Is there such a thing as too much money in a pension?

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I've been reviewing mine and my Husband's collective plans for retirement. We are late 30s and are projected to have enough to sustain our current living standard (have accounted for inflation) thanks to compounding, at the current state pension age of 68 for us. The mortgage would be paid off and I haven't factored in receiving a state pension.

Savings are diverse and a mix of DB and various pension funds and a SiPP.

We are comfortable financially but do a lot of work budgeting and do make hard choices and sacrifices. Lucky enough to go on 1 holiday a year and run two cars. We will also likely downsize in older years to release more capital. Child does lots of expensive extra curricular and we plan to continue to invest in them in this way as well as saving for them.

I'm struggling to justify maintaining the high level of pension savings we make given the limitations on pensions withdrawal ages. We could also increase our current lifestyle. We don't plan on moving anytime soon and don't need to so this would likely be an extra holiday or experiences for us as a family. We have adequate but not extravagant savings plans for our child.

Anything we contribute from now to pensions will be towards retiring early.

I'm keen to hear from those who have retired. How do you know when you have the right balance between living in the now and enjoying life and making sure you have enough for the future?

I don't won't to live a more luxurious retired life at the expense of present life if I can avoid. I'm unclear how well balanced we currently are and projections are not guaranteed. We are still at the point where if our income stopped, after a year this would be an issue.

Does anyone think they saved too much or did anyone misjudge it and end up short? Should I focus more now on S&SI even though we'd lose a huge amount of tax relief as one of us is a higher rate tax payer? Did you realise that you needed access to cash with fewer restrictions?

On the annual leave thing, we also have no family support. My kids love their holiday clubs though - it’s not like they are in prison! They’re playing with their friends all day and doing activities we’d never be able to facilitate at home. Obviously not great if they have to go all summer, but most working parents have a balance and I don’t think should feel bad about it.

The balance between couples’ pensions is important - ideally you want them to be similar. Mine had a lot more in it than DH’s, so we’ve diverted part of his ISA into a LISA this year. If you’re under 40 you can still open one, can save up to £4k/year (out of ISA allowance), government tops it up by £1k. You can only pay in until 50 and then can’t access it (without a charge) until 60.

The tax break isn’t lost tho, it’s actually pretty good as you’ve gained compound interest on the 40% tax you would have paid at source for potentially a few decades. So paying the 40% when drawing your pension is still a pretty good deal IMO.

Thats not to say you shouldn’t also be filling up your S&S ISA allowance every year in your position OP

But why do you care about minimising it? In this situation, not to be too callus, but you’re dead. Unless it’s going to make a huge difference to your kids surely just pay the tax? Your kids are already getting monthly help now and will presumably be getting a good chunk as well when you die. I don’t get the mentality of protecting it from a rightful tax. And sorry I’m not picking on you personally, it’s a general theme I see on here that I just don’t understand. Either spend it and enjoy it. Or don’t

@KarmenPQZ
We want to minimise the tax our DC pay on our death as much as possible for several reasons, we’d rather they weren’t hit with a potential 60% tax bill so we plan to look at ways we can minimise that for them.
We are spending our money but honestly, we could spend more and further enjoy our retirement while we still have our health and our DC will still get healthy amounts each.
Personally, we don’t see anything wrong in trying to minimise their potential tax bill when tax was paid on the earnings whilst working, tax is being paid on pension income and our DC are tax payers.