How much should a 35 have in pension?

[ebfwtf]

I’m 35, I have a house in the south east with an about 300k on the mortgage. I’m in the nursery years so outgoings are high currently. My income is good now (about 125k) but for a long time I was only about 40-50k while renting in London so didn’t contribute much. How much would you expect me to have in my pension? How much did you have at the same age?

How long is a piece of string? What are your goals for retirement age, lifestyle etc? Will you sell your family house down south and live in a flat in Rotherham to release equity? Do you have any savings or investments? Are you married? Do you expect an inheritance? Do you have full NI contributions? Do you have any availability in your budget to plow money into this right now?
Your best bet is to use a pension calculator and figure out if you're on track for your goals, rather than comparing with strangers online who will have different situations and goals
www.moneyhelper.org.uk/en/pensions-and-retirement/pensions-basics/pension-calculator

You need to work backwards here.

Start by working out how much money you're going to need in order to retire comfortably then you can work out how much pension you'll need and what you need to be saving. But you can't do anything until you know how much you're going to need.

There is no 'should' it's hugely variable from nothing to huge sums.

You need to consider your own priorities and make the best of your own situation, the obvious one being, if you can afford it, contributing enough to reduce your salary below £100k because you effectively pay about 60% tax on the amount you earn above that.

Plus you'll get a bit of help with the cost of childcare (I think it's about £2k pa), unless you have a partner who's also a high earner, but in that case, with a mortgage that's 'only' £300k, you'd likely be able to afford to live well on 2 x £99k salaries, even with a mortgage and nursery costs while at the same time increasing your pension by huge amounts.

Comparing pension pot to others of the same age isn’t that helpful - the national average is pretty low, but then the national average wage is quite a lot lower than yours too.

As a pp said, think about salary sacrifice into your pension if you can as you only earn £38 of every £100 in the £100-125k bit. Make sure you are taking advantage of all employer matching offered.

Are you in a relationship? Pension planning also important to do at household level and not just individual level

At least £250k by 35 imo, especially with your salary

You’d have to tell us what pension lifestyle you want, when you plan to retire and what you’re aiming for the rest of your career for us to guess what you’d need by now.

In a magazine I read it said at least 800K for an average retirement. Every little helps, good luck 🙏

What's yours OP?

At your salary surely you should be aiming for a million pound pot. Work back from there

I’m 35, similar earning profile but outside of London. I have £150k in pension, and I’m contributing at a level that means I’m aiming for a £1m pot at retirement.

Oh gaaaaad 😱

this is what I was terrified to read 😂😭

but I don’t even know how this would have been possible! I was at uni racking up debt, then earning 18-28k for 2 years, the 40-50k for 3 years, then 60-70 for 3 years, and now here I am earning 125. Surely with student loans (now paid off but only 2 months ago) I wouldn’t have earned much more than that in take home?!

Only about 70, which I feared was low because I vaguely remembered reading that it should be 1.5x my salary.

interesting! My husband contributes a higher % but earns less so I imagine his total pot is lower thqn mine. I’ll have a chat with him, thanks!

While I do expect some inheritance, how much will depend on care needs etc…I have 3 living grandparents in their 90s so the genes are clearly strong! We’ve been overpaying on our mortgage but I’m wondering if we should instead put more in the pension where it will earn interest, and then use inheritance to pay off whatever’s left on my mortgage at that stage (if anything). Will take a look at a calculator, thanks

Yes, it's terrifying how out of touch some Mumsnetters are about money.

If you've not got hundreds of thousands in a pension by your mid 30s, you'll be a pauper in your old age.

Meanwhile, back in the real world.....

You've decades to save for a pension and for a lot of that you'll likely have a lot more disposable income when you're not paying for nursery and you've paid off your mortgage. And most people don't have anywhere near a million pounds and they manage just fine.

Hopefully you are putting enough into your pension annually to get you below £100k due to taxation / free child care advantages.

Not sure where 1.5 times your salary has come from? Mine was 7.5 times and wasnt enough to retire at 57.

I think she’s talking about having 1.5 times salary at age 35, not at retirement.

I’ve heard that as well OP, so I guess it depends how long you’ve been on your current salary. But regardless, you’re quite far above average for your age.
What percentage are you and your employer contributing now?

OP you are doing better than me, I’m 38 and have £50k and earn half what you do. You’re in a decent position if you can up it now. How about putting what you would have paid in student loan repayments in?

@ebfwtf when I was 35 had had precisely 0 in my pension and I didnt start contributing until I was 37. I am now 43 and have built up a good start to my pension pot that should give me a comfortable retirement and hopefully will allow me to retire early. That is based all being well, being able to contribute at same level, relativey low growth assumptions etc.

As you are in the 100k -125k bracket putting at least 25k into your pension each year is very tax efficent, if you play with some calculators it will show the real cost of your pension contribution vs loss in takehome.

My net contributions, cash I have 'sacrified' now to take out later, works out that for every 100k in the pot it has cost me 32k. The rest employers contribution (8%), less tax to pay as salary sacrifice scheme, and a lot of growth.

My pot has built up basically once I had pay rises, I now earn ever so slightly more than you, and with my employer contributions I am putting 40% contributions a month into my pot (but only this high for the last 5 months) prior to that it was 23%.

I also have a mortgage of circa 300k and I am single so noone to share bills with or pension pots when the time arrives

I would definitely have a think about;
How much would you need monthly when retired to give the lifestyle you want

What age do you want to retire

Lifestyle now vs lifestyle at retirement

And then you can consider if you want to put all excess into your pension or do you want for example an ISA pot you can access earlier for early retirement (Personally I would max out employer cont match, and get out of the 100 -125k bracket after which)

If you havent already i would also look at the funds your current pension is invested in and make sure you are happy with them. General concensus is the younger you are the more risk in the funds can be taken, as you have time to build back up / ride out market shocks. Employer pension default funds are usually a more risk averse so leaving them in the default fund can mean lower growth levels

Purely financially overpaying on the mortgage is probably not the most effective money making strategy, pension, investments would likely pro ide better returns. I understand the desire though as psychologically it has a strong pull (I can't seem to stop overpaying even though I understand that it is not the optimal strategy long term)

In short I think you are in a really good position. The fact you are looking at it now means you can make sure you have a goal, and you are saving, investing, overpaying to get you to that goal 👌

I woukd try not to stress too.much, I think I had about 100k at 35 and now I'm 47 it's £250k in vsrious pots and I'm aggressively saving, as is my husband.

You're aware of the importance of it which is more than a lot of people so as long as you are saving what you can and maximising any salary sacrifice then that's great. I have increased my contributions with my pay rise each year, so not had a real pay rise for a few years but my pension has increased healthily. Worth considering if you can.

70k is a good starting point. Ask ChatGPT to work out how much you should save per month to achieve a pot big enough to give you an annual income of whatever you want in retirement. If you want to retire before state pension age, you’ll also want to bridge that gap.

if you can start chucking in a good bit once the nursery years are over, compound interest will do wonders! You’re still young.

does your employer match at all? Always good to get as much as you can out of them.

At a quick glance, starting at 70k, saving between you and your employer £600 gross, 6% return (low historically) returns £850k by 65.

212k tax free lump sum for rainy days, a car at some point and a healthy income, topped up nicely by state pension. Definitely doable!

Are you at least putting in everything over 100k to avoid the 100k tax trap?