Pension Pot... eek!

[sparklestar4]

Hello,

I'm a 35yo Female and I currently work part time due to childcare reasons (2yo and 4yo). I currently have a Royal London workplace pension with approximately £21k.

My contributions are £180 per month. I anticipate to increase my contributions to at least £300 in September 2028 when I return full time working.

Our mortgage will be paid off by the time I'm 55 and I don't expect to retire before I'm 68 to be honest, I like working too.

I'm not sure what I'm asking for from this post but am I doing OK?

It’s not a lot right now but you’re contributing and you’ve got decades of growth ahead of you. In time you’ll be fine , assuming there is still a state pension aswell of some description that will also add to your pension income .

It’s pretty normal for pension contributions to reflect the stage of life you’re in - right now you’re focusing on paying a mortgage and childcare costs. If you can make additional contributions then do so, but there’s not much point worrying about not contributing money you don’t have going spare to contribute! Presuming you work until state pension age, you have over three decades ahead of you to build.

You just do it slowly over time. Each time you get a pay rise save as much of it as you can and don't allow lifestyle creep. Don't worry about it, but save what you can.

You are right to prioritise it, you may find as you get older that you don't want to work to 68. Many get health niggles and that makes it tougher to work that long or to do so in full time stressful / highly physical work or mentally it just gets harder still to deal with work, so having the choice becomes important.

You can enter all your details into a pension calculator which will forecast the size of your pension pot in 30+ years time. Is the £300 including tax free amount? How much is employer contribution? Is the Royal London pension fund you’re in a good one?

If you’re interested in understanding your position a little better, I would suggest you watch Rebel Finance School on YouTube.

If it makes you feel better, I have a similar amount in mine and am a similar age.

Everyone online seems to have pensions £100K+ by 40 - so I get the angst!

I am now a SAHM. I add £3,200 to mine a year (with the tax relief) but can't add any more.

Balancing immediate needs with longer term needs is always tricky. I am trying to just accept that I will do what I can do, and try to not give myself a hard time.

It’s not great but you have time. Do those contributions include your employers contributions or are they just yours?

Here’s the calculator mentioned above

https://www.moneysupermarket.com/pensions/calculator/

Get a job in local government . Even if you earn 30k for 25 years working full time you’d have a decent pot!
from 40- 65 you’d build a great pot .
You need a defined benefits pension asap !

It’s not great tbh. Increase your contributions when you go back to work and make sure that your plan they’ve got you on is the most aggressive in terms of allocation because you have 30 years of time for the stock market to do its thing. Don’t miss out on thousands because the portfolio has been invested for you into a low risk vehicle.

Are you married? How is DH’s pension?

You can only do what you can do. Make sure you are getting your NI contributions.

You might not want, or be able to work until you are 68 so you need options.

Once your mortgage is paid off you will be able to save more.

You have time. Even at £300 static contributions over 30 years you would build a £500k pot. Just increase your % contributions at every pay rise, increase them by half of the pay increase e.g. 3% pay increase 1.5% goes straight back into pensions as you don't 'feel' it that way.

Were you contributing to your pension while working full before children and does your employer match your contributions beyond the percentage you’re paying in now? I’d try to contribute the maximum your employer matches because that’s free money to you, but by default when I joined I was on the minimum and I had to manually change the contributions. Do you have any old workplace pensions you could track down and consolidate?

Are you married, and if so does your husband have a better pension. My husband’s pension is significantly higher than mine and will continue to be for practical reasons and while I don’t love the imbalance it makes sense.

Depending on your attitude to risk and finances, you could stretch out your mortgage until your retirement ages in order to free up money to put into your pension. It’s always better to contribute earlier so the money in your pension has longer to compound. Generally my pension has outperformed even the high mortgage rates we’re seeing at the moment but there’s no guarantee of that. It could also be more tax efficient because pension contributions are from your gross salutary, and you could clear the mortgage balance on retirement with your tax free lump sum. That strategy isn’t for everyone, but we’ve paid our mortgage down to below 60% LTV where rates don’t get any better, and we don’t overpay beyond that. You’d have to be disciplined in actually saving the money if you do that though, and there is a psychological benefit to owning your house sooner so not the right answer for everyone.

Were you a bit late starting your pension? 21k from 10+ years of work implies no growth at all. If you are putting 180 a month in how much does your employer add?

As a rule you want half your age as a percentage of your wage going in in total - but thats based on full time work, on part time pay it it may not be enough.

salaries are much lower though! a public sector equivalent of my job was published recently and it paid 30% less than mine!

It doesn’t seem a lot; reality may hit you in your 50s that you may not want to work until you are 68 or want to cut down on hours; put as much as you can.