing it up ourselves.
LA db pension deferred and civil service pension paying into now.
SIPP is a far better way to save than ISA due to tax boost. I've SIPP and ISA though. Then money in other general investment accounts.
Im currently earning the highest wage I have so I don't touch any savings.
We also have a couple of buy to let's that we'll sell.
I am careful with my money by nature but travel is my one spend. We could upsize and have a big house but there's only 2 of us so not getting drawn into that route was important.
The biggest thing that will mean I can retire at 55 is we dont have children!

The one thing I have come to realise recently is how financially illiterate the majority of people are. Things like SIPPs and the significant tax boost isn't out there...if you know you know but if you don't, for example.

We’re not really able to save much, but OH and I both have good pensions and we have life insurance/mortgage protection. We were also overpaying our mortgage up until last year when the payments went up due to rising interest rates. So yes I’d say we are definitely forward planning even though we don’t really have savings.

I’m in a much better position that my husband and many of my friends are, albeit completely by accident. I joined my work place pension scheme
in my 1st job after graduating university and made small additional payments. The firm (a national building company) went bust as a result of the 2008 crash so I didn’t pay into it for more than a couple of years but it’s now worth just under 20k. I’ve joined the pension scheme in every job I’ve ever had so between everything else I have almost 30k across various schemes and have already made enquiries with a pensions advisor about what to do with it to try and give it a boost. I’m due to have some credit card debt paid off this year, once that’s done I’ll look into increasing my additional payments to my current work place pension.

My husband on the other hand never had a pension until work place pensions became compulsory and has very little saved as a result. That said, he has money in savings whereas I have about £50 in savings!

We’ve 8 years left on our mortgage, once that’s cleared we’ll seriously look at giving our pensions a major boost as it does worry me.

SIPP SIPP SIPP. You dont need a pension advisor to tell you that. You get the bonus of a tax free boost.

I'm in a fairly good position sort-of by accident. I became a teacher in the late 90s and we were auto enrolled in the pension scheme.
The Pru people came to work to talk about AVCs and I joined up because I thought 'Why not?'.

I've had a lot of years part time and 2 maternity leaves. I'm early 50s and my account shows I have a pension of about 20k and a lump sum of about 35k that I can take at 60. I am aiming to keep working full time for the next 3-5 years. It feels too young to go earllier than that, and I'm focused on saving for my retirement in the meantime. I'll be hopefully going part time at about 55-57 and will retire at 60 at the latest.

I have my AVCs to help bridge 60-state pension age. I'm nearly at full holdings on my national savings, and I'll start on paying into an ISA when that's full.

I do need someone to tell my what it is though and I’ve never heard of them so feel free!

Being a senior civil servant in your early thirties is amazing! Which pension scheme do you have and what is the retirement age?

do you plan to work passed sixty!

I was a decade behind you reaching that level and am now starting to think about how to manage the 60-67 years.

Rebel Finance School would be my advice as a starting point.
Self Invested Personal Pensions have additional tax contributions added by government based on your tax bracket. Ie if you're a 20% tax payer then the government will add 20% to your SIPP!

I'm about to turn 40 and I would say I was not brought up to ever think about it. In my 20s my bank sat me down and explained how much I needed to put away but we were so poor due to exDHs financial abuse/weirdness it was a ridiculous pipe dream. We got divorced and in my 30s I have focussed on establishing a good income and buying a house. My 40s will be spent overpaying the mortgage to save on interest and building my pension. I hope to be able to go part time at 60. I love my work so probably wouldnt ever want to fully retire but it'll be time to give the youngsters room and take it easy!

Not all of it, think about the maths. This example is just for someone who is not in the higher rate tax band, it is a no brainer if you are as you can claim tax relief.

If you add £80 to your pension, it is topped up with £20 by the government, so you have £100 added. When you draw from your pension, you can withdraw 25% tax free (£25), so you only pay 20% tax on the remaining £75, which is £15. You get back £100 minus £15, which is £85.

Additionally, you can buy exactly the same investments in a SIPP as you can in an ISA, they are just in a different wrapper.

I’m 45 and massively looking into it at the moment as I don’t think I’ll be able to keep my role into my 70s or at a higher level. It’s very full on and even taking holidays can be tricky, and I want to be able to slow down at some point. I do have a profession that translates well into self employment so I’m hoping to look at doing that in my 60s then I can at least have some control over workload.
DH and I both have good pensions (he has an old final salary one also), so I’m hoping to have the mortgage paid off by mid 50s so we can funnel more into retirement. I’m about to pay £50k off the house from savings which will help. I’ve also got a share scheme at work, I work for a Fortune 100 company so the shares are pretty stable, the plan is to use that to help DC in their 20s.
My parents have a really good lifestyle in retirement (part retired for my 70 yr old mum who still teaches several days a week) as my dad was in pensions and wealth management, so I’ve seen how well planning can help. It does mean we don’t have several holidays a year, or all the latest gadgets but I’d rather not waste money now (we don’t go without) and regret it in the future. My dad warned me back in the 90s that I wouldn’t necessarily be able to rely on getting a liveable state pension and I fear he may be right. I do appreciate though that we’re in a fortunate position at the moment and things can easily change.