What shall I do now?

[Wafflesandcrepes]

I’m 48 with only £350,000 in all in various retirement pots. I’m now with an amazing employer which offers a very good salary and very good pensions contributions. This hasn’t always been the case hence why I’m not where I want to be when it comes to retirement savings.

Question is: where do I go from here?

I’m currently maxing out my pension contributions and I think I can put £60k a year for the next three years if I make a massive effort. (I won’t be able to keep saving at this rate for very long - three years max)

In terms of my expectations, I’m not looking to retire early. I love working and I’m happy to keep going until 67 or more (if I can and if i’m indeed able to secure employment even if much less well paid.) And when retirement comes, I’ve no wish to travel or do anything expensive. I live in London so plenty to do. I won’t need a car. I’ll be owning my flat by the time I retire so no rent or mortgage to factor in.

What else should I be doing to improve my finances for retirement? Have some of you taken a weekend job for example to save more? Any pensions advisors you’d recommend I speak to?

Thank you.

Just keep saving as you are, pension first, then ISAs. You are in a much better position than many and it helps to have the option to retire earlier if you want to. A lot can happen to your health and job security in your 50s and 60s, so sensible to save what you can.

Given how you want to live in retirement I would say really you're already doing pretty well for someone with nearly 20 working years ahead of you. You'll have state pension too. As above, you should probably plan for possible scaling back around 60 - from observation and experience this seems to be the age when we stop being as employable and run out of fucks to give; there is also the possibility that your current role will change massively over the coming years.

“run out of fucks to give” - this really made me laugh.

I know I’m better off than many people and at least I have the opportunity to put a bit of money aside during the next three years.

I do hear about the £1m you need and this is what’s worrying me.

You don't need £1m if you retire at 68 very few are in a position to save that much. Unless you are renting you don't need as much as the pension calculators say unless you want to travel extensively or eat out most days or have massively expensive hobbies. It is much cheaper to live when you don't have a mortgage or a commute.

you should probably plan for possible scaling back around 60 - from observation and experience this seems to be the age when we stop being as employable and run out of fucks to give

I completely agree with this. At 48 I thought I'd always want to work in some form or other, I loved my job and could not imagine retiring. Ten years on I was done. Once that thought came into my head I couldn't turn it off.

You definitely don't need a million. I own my own home, have a modest but very contented and busy life on about £20k per annum. Have you actually calculated what you would spend in a year if you were retired now? Could that be your starting point and work back from there.

So I want to be ready financially to retire by 60. Definitely. This is the safe thing to do. And this is why I’m panicking slightly as this is only 12 years away. Every year I’ll be able to continue working past 60 will be a bonus.

Just did a back-of-an-envelope calculation and I think I’d love to have £2,500 a month including £300 for gigs or theatre (which I love but can cut back on if needed) I could be happy on less.

So if I believe the calculator I’m using a pot of £600k should cover this. Is that right?

*needing” (not using)

That calculator looks on the low side of things if you ask me, most of them seem to be.
This is the best one I have found https://markinthemoney.com/

Based on your current pot plus three annual contributions of £60k plus 19 years of compound growth in the market, you're well on your way to a pot of £1.3m+ by the time you're 67.

I don't want to sound like a misery but be careful that you don't overestimate what you will need in retirement, at the expense of forgetting to live now.
At say 77, you might have the money but not the health to be going to the gigs you were planning on attending.

Isn’t there a cap of £40k per annum pension contributions or have I been advised incorrectly?

You can put £60k a year in to a pension and get tax relief on it. You need to have enough income to match the contribution to get tax relief.

You can put in more than £60k, but you don’t get the tax relief on the amount above £60k.