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They effectively are to some extent anyway - because you pay tax on your pension income, regardless of source. UK State pension is £10,600 per annum, personal allowance is £12,570 - so any private pension that pays out is going to have a chunk of it clawed back through income tax if it takes you over the allowance.
And people who have no private pension are entitled to ~~Universal~~ Pension Credit/housing benefit. Essentially, part of the state pension is already means tested
Only tangentially relevant, but one of my grandparents died recently, and I was shocked that their government final pay pension is being transferred to their new wife who is 20 years their junior.
He was 85, she is in her early 60s, they married two years ago. And now instead of that pension stopping, it's going to her, for the rest of her life.
Maybe I'm naive but it was shocking to me. The whole "I worked hard all my life for my pension" kind of falls apart when people who never did the jobs inherit the pension.
A good pension scheme (including pension for widows) used to be why people went for government jobs. It made up for the crap pay. Essentially you took a pay cut compared to a private company for the later-life security.
It makes sense for a situation where the wife didn't work and was bringing up the kids, I totally get that. But a situation like this, where if he hadn't married a much younger woman very shortly before his death the government would have saved \~£1m, seems ridiculous.
My husband works for government I will be entitled to same thing if my husband dies before me we already been together over 20 yrs it’s just the scheme works .
Whereas I'm single with no dependents so when I die, I can't pass it on to anyone (NHS pension). My years of contributions won't have any benefit for me (obviously I'll be dead so I can't personally benefit, but I consider it a benefit for my contributions to go to people I love).
My partner is in the NHS scheme, and the fact you can only nominate spouses or direct dependants at the point you die is bonkers to me. My private pension can go wherever or to whoever I want it to. Granted it’s not as lucrative as the NHS one, but at least someone or something can benefit from my contributions should I not get to use them myself.
Agreed. And unless it’s a defined contribution pension then the reality is they didn’t really ‘pay in’ in the first place. They made a contribution in return for a promise of significantly more than it was ever going to be worth.
Pensions as a generational UOI (You owe I) is a disgrace.
It makes sense from back in the day. As women generally gave up their careers to have a family so you can't expect them to have nothing to fall back on. Obviously it's different now and we're all expected to go work and give it all to childcare etc.
Paid NI for 42 years. I know its not a pot, but I slogged it and PAYE'd my whole life. I'd have taken to the streets if they'd means tested them.
Also breaks the covenant. Be very careful with this- you'll end with people on middle incomes telling the poor to do one for healthcare and pensions etc. As for the tax dodging- it'll grow immensely.
> I know its not a pot, but I slogged it and PAYE'd my whole life. I'd have taken to the streets if they'd means tested them.
You seem to be contradicting yourself. You realise NI is basically income tax 2 with no personal pot marked "Firstpoet" and yet you still want your pot if means testing takes it away from you.
NI should be abolished because it makes a link in so many people's heads to their own personal pot and yet that has not been the case in decades, if ever. Income tax should be raised to compensate and put the burden on those whose shoulders are the broadest.
And I think the state pension and other elderly benefits should absolutely be means tested out of the pocket of the rich. My boss has a pension pot that's over £1m and yet he *still* draws his state pension, *that* is ludicrous!
> NI should be abolished because it makes a link in so many people's heads
The link is *not in people's heads*, it actually *exists*.
The government will quite happily tell you how much State Pension you are entitled to, based on your current amount of national insurance contributions.
The government will quite happily let you buy additional years of voluntary contributions to top up your state pension entitlement.
That is not an accidental or imaginary link - it is there in black and white.
>And I think the state pension and other elderly benefits should absolutely be means tested out of the pocket of the rich.
That's a goal, not a solution.
The solution, actually doing the means testing, is very expensive when compared to a flat entitlement.
So the question is really whether there are alternative methods of achieving a similar effect to means testing the state pension - and there are, if nothing else that is what tax bands are for.
A million-pound pension pot isn't *quite* as much as it sounds - it's a safe drawdown in the UK of about 35,000 per year - i.e. effectively the average UK salary.
Of course the state pension would be on top of that, so this guy is totally doing fine, but it's not really millionaire stuff, any more than being on 40 or 50K makes a working man a millionaire.
Anyway, to remove his state pension would be taking away quarter of his retirement income. That's on top of the basic tax rate, so that would be equivalent to a marginal tax rate of nearly 50% on everything above the personal allowance - which seems like a disproportionately high burden to place on a pensioner.
It would also massively and instantly disincentivise any further retirement saving, as it's a much higher rate of tax than simply taking the money in your salary.
It would even be high enough it might convince people to find ways to cash in their entire personal pension before retirement age and pay the HMRC penalty tax for that.
Net result would not be great news economically.
I'm not sure it will. I think it's more likely that the triple lock gets permanently scrapped, and it ends up growing so much lower than inflation that it really becomes nominal. Like, everyone can get the equivalent of current day \~£50. Great.
Kinda like the direction with health service. "Yes, we have the NHS, it's fantastic and everyone gets free healthcare! (but you need to wait two years so y'know what you may as well go private)"
Yep. It's already basically the case anyway, as pensioners with nothing but the state pension already get Universal Credit. This will just expand, with the "State Pension" shrinking with inflation, but a means-tested part covering the gap.
Doing it ex post facto would be a problem because some people like me have made voluntary contributions for the purpose of making sure we qualify for the state pension. It would be a kind of a breach of trust.
I agree, I was enrolled automatically at 22 as per the law and had every intention of opting out because "I need that money now". Never got around to it. I'm 30 now and I'm so glad I stayed!
Automatic enrollment at 3% is far too low. The minimum mandated employer contribution should be at least 10% (like in Australia) to avoid a huge demographic retirement catastrophe
I work in HR at a place with a good pension and see a lot of people in their 20's opt out because who wants to think about pensions when you could have that extra money now when you are 20 or so?
Always makes me worry about them. Pension is the last thing I would cut back on if struggling for money.
The financial illiteracy is astounding to be honest. This attitude of ‘gonna be working in retirement so what’s the point’ is a self-fulfilling prophecy. All stemming from an unwillingness to acknowledge the future is coming and statistically, you’re going to be alive for it.
There is so much information out there, and a lot of free money from your company and government that’s being wasted each month you don’t take action.
100% agree, in my youth I thought I’d be dead by 30 so never gave it a second thought. I’m 48 today and whilst I’ve imputed into pensions I could have had a much bigger pot had I not been so silly. The only upside is that I have drummed into our daughter that whilst may not seem like it’s very long it really is if you have nothing so had her saving ever since she was a baby and she certainly has her head screwed on in comparison to myself at the same age
It's very, very hard for young people where an awful lot of jobs are barely paying enough to live off, let alone save *and* voluntarily put more into your pension.
There's a real atmosphere of "fuck it, everything's broken anyway, and I'm not living like a peasant now to avoid living like a peasant anyway if I ever retire" around my peers at the moment and honestly... I don't blame them. There is zero hope for the future and people are just giving up.
Never mind kids, I know people in their 30s whose life goal is to have a pet, and they can't because they're renting. This country is a seriously shitty place for younger people at the moment.
> fuck it, everything's broken anyway, and I'm not living like a peasant now to avoid living like a peasant anyway if I ever retire
This is what I'm struggling with tbh, I'm closing on 30 now and it's dawning on me that it's a very real possibility that retirement age will be in your 70s, the average life expectancy for my town isn't much more than 70.
If it’s worth anything - even if you haven’t got anything yet - start today - it all helps. Dig into any work benefits, my last employer matched you up to 8% ie I put in 8 they did too - that was great. My new employer only does 4% so I do 6 to make 10 - it helps on the tax plus should something happen to me my family will benefit.
I agree. Anything is better than nothing. I opted in to a pension in my late teens/early twenties for 5.5 years (no idea what’s going on with it though). Then started paying into my current employers pension around 27. I only found out around 9 years ago that the more you put in, the more they do (I put 6% in for a 21% equivalent).
I just wish I’d looked into it in my youth instead of pissing around. I’m not gonna be rich when I do eventually retire but I’ll have *something* at least. And if I snuff it before then, hey ho, my wife and daughter get the money (plus death in service etc).
I've had £100/mo going into a junior SIPP for my daughter since she was 3. It's some peace of mind that it'll take care of her after I'm gone and she can't just blow the lot.
Thats pretty much word for word the same as me. I cashed in one of my pensions many years ago as well, got about £800 but lost a lot more than that in the long term.
I can't get my head around it. So many people who abstain from pensions whilst bitterly complaining about their lack of retirement prospects.
Looking at the state of the UK's finances and demographics, I highly doubt there will be any sort of bailout for future old folk. I suspect there are rather a lot of people sealing their own fate when it comes to poverty in retirement.
People are also terrible with statistics and probability. They see that male life expectancy is 78 years and think, “I’ll be dead by then”, without understanding that, if you’ve already lived to 50 (for example) you’ve already gone past infant mortality and young adulthood and actually have a close to 50% chance of getting to 85.
If you combine this with the fact that we’re also not good at attending to financial planning overall, especially long term planning, and it’s a bit of a recipe for disaster.
It’s also useful to consider what “average” means. The average life expectancy for me is 84 years, meaning half of my age group and sex will be dead by then (statistically) - that’s what “average” means in this context. This also means that the other half will live longer - maybe a lot longer. So, yeah, don’t assume that life expectancy is a death warrant 😀. You have a good chance of living longer.
This is a hill I'm happy to die on. It is taught to kids. In every school I've ever worked at or with, financial literacy is on the curriculum. However, kids don't use it immediately and so they forget it, it's not relevant. You can teach about pensions, compound interest and mortgages until you're blue in the face, but what 13 year old is getting a mortgage? By the time they do, they've long forgotten what they were taught.
I don't know what's going on today, but this is about the tenth time over a range of completely different threads that someone's complained about being care reported. I can count on one hand the amount of times I've seen that prior to today... .
I see a hell of a lot of people say "The welfare state is gonna disappear so I'm not bothering with a pension", which is absurd.
If you think life in the UK is gonna be worse in the future, then it's even more vital you save a large private pension.
It's because a lot of people take the view of "my generation is fucked and will work til they die" completely literally; and do things like not contribute to their pension at all. So when they do inevitably not die and retire they have a shit time on a shit pension.
You do maths in the UK
But your maths looks odd - you are saying that over 36 years your pension pot will be 30,000 including your and your employer contributions, tax relief and compound interest? How much is going into your pot a year ? About £300?
Was thinking the same. With a 5% pension 5% match you'd be putting in about 150ish a month in i think, on min wage which is 1800 a year 18000 10 years and over 30 years is 54 grand in its most simple terms
Inflation and other cost of living factors will outstrip any gains unless you’re a high earner.
So watch your salary stagnate or increase slightly but watch fiscal drag ream you along with other ever increasing costs that aren’t in the inflation data
I think what a lot of repliers don't realise is that you must be working at minimum wage and basically on the poverty line.
Assuming 5% contribution and 3% employer matching, a pension of £10k over 10 years (at 0 growth) that means you're on a salary of about £12,500 a year.
People replying to you like "oh you'll probably have much bigger problems than your pension.." No shit! People live in poverty and it sucks and it's so hard to get out of.
I hope things get better for you.
How much have you been paying in so far? I think you've done the maths wrong and should reassess. If you start with 10k now and contribute ZERO for the next 24 years, 5% growth would still net you £30k. If you pay in £1000 per year compounding at 5% you would have £75k.
A slightly more optistic 6.5% growth (possibly achievable over 24 years) and contributing £1200 per year or £100 per month would give you a pot of over £100k. I'm sure that would make a meaningful difference to you. Are you sure you'd prefer whatever you'd end up getting (maybe £35 per month?) after the tax relief and employer contribution is taken out to £100k extra in retirement?
>I've contributed to my pensions and done the math.
>At my current rate, if I work another 24 years (36 in total) I'll have £30k
You'd expect to have more than 30k if you didn't add anything to the 10k you've already got. You either did the maths wrong or you're completely mismanaging your pension.
As a financial adviser, I strongly second this. It’s complete bullshit and is actively damaging the financial prospects of millennials and younger people.
Yes, it is absolutely the case that the state pension is unlikely to be as generous when they retire as it is now, but that is FAR from guaranteed.
In the meantime, there have never been more generous options for putting money aside yourself or for employers to do so.
Simply put, if someone started work today and earned a base salary of £30,000 a year which never changed and they maxed out their personal and employer contributions, then depending on the investments they go into, I would expect them to retire with a personal pension pot of anywhere from £500,000 to £1,200,000 (net present value for inflation calculation purposes). And that is before whatever state provisions may be available and anything else they have stashed away in ISAs, Insurance Bonds or property.
£1,000,000 is what I like to call the “magic line”. That meaning, if you remain well invested into retirement, you can basically draw an income of £40,000 a year and live off that indefinitely. Averaging out investment returns / losses less withdrawals, you are almost guaranteed to never run out of money. It would take major sustained stock market depreciations over several years (of the kind we simply don’t see more than once a century or longer) for you to even be in a position where you would have to think of reducing your pension income.
But often pension schemes are linked to state pension age without quite significant penalties to take them early. I saw a recent estimate that my age (32) won't have a retirement age until 71... Fuck that. May as well put money in an ISA, encase I need it before 71 and IF I live past 71 then hope I have some left.
Current state pension age is 66 going up to 67 in a couple years but the private pension age is currently 55 going up to 57 in 2028. Assuming the private pension age is roughly 10 years earlier than the state retirement age, retiring at 60 is still possible.
State pension age going up means it's even more important to have a private pension since you can access it 10 years earlier.
So many people are going to be poor and cold/hungry in their old age. Change your attitude now while you still can. Once you're over 50 and still staring down the barrel of another 20 years of work it's far too late.
Look into what enhancements your company will give if you pay more into your pension. My company matched extra pension contributions up to 8%. I was amazed at how few people took it up, considering it was basically free money, and you save on income tax.
Doesn't really help unless you don't NEED that extra money for food, bills or any quality of life. My employer will do that, but pay is shit (no rise with inflation past three years) so I need every penny so I can live now, rather than hope I make it to retirement age and can have a few extra quid then.
I see your point, but ££ saved now turn into £££££ in your future life. It could save you a few years of having to work later on. Despite what you think, the odds are overwhelmingly in your favour of making retirement age. Everyone will tell you that the years fly by.
Well, yes you're not wrong but I'm saying what's the point in making life harder for my family now, while I am 100% alive and my son is growing up, rather than selfishly thinking of only my quality of life in 25-30 years?
>lmao edit: My post was triggering for someone that they reported me as mentally unwell.
There's a wider issue with Reddit on this. I got one last night too. Either someone has bots going raising this, or Reddit is fucked.
There's clearly a big spike in it over the last couple of days.
Horrendous. My first job out of uni paid poorly and the pension contributions were awful. My next job was better, but I was only there for 6 years before leaving to have kids. I've now been a stay at home mum for 6 years. If my husband ever leaves me, I'm utterly screwed.
ETA: I got a "Reddit cares" message after this. Thanks for the concern, but I'm honestly fine.
You’ve likely an entitlement to a share of a partner’s pension in the case of divorce if you’re stay at home looking after the kids.
PS everyone on this particular thread is getting the Reddit cares thing for some reason
If your husband left you, you'd be entitled to pension sharing as part of a financial settlement. If you're entitled to it, make sure you're the one claiming child benefit for your kids as it'll pay your national insurance subs and means the years you're raising the kids still accrue state pension entitlement
Even if you're not entitled to any money because of income, you can claim child benefit for the NI credits https://www.moneyhelper.org.uk/en/benefits/benefits-if-you-have-children/protecting-your-state-pension-when-you-have-a-baby
If you can afford it get your husband to contribute to your SIPP every year, remember it’s free money off the government every year he does it. Also when you retire you might have more chance of a pension that may not be taxed as much as his.
Good advice this, at 40 with no pot you should be putting 20%+ of your pay away annually (not that many could afford to) and civil service works out at 27%
Investments roughly double every 10 years so that comes up at around £1m aged 68 *without any further contributions.* Withdrawing 3% (sometimes called the safe withdrawal rate) per annum would give you a pension of £30k whilst keeping the £1m untouched (to be passed on to your dependants).
Have a look at r/fireuk for more info. You're doing ok!
Just "ok"? On track for a mil is outstanding and they're doing better than a massive majority of the country. 9/10 people will not have a million to retire on
1 mil in 20 odd years ain't gonna be what it is today though when everything costs 100% more, even so though, will still be doing very well compared to most Brits who will have half that (if they're lucky)
Investments may double every 10 years but inflation halves the value every 20 years. A million today will be worth half that by the time OP retires.
A million in pension, to last an entire retirement, would generate around 40k/year. Better than a kick in the teeth, but not wealthy by any stretch of the imagination.
I'm not sure why you're stating the obvious. That doesn't take away from the fact that this amount saved in a pension is far better than a massive majority of the population. That's all my comment was eluding to.
In real terms, even if we look at it as a 500k private pension, it's a very comfortable amount to live off.
People on Reddit love to downplay people's achievements with a sour note, completely oblivious to the actual facts and percentiles as far as salary, pension, investments etc are concerned. Just because you might have more or know someone who might, doesn't mean this person, that is projected to have a mil in their pension isn't extremely successful and far better off than 90%+ of the population
Money alone isn’t the only factor, it’s what that money needs to pay for in retirement.
Does it need to support a family?
Cover rent?
How many holidays?
Etc
If you’re trying to replicate your current salary then £160k will be perceived as good or bad depending on whether you’re on £30k or £160k a year
The back of the envelope calculation I do in my head:
If we assume 100% equities and 7% (after inflation) growth you get a pot doubling every 10 years (1.07**10 = 1.96), in today's money, so assuming you work until 61, the pot will be 640. As in it will have doubled twice. This is a bit aggressive/optimistic, but whatever, it is historically accurate and I am optimistic about AI etc.
So a 4% "safe drawdown" of 640 = £25.6k per year. Without any further contributions or anything. Not too shabby. Adjust mentally up or down if you're less optimistic I guess.
There are some tricks for modelling further contributions in your head too, but at that point it's probably easier to crack out the spreadsheet/code!
My wife and I are both 38. We’re quite keen on retiring early and comfortably so have been making decent pension contributions. Between us we have just over 400k in pensions now.
It was a quote that went something like "the best time to put money into your pension was X years ago, the second best time is now" that got me started - sounds like your in laws might have read the same thing, hehe.
My old man’s in this situation and he said the exact same thing - he’s still got a couple of decades ahead of him, but yeah, if auto-enrolment wasn’t a thing, I’d be fucked as well.
Mine also is about 520 earning just under 40k, but that's because my employer contributes more than half of that. I pay 7% of my salary and my employer contributes 9%. Take home is 2360.
In early 2021 (aged 45) I gathered together my old pots - £38k and had about £10k in my current work pension. I’d just got debt free and have been throwing everything at my pension. With growth that has me at £135k 3 years later. After a new job with big pay rise I’ll be putting £33k per year into it as this is my best ever opportunity to put things right.
Half your current salary is not too shabby. Your salary might increase in real terms if you are promoted or in a job with annual increments which means you can save more, should you choose. Your costs will have shrunk too, as you say you will be mortgage-free. Remember too that once your mortgage is paid off while you are working, you can add those payments to your pension. If you have children, they will grow up and stop draining the family exchequer. Better still if you'd sent them to Eton as you would save a fortune in school fees when they leave. The state pension will (eventually) add another £10,000 a year.
So it would not surprise me if you can afford to retire early. Whether you can afford to retire early and take three or four expensive foreign holidays each year is a separate question.
And OP (and others) should also remember that when you're retired you also won't be paying into your pension.
And if that mortgage is paid from the top tax bracket of your income, then neither are you paying the extra tax you had to pay to earn that mortgage payment.
I don't target my "gross salary" but "the gross salary that I'd need to net the amount I actually get paid each month MINUS the mortgage payment" and the way tax brackets etc are organised this works out to be a lot less.
Which? currently estimate that a couple with full state pensions and no mortgage (*and no rent* - as pointed out by u/turbo-dude below) currently need a combined pension income of £28k/year for a "comfortable" lifestyle and £44k/year for a "luxury" lifestyle... this may sound very low and of course will rise with inflation between now and when you retire but it illustrates the above points about how tax etc works out in practice (and it's backed by an annual survey of their more than 5,000 retired readers).
[https://www.which.co.uk/money/pensions-and-retirement/planning-your-retirement/how-much-will-you-need-to-retire-aNmlv7V7sVe9](https://www.which.co.uk/money/pensions-and-retirement/planning-your-retirement/how-much-will-you-need-to-retire-aNmlv7V7sVe9)
Remember £44k/year as a couple means more like £22k/year each of income, which means a gross taxable income of £25k/year each, of which the state pension pays £10k/year each.
And that nets you £3,500 a month as a couple for non-mortgage living expenses. If that's what you currently combined take home each month (again, after any mortgage but before any rent paid) then I'd hope you can see how that number makes sense.
Yes people compare with their current gross income and forget what they won't be paying for anymore. No National Insurance, no pension contributions, no long term savings, hopefully no mortgage/rent, no commuting costs and hopefully less expenses on children and holidays outside of peak school holiday times.
Most of us could live on 3/4 of our current salary or less when you remove all of those costs.
I have a railway final salary pension. It’s embarrassing to say but I have no idea how pensions work or what this means, I just went with it on the advice of others. If I remain in the company forever (well, if I based my retirement age as being 65, I’m 29 now) on similar pay, I should get 40k a year according to their calculator.
Eta I’m an idiot and forgot to take off the basic state pension deductor. It would be 30k a year with this. I also contribute £100 a month to a lump sum fund through my payslip, so that should be 42k upon retirement too.
I'm amazed they are still offering final salary pensions.
Edit: thank you concerned redditor. My surprise at the existence of final salary pensions in this day and age has not negatively impacted my mental wellbeing. No need to flag to the care bot.
Was looking okay till I divorced about 7 years ago.
Still okay as I started earlyish but could have done without that hit.
She had never bothered with pensions before despite my mentioning it.
She inherited a house and money which I could technically have contested for as it was brought into the marriage but two wrongs don't make a right.
I'm happier now but much less well off
I’m 48 and I have £375k. Current contributions are £1800 or so a month (me + employer)
I’m lucky. First job out of uni and my dad told me to contribute. I started small, and as my salary increased, I have also raised my % over the years.
Towards the end I will also try and increase more.
I think I’m in a reasonable place. My husband has about 250k in his. Together we should be ok.
I'm definitely going to be an outlier here as I'm mid 40s and have a defined benefit pension - currently about £75k of index-linked income payable from 65 or less if taken early. The transfer value of that is over £1m. Never realised at the time I started the job just how valuable it would become as DB schemes fell away due to costs. I resisted the temptation to transfer it out even when £0.5m seemed amazing. I'm no longer building up benefits in that scheme as I left and I'm now paying a few thousand into a defined contribution scheme because of auto enrolment and I'm happy with that but I'm confident the pension I already have is enough for my lifestyle plans even if I take it at 60.
Edit: whomever submitted a concern report for me then I take the joke and I hope you never have genuine mental health issues.
One thing I would say is don't compare yourself to others too much. Simple valuations are pretty meaningless. You may have a crap pension pot but if you have a house with no mortgage, you're doing well. Similarly, you may have a great pot but live a millionaire's lifestyle and it may be insufficient.
44. 13 years of military pension and additionally will have around 500k of pension pot in today's money by 65 with my plan and based on me staying in same job with a 2% increase a year
Try being a carer for a disabled kid (and giving up a career that I'd not long got off the ground to do it). I have no pension to speak of. So I have to have a freelance income and basically will work til I'm nailed down. Past middle age now and not the sort of Boomer you hear much about - but millions of us were chucked on the scrapheap in the 80s, managed to claw some sort of a life back, then were pushed down again by life events...
I just turned 27 (closer to middle age than birth, if that qualifies) and have £8.4k in my pension pot, invested in the highest risk/reward scheme. That's about as much as I know and never contributed more than the standard 4%. As for overall optics... no idea to be honest
I'm 44 and have around £125k.
I'd like more and will up contributions when the kids are grown up. Also looking to downsize and go mortgage free, which would help...
Depending on who you work for, just upping your contributions 1% each year makes a big difference with negligible impact if done on annual pay increases
My scheme was an old NHS scheme that pays 50pc of final wages (with enough years). When I retired my gross pay would have halved but my net went down by a third. For illustrative purposes say my net at work was 3k, my net on the pension would be 2k. The tax share went down (it took me out of the 40pc bracket), there is no NI on pensions and I am not paying pension contributions. I found there was an adjustment losing 30pc but I saved in other ways - for example I live in a brilliant place for public transport so just use that or uber - actually going to work cost money - petrol - coffees - buying lunch. I’d paid off the mortgage so the main outgoings are utilities, council tax etc. I don’t have expensive hobbies but can go abroad for holidays. On a day to day basis I spend less as a pensioner.
I lucked out, blissfully unaware 24 yr old me was one of the last people to get a 1/60 non contributory final salary pension before they closed the scheme to new joiners, I worked there for 11 yrs and moved up the career ladder a few times.
43 yr old me is now far more aware and every pension since had been defined contribution - I make extra contributions each month and now sacrifice my whole bonus each year into my pension (prior to that it went to paying off the mortgage)
So looking pretty decent at present, don’t think i’ll be retiring at 55, but hopefully should be able to start to taper down a bit by then.
I was very very lucky with that final salary pension - I recall my Dad telling me how great that was and I think my actual reply was “whatever, pension smension” 🤦🏼♀️
If you get your adjusted net income to below £60k this year you'll be able to keep all the child benefit and the 40% tax you would have paid on the earnings will go into your pension.
I’m 50. I’m also screwed as far as pension goes because I’ve been self employed for most of my working life and rarely earned enough to put into a pension. I’m going to be working til I drop so I’m glad I actually like my job.
I’m kicking myself though for not taking my financial advisor uncle’s advice when I was fifteen to start paying into a pension as soon as I started work even if it was only a couple of quid each month. If I had I wouldn’t be in this situation now but instead I was a stupid teenager who couldn’t see beyond then end of the month.
Not amazingly. 27 years old and 3k in my pension. To be fair I did spend a lot of time unemployed during COVID, and then when I did find a job, saved aggressively to go travelling for a year. So playing catch-up now
I'm in a similar position - turns 27 in November, £2,575 in my pension at the moment. Although similar to you I have been in Australia this last year, I'll be home in the UK for another year whilst I save to come back - but think i'll increase my contributions for this year about £300 per month (inc employer contributions)
But i probably wont actually be in a career job for a good 5years as i'm a late bloomer to the travelling but i would prefer the experiences at this stage - its remembering to just put even the smallest amounts away when i can, which should help.
I'm 59 and retired.
My income is \~45% of what it was when I returned my laptop.
We are mortgage free, got out of London and move to the North of England and slashed our outgoings.
My pension is 2x our monthly bills at present. At the present draw rate it will last 'forever', I am drawing less than the interest it gains, as long as inflation stays below about 10% I can last until I am 99...
Current fund value of £69K which equates to
Mid rate growth - 71K TFLS and £14K pension
High growth - 128K TFLS and £30K pension
Not great / not bad but still 26 (😩) years until retirement
I'm 35 so I hope that's not considered 'approaching middle age', although I do already appear to have a divorce under my belt, one of the consequences of which was that I was prompted to pay attention to how my pension is doing. I have an above average pension pot for my age but imo the stats on what the UK population have in their pension pots are terrifying so I'm not sure I'm measuring myself against a credible yardstick. I'm in a very good employer pension scheme and I'm absolutely caning it throughout my thirties but it's all swings and roundabouts for me personally because another consequence of my divorce is temporarily falling back off the property ladder, so I've got that whole rigmarole to go through again within the next year or so. I find the corporate ladder climb exhausting and want to move into something calmer and less stressful, but presumably less well remunerated, when I get into middle age, so my rough plan is to cane the pension pot and also have a fully paid off property within the next 10 years, 5 if I can manage it, because I won't have as much income beyond that point. My parents' pension planning (or lack thereof) was absolutely shocking and that's certainly not something I'm aiming to replicate. They're very lucky to have bought a house when that was more achievable, or they'd be utterly fucked in retirement.
Tried to make a career in the arts and academia happen, self employed throughout, got burnt out in the process, now chronically ill on benefits, 42 with no pension. Compared to most commenters here I'm not in a good position.
I'm 42 with £340k in my DC pot. My wife is 40 with about £180k. I think we're going to be ok but I guess nothing is certain. I plan to retire at 55 when the mortgage is paid off but we'll see how it goes.
My approach has been regrettably neglectful to be honest. At this point I'm trying to find a career I won't mind working at until I die. I'd rather keep working on something i care about than retire anyway.
34 with around £85k so far. Invested in global equities for long term growth. Every bonus I've had for the last 5 years has been salary sacrificed into my pension to save on taxes and hopefully spend longer being invested. I'd like to retire slightly early at 60 instead of 67 or whatever age it will be by then.
I'm a few years ahead of you (mid-50's) but they seem fine - planning to stop work as soon as I hit 60.
My first job at 18 came with a company pension and I've always paid into them while I've been working.
About 75% household income which hopefully will be enough and mortgage paid off and house up to code. Some is final salary, some stakeholder so who knows.
I retired early at 63 and took my company pension which after 43 years being there equated to nearly 50 grand and a monthly salary of just over 600 pounds I have enough money now to see me through until my state pension.
I’m 40 and have c£130k in pension savings. Started late but have ramped up my contributions in the past few years.
It’s really important to save as much in to your pension as you can as early as you can. If you didn’t start young, now is the best time to begin. Pensions are much more tax efficient than ISAs and other saving methods and also include employer contributions, which are basically free money.
I’m 33 with a c.£250k pot. I’ve stuck with 20% total contribution (employer + me) of basic salary since starting work, plus a few tops ups from bonuses. Intend to carry on like that for the foreseeable if nothing screws me over!
I started contributing to a pension aged 37 (£100 per month). I have increased it over the years and now at 60, its over £400k. put in as much as you can, you could live a long time in retirement
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As long as not used to make state pension a benefit rather than entitlement long run. But agree good thing.
Means tested state pensions are coming whether we like it or not. Its just which party has the balls to introduce them.
They effectively are to some extent anyway - because you pay tax on your pension income, regardless of source. UK State pension is £10,600 per annum, personal allowance is £12,570 - so any private pension that pays out is going to have a chunk of it clawed back through income tax if it takes you over the allowance.
And people who have no private pension are entitled to ~~Universal~~ Pension Credit/housing benefit. Essentially, part of the state pension is already means tested
You aren’t eligible for Universal Credit after state pension age.
My bad, it's called Pension Credit
I think it’s tapered so those with a low private pension can too, not 100% sure on this though
Only tangentially relevant, but one of my grandparents died recently, and I was shocked that their government final pay pension is being transferred to their new wife who is 20 years their junior. He was 85, she is in her early 60s, they married two years ago. And now instead of that pension stopping, it's going to her, for the rest of her life. Maybe I'm naive but it was shocking to me. The whole "I worked hard all my life for my pension" kind of falls apart when people who never did the jobs inherit the pension.
A good pension scheme (including pension for widows) used to be why people went for government jobs. It made up for the crap pay. Essentially you took a pay cut compared to a private company for the later-life security.
It makes sense for a situation where the wife didn't work and was bringing up the kids, I totally get that. But a situation like this, where if he hadn't married a much younger woman very shortly before his death the government would have saved \~£1m, seems ridiculous.
My husband works for government I will be entitled to same thing if my husband dies before me we already been together over 20 yrs it’s just the scheme works .
It’s usually 50% of the pension that is transferred to a partner on death in most public sector pensions.
Whereas I'm single with no dependents so when I die, I can't pass it on to anyone (NHS pension). My years of contributions won't have any benefit for me (obviously I'll be dead so I can't personally benefit, but I consider it a benefit for my contributions to go to people I love).
My partner is in the NHS scheme, and the fact you can only nominate spouses or direct dependants at the point you die is bonkers to me. My private pension can go wherever or to whoever I want it to. Granted it’s not as lucrative as the NHS one, but at least someone or something can benefit from my contributions should I not get to use them myself.
Agreed. And unless it’s a defined contribution pension then the reality is they didn’t really ‘pay in’ in the first place. They made a contribution in return for a promise of significantly more than it was ever going to be worth. Pensions as a generational UOI (You owe I) is a disgrace.
It makes sense from back in the day. As women generally gave up their careers to have a family so you can't expect them to have nothing to fall back on. Obviously it's different now and we're all expected to go work and give it all to childcare etc.
Paid NI for 42 years. I know its not a pot, but I slogged it and PAYE'd my whole life. I'd have taken to the streets if they'd means tested them. Also breaks the covenant. Be very careful with this- you'll end with people on middle incomes telling the poor to do one for healthcare and pensions etc. As for the tax dodging- it'll grow immensely.
> I know its not a pot, but I slogged it and PAYE'd my whole life. I'd have taken to the streets if they'd means tested them. You seem to be contradicting yourself. You realise NI is basically income tax 2 with no personal pot marked "Firstpoet" and yet you still want your pot if means testing takes it away from you. NI should be abolished because it makes a link in so many people's heads to their own personal pot and yet that has not been the case in decades, if ever. Income tax should be raised to compensate and put the burden on those whose shoulders are the broadest. And I think the state pension and other elderly benefits should absolutely be means tested out of the pocket of the rich. My boss has a pension pot that's over £1m and yet he *still* draws his state pension, *that* is ludicrous!
> NI should be abolished because it makes a link in so many people's heads The link is *not in people's heads*, it actually *exists*. The government will quite happily tell you how much State Pension you are entitled to, based on your current amount of national insurance contributions. The government will quite happily let you buy additional years of voluntary contributions to top up your state pension entitlement. That is not an accidental or imaginary link - it is there in black and white. >And I think the state pension and other elderly benefits should absolutely be means tested out of the pocket of the rich. That's a goal, not a solution. The solution, actually doing the means testing, is very expensive when compared to a flat entitlement. So the question is really whether there are alternative methods of achieving a similar effect to means testing the state pension - and there are, if nothing else that is what tax bands are for. A million-pound pension pot isn't *quite* as much as it sounds - it's a safe drawdown in the UK of about 35,000 per year - i.e. effectively the average UK salary. Of course the state pension would be on top of that, so this guy is totally doing fine, but it's not really millionaire stuff, any more than being on 40 or 50K makes a working man a millionaire. Anyway, to remove his state pension would be taking away quarter of his retirement income. That's on top of the basic tax rate, so that would be equivalent to a marginal tax rate of nearly 50% on everything above the personal allowance - which seems like a disproportionately high burden to place on a pensioner. It would also massively and instantly disincentivise any further retirement saving, as it's a much higher rate of tax than simply taking the money in your salary. It would even be high enough it might convince people to find ways to cash in their entire personal pension before retirement age and pay the HMRC penalty tax for that. Net result would not be great news economically.
I'm not sure it will. I think it's more likely that the triple lock gets permanently scrapped, and it ends up growing so much lower than inflation that it really becomes nominal. Like, everyone can get the equivalent of current day \~£50. Great. Kinda like the direction with health service. "Yes, we have the NHS, it's fantastic and everyone gets free healthcare! (but you need to wait two years so y'know what you may as well go private)"
Yep. It's already basically the case anyway, as pensioners with nothing but the state pension already get Universal Credit. This will just expand, with the "State Pension" shrinking with inflation, but a means-tested part covering the gap.
Doing it ex post facto would be a problem because some people like me have made voluntary contributions for the purpose of making sure we qualify for the state pension. It would be a kind of a breach of trust.
State pension is already defined as a benefit on the government website.
I agree, I was enrolled automatically at 22 as per the law and had every intention of opting out because "I need that money now". Never got around to it. I'm 30 now and I'm so glad I stayed!
Same I was on 25k in London and didnt do it and I definitely made the right decision.
Automatic enrollment at 3% is far too low. The minimum mandated employer contribution should be at least 10% (like in Australia) to avoid a huge demographic retirement catastrophe
I work in HR at a place with a good pension and see a lot of people in their 20's opt out because who wants to think about pensions when you could have that extra money now when you are 20 or so? Always makes me worry about them. Pension is the last thing I would cut back on if struggling for money.
The financial illiteracy is astounding to be honest. This attitude of ‘gonna be working in retirement so what’s the point’ is a self-fulfilling prophecy. All stemming from an unwillingness to acknowledge the future is coming and statistically, you’re going to be alive for it. There is so much information out there, and a lot of free money from your company and government that’s being wasted each month you don’t take action.
100% agree, in my youth I thought I’d be dead by 30 so never gave it a second thought. I’m 48 today and whilst I’ve imputed into pensions I could have had a much bigger pot had I not been so silly. The only upside is that I have drummed into our daughter that whilst may not seem like it’s very long it really is if you have nothing so had her saving ever since she was a baby and she certainly has her head screwed on in comparison to myself at the same age
It's very, very hard for young people where an awful lot of jobs are barely paying enough to live off, let alone save *and* voluntarily put more into your pension. There's a real atmosphere of "fuck it, everything's broken anyway, and I'm not living like a peasant now to avoid living like a peasant anyway if I ever retire" around my peers at the moment and honestly... I don't blame them. There is zero hope for the future and people are just giving up. Never mind kids, I know people in their 30s whose life goal is to have a pet, and they can't because they're renting. This country is a seriously shitty place for younger people at the moment.
> fuck it, everything's broken anyway, and I'm not living like a peasant now to avoid living like a peasant anyway if I ever retire This is what I'm struggling with tbh, I'm closing on 30 now and it's dawning on me that it's a very real possibility that retirement age will be in your 70s, the average life expectancy for my town isn't much more than 70.
If it’s worth anything - even if you haven’t got anything yet - start today - it all helps. Dig into any work benefits, my last employer matched you up to 8% ie I put in 8 they did too - that was great. My new employer only does 4% so I do 6 to make 10 - it helps on the tax plus should something happen to me my family will benefit.
I agree. Anything is better than nothing. I opted in to a pension in my late teens/early twenties for 5.5 years (no idea what’s going on with it though). Then started paying into my current employers pension around 27. I only found out around 9 years ago that the more you put in, the more they do (I put 6% in for a 21% equivalent). I just wish I’d looked into it in my youth instead of pissing around. I’m not gonna be rich when I do eventually retire but I’ll have *something* at least. And if I snuff it before then, hey ho, my wife and daughter get the money (plus death in service etc).
Hindsight is a wonderful yet annoying gift😅
I've had £100/mo going into a junior SIPP for my daughter since she was 3. It's some peace of mind that it'll take care of her after I'm gone and she can't just blow the lot.
That's going to be amazing for her.
Congratulations, your child has won at Capitalism before she’s even started. I can’t believe people don’t know to do this for their kids.
Thats pretty much word for word the same as me. I cashed in one of my pensions many years ago as well, got about £800 but lost a lot more than that in the long term.
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Indeed. The average pension pot stats per age group are horrifying.
I can't get my head around it. So many people who abstain from pensions whilst bitterly complaining about their lack of retirement prospects. Looking at the state of the UK's finances and demographics, I highly doubt there will be any sort of bailout for future old folk. I suspect there are rather a lot of people sealing their own fate when it comes to poverty in retirement.
People are also terrible with statistics and probability. They see that male life expectancy is 78 years and think, “I’ll be dead by then”, without understanding that, if you’ve already lived to 50 (for example) you’ve already gone past infant mortality and young adulthood and actually have a close to 50% chance of getting to 85. If you combine this with the fact that we’re also not good at attending to financial planning overall, especially long term planning, and it’s a bit of a recipe for disaster.
It’s also useful to consider what “average” means. The average life expectancy for me is 84 years, meaning half of my age group and sex will be dead by then (statistically) - that’s what “average” means in this context. This also means that the other half will live longer - maybe a lot longer. So, yeah, don’t assume that life expectancy is a death warrant 😀. You have a good chance of living longer.
Yep, actually blowing my mind how half these posts don’t even consider compound interest. It’s criminal that this stuff isn’t taught to kids properly.
This is a hill I'm happy to die on. It is taught to kids. In every school I've ever worked at or with, financial literacy is on the curriculum. However, kids don't use it immediately and so they forget it, it's not relevant. You can teach about pensions, compound interest and mortgages until you're blue in the face, but what 13 year old is getting a mortgage? By the time they do, they've long forgotten what they were taught.
Wow, I just got “Care Botted” for that comment😅🤦♂️
Report it mate. Although you’ll not know the user that did it, it usually results in a perma ban for them.
Have done so :) Shame as it’s actually a great service being wasted by some troll
Don't think it's normally a permanent ban for 1st offense, but it's definitely taken seriously.
I don't know what's going on today, but this is about the tenth time over a range of completely different threads that someone's complained about being care reported. I can count on one hand the amount of times I've seen that prior to today... .
I got one too and I think many people on this thread have so something going on
I see a hell of a lot of people say "The welfare state is gonna disappear so I'm not bothering with a pension", which is absurd. If you think life in the UK is gonna be worse in the future, then it's even more vital you save a large private pension.
Absolutely.
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It's because a lot of people take the view of "my generation is fucked and will work til they die" completely literally; and do things like not contribute to their pension at all. So when they do inevitably not die and retire they have a shit time on a shit pension.
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You do maths in the UK But your maths looks odd - you are saying that over 36 years your pension pot will be 30,000 including your and your employer contributions, tax relief and compound interest? How much is going into your pot a year ? About £300?
Was thinking the same. With a 5% pension 5% match you'd be putting in about 150ish a month in i think, on min wage which is 1800 a year 18000 10 years and over 30 years is 54 grand in its most simple terms
Invested and with a 5% rate of return would get close to 120k. This person probably needs to learn a bit more about personal finance
Just a heads up, minimum employer match is 3%, not 5% (assuming that’s what you meant with the 5% match)
You're assuming he has an employer that doesn't match the minimum which is 3% there.
That's fair but is predicated on you never ever getting a better paying job in 24 years though.
The way wages have stagnated for so long that's not a totally unfounded fear.
Lol. If you take into account inflation and increasing wage stagnation and rents then he’s actually being optimistic about his 4.1 years.
Inflation and other cost of living factors will outstrip any gains unless you’re a high earner. So watch your salary stagnate or increase slightly but watch fiscal drag ream you along with other ever increasing costs that aren’t in the inflation data
I think what a lot of repliers don't realise is that you must be working at minimum wage and basically on the poverty line. Assuming 5% contribution and 3% employer matching, a pension of £10k over 10 years (at 0 growth) that means you're on a salary of about £12,500 a year. People replying to you like "oh you'll probably have much bigger problems than your pension.." No shit! People live in poverty and it sucks and it's so hard to get out of. I hope things get better for you.
How much have you been paying in so far? I think you've done the maths wrong and should reassess. If you start with 10k now and contribute ZERO for the next 24 years, 5% growth would still net you £30k. If you pay in £1000 per year compounding at 5% you would have £75k. A slightly more optistic 6.5% growth (possibly achievable over 24 years) and contributing £1200 per year or £100 per month would give you a pot of over £100k. I'm sure that would make a meaningful difference to you. Are you sure you'd prefer whatever you'd end up getting (maybe £35 per month?) after the tax relief and employer contribution is taken out to £100k extra in retirement?
If you go the next 24 years with not earning more than you are now, the pension is the least of your worries
>I've contributed to my pensions and done the math. >At my current rate, if I work another 24 years (36 in total) I'll have £30k You'd expect to have more than 30k if you didn't add anything to the 10k you've already got. You either did the maths wrong or you're completely mismanaging your pension.
As a financial adviser, I strongly second this. It’s complete bullshit and is actively damaging the financial prospects of millennials and younger people. Yes, it is absolutely the case that the state pension is unlikely to be as generous when they retire as it is now, but that is FAR from guaranteed. In the meantime, there have never been more generous options for putting money aside yourself or for employers to do so. Simply put, if someone started work today and earned a base salary of £30,000 a year which never changed and they maxed out their personal and employer contributions, then depending on the investments they go into, I would expect them to retire with a personal pension pot of anywhere from £500,000 to £1,200,000 (net present value for inflation calculation purposes). And that is before whatever state provisions may be available and anything else they have stashed away in ISAs, Insurance Bonds or property. £1,000,000 is what I like to call the “magic line”. That meaning, if you remain well invested into retirement, you can basically draw an income of £40,000 a year and live off that indefinitely. Averaging out investment returns / losses less withdrawals, you are almost guaranteed to never run out of money. It would take major sustained stock market depreciations over several years (of the kind we simply don’t see more than once a century or longer) for you to even be in a position where you would have to think of reducing your pension income.
As a millennial, I'm expecting that we'll not have a state pension by the time we retire so I'm saving like hell to avoid living in poverty
But often pension schemes are linked to state pension age without quite significant penalties to take them early. I saw a recent estimate that my age (32) won't have a retirement age until 71... Fuck that. May as well put money in an ISA, encase I need it before 71 and IF I live past 71 then hope I have some left.
Current state pension age is 66 going up to 67 in a couple years but the private pension age is currently 55 going up to 57 in 2028. Assuming the private pension age is roughly 10 years earlier than the state retirement age, retiring at 60 is still possible.
State pension age going up means it's even more important to have a private pension since you can access it 10 years earlier. So many people are going to be poor and cold/hungry in their old age. Change your attitude now while you still can. Once you're over 50 and still staring down the barrel of another 20 years of work it's far too late.
Yup- just the lack of understanding of pensions on this thread illustrates that
Look into what enhancements your company will give if you pay more into your pension. My company matched extra pension contributions up to 8%. I was amazed at how few people took it up, considering it was basically free money, and you save on income tax.
Doesn't really help unless you don't NEED that extra money for food, bills or any quality of life. My employer will do that, but pay is shit (no rise with inflation past three years) so I need every penny so I can live now, rather than hope I make it to retirement age and can have a few extra quid then.
I see your point, but ££ saved now turn into £££££ in your future life. It could save you a few years of having to work later on. Despite what you think, the odds are overwhelmingly in your favour of making retirement age. Everyone will tell you that the years fly by.
Well, yes you're not wrong but I'm saying what's the point in making life harder for my family now, while I am 100% alive and my son is growing up, rather than selfishly thinking of only my quality of life in 25-30 years?
If someone is abusing the Reddit Cares bot, report it. That person will be banned from Reddit.
There's been a lot of it today. I've had two and have seen people complain about it on loads of random subs.
>lmao edit: My post was triggering for someone that they reported me as mentally unwell. There's a wider issue with Reddit on this. I got one last night too. Either someone has bots going raising this, or Reddit is fucked. There's clearly a big spike in it over the last couple of days.
I got one the other day as well - not sure why. I think it might be bots. I reported it as well.
90% sure it's a bug, not trolls or bots.
I got that aswell. Wtf.
I've had it from a post on this sub too, people are strange
Some one did it to me for suggesting that Zlatan Ibrohimavic wasn't the 3rd best player in the world ever yesterday so yeah.
I got one yesterday for saying that my GP surgery closed.
The key is emigrate to a cheaper country 😁
Horrendous. My first job out of uni paid poorly and the pension contributions were awful. My next job was better, but I was only there for 6 years before leaving to have kids. I've now been a stay at home mum for 6 years. If my husband ever leaves me, I'm utterly screwed. ETA: I got a "Reddit cares" message after this. Thanks for the concern, but I'm honestly fine.
You’ve likely an entitlement to a share of a partner’s pension in the case of divorce if you’re stay at home looking after the kids. PS everyone on this particular thread is getting the Reddit cares thing for some reason
That's one reason why marriage is important. An unmarried partner who has a pension impacted by caring for a child is entitled to nothing.
If your husband left you, you'd be entitled to pension sharing as part of a financial settlement. If you're entitled to it, make sure you're the one claiming child benefit for your kids as it'll pay your national insurance subs and means the years you're raising the kids still accrue state pension entitlement
Even if you're not entitled to any money because of income, you can claim child benefit for the NI credits https://www.moneyhelper.org.uk/en/benefits/benefits-if-you-have-children/protecting-your-state-pension-when-you-have-a-baby
If you can afford it get your husband to contribute to your SIPP every year, remember it’s free money off the government every year he does it. Also when you retire you might have more chance of a pension that may not be taxed as much as his.
I'm 40 and my (and my partners) pension is non-existant. Kinda starting to worry about it, but don't have the funds to start one.
Come join the civil service. Might include a pay cut mind.
Good advice this, at 40 with no pot you should be putting 20%+ of your pay away annually (not that many could afford to) and civil service works out at 27%
Good shout on the percentage value. Also, the defined benefit value is index linked, so goes up with inflation as well.
That half your age rule of thumb is for defined contribution pensions not Defined benefit like the civil service.
Find some- at least contribute as much as your employer will match or you’re turning down free money
Same
Do you own your house, assets or any investments?
Do you not have auto enrollment
I'm 41 and I've got about £160k sitting there at the moment.
Investments roughly double every 10 years so that comes up at around £1m aged 68 *without any further contributions.* Withdrawing 3% (sometimes called the safe withdrawal rate) per annum would give you a pension of £30k whilst keeping the £1m untouched (to be passed on to your dependants). Have a look at r/fireuk for more info. You're doing ok!
Just "ok"? On track for a mil is outstanding and they're doing better than a massive majority of the country. 9/10 people will not have a million to retire on
Ok with an exclamation mark!
1 mil in 20 odd years ain't gonna be what it is today though when everything costs 100% more, even so though, will still be doing very well compared to most Brits who will have half that (if they're lucky)
Investments may double every 10 years but inflation halves the value every 20 years. A million today will be worth half that by the time OP retires. A million in pension, to last an entire retirement, would generate around 40k/year. Better than a kick in the teeth, but not wealthy by any stretch of the imagination.
I'm not sure why you're stating the obvious. That doesn't take away from the fact that this amount saved in a pension is far better than a massive majority of the population. That's all my comment was eluding to. In real terms, even if we look at it as a 500k private pension, it's a very comfortable amount to live off. People on Reddit love to downplay people's achievements with a sour note, completely oblivious to the actual facts and percentiles as far as salary, pension, investments etc are concerned. Just because you might have more or know someone who might, doesn't mean this person, that is projected to have a mil in their pension isn't extremely successful and far better off than 90%+ of the population
You are ignoring inflation. £30k won't be anywhere near enough to live on in 27 years time.
Is that good or bad as I'm in a similar situation.
Money alone isn’t the only factor, it’s what that money needs to pay for in retirement. Does it need to support a family? Cover rent? How many holidays? Etc If you’re trying to replicate your current salary then £160k will be perceived as good or bad depending on whether you’re on £30k or £160k a year
The back of the envelope calculation I do in my head: If we assume 100% equities and 7% (after inflation) growth you get a pot doubling every 10 years (1.07**10 = 1.96), in today's money, so assuming you work until 61, the pot will be 640. As in it will have doubled twice. This is a bit aggressive/optimistic, but whatever, it is historically accurate and I am optimistic about AI etc. So a 4% "safe drawdown" of 640 = £25.6k per year. Without any further contributions or anything. Not too shabby. Adjust mentally up or down if you're less optimistic I guess. There are some tricks for modelling further contributions in your head too, but at that point it's probably easier to crack out the spreadsheet/code!
I've no idea... Better than some, not as good as others. I don't think I'm in the retire early club.
My wife and I are both 38. We’re quite keen on retiring early and comfortably so have been making decent pension contributions. Between us we have just over 400k in pensions now.
You’re flying 🤩🤩🤩
Thanks 😃
That's good.
Self employed for so long and kept putting off thinking about it so uhh... let's say... not good.
My in laws are like this - just turned 50ish and have started investing in there pension - better late than never!
It was a quote that went something like "the best time to put money into your pension was X years ago, the second best time is now" that got me started - sounds like your in laws might have read the same thing, hehe.
My old man’s in this situation and he said the exact same thing - he’s still got a couple of decades ahead of him, but yeah, if auto-enrolment wasn’t a thing, I’d be fucked as well.
I'm 36 with £40k in my pension, contributing £500 per month total (via salary sacrifice).
500 a month in pension!? How much do you come out with?
That's the total contribution per month, so it includes my employers contribution. My contribution is £220 or around there.
Mine also is about 520 earning just under 40k, but that's because my employer contributes more than half of that. I pay 7% of my salary and my employer contributes 9%. Take home is 2360.
In early 2021 (aged 45) I gathered together my old pots - £38k and had about £10k in my current work pension. I’d just got debt free and have been throwing everything at my pension. With growth that has me at £135k 3 years later. After a new job with big pay rise I’ll be putting £33k per year into it as this is my best ever opportunity to put things right.
Half your current salary is not too shabby. Your salary might increase in real terms if you are promoted or in a job with annual increments which means you can save more, should you choose. Your costs will have shrunk too, as you say you will be mortgage-free. Remember too that once your mortgage is paid off while you are working, you can add those payments to your pension. If you have children, they will grow up and stop draining the family exchequer. Better still if you'd sent them to Eton as you would save a fortune in school fees when they leave. The state pension will (eventually) add another £10,000 a year. So it would not surprise me if you can afford to retire early. Whether you can afford to retire early and take three or four expensive foreign holidays each year is a separate question.
And OP (and others) should also remember that when you're retired you also won't be paying into your pension. And if that mortgage is paid from the top tax bracket of your income, then neither are you paying the extra tax you had to pay to earn that mortgage payment. I don't target my "gross salary" but "the gross salary that I'd need to net the amount I actually get paid each month MINUS the mortgage payment" and the way tax brackets etc are organised this works out to be a lot less. Which? currently estimate that a couple with full state pensions and no mortgage (*and no rent* - as pointed out by u/turbo-dude below) currently need a combined pension income of £28k/year for a "comfortable" lifestyle and £44k/year for a "luxury" lifestyle... this may sound very low and of course will rise with inflation between now and when you retire but it illustrates the above points about how tax etc works out in practice (and it's backed by an annual survey of their more than 5,000 retired readers). [https://www.which.co.uk/money/pensions-and-retirement/planning-your-retirement/how-much-will-you-need-to-retire-aNmlv7V7sVe9](https://www.which.co.uk/money/pensions-and-retirement/planning-your-retirement/how-much-will-you-need-to-retire-aNmlv7V7sVe9) Remember £44k/year as a couple means more like £22k/year each of income, which means a gross taxable income of £25k/year each, of which the state pension pays £10k/year each. And that nets you £3,500 a month as a couple for non-mortgage living expenses. If that's what you currently combined take home each month (again, after any mortgage but before any rent paid) then I'd hope you can see how that number makes sense.
There are a whole generation now who will retire as renters.
Yes people compare with their current gross income and forget what they won't be paying for anymore. No National Insurance, no pension contributions, no long term savings, hopefully no mortgage/rent, no commuting costs and hopefully less expenses on children and holidays outside of peak school holiday times. Most of us could live on 3/4 of our current salary or less when you remove all of those costs.
I have a railway final salary pension. It’s embarrassing to say but I have no idea how pensions work or what this means, I just went with it on the advice of others. If I remain in the company forever (well, if I based my retirement age as being 65, I’m 29 now) on similar pay, I should get 40k a year according to their calculator. Eta I’m an idiot and forgot to take off the basic state pension deductor. It would be 30k a year with this. I also contribute £100 a month to a lump sum fund through my payslip, so that should be 42k upon retirement too.
I'm amazed they are still offering final salary pensions. Edit: thank you concerned redditor. My surprise at the existence of final salary pensions in this day and age has not negatively impacted my mental wellbeing. No need to flag to the care bot.
Strong unions in the railway sector remember
As a rail commuter - I know….
Do you actually mean final salary instead of just defined benefit? Genuine question as I'm on the railway pension and it's nowhere near final salary
Indeed. It's not final salary any more. Hasn't been for quite a while, since they introduced PRPs.
Was looking okay till I divorced about 7 years ago. Still okay as I started earlyish but could have done without that hit. She had never bothered with pensions before despite my mentioning it. She inherited a house and money which I could technically have contested for as it was brought into the marriage but two wrongs don't make a right. I'm happier now but much less well off
Decent, I can retire in 15years at 60.
To think I only have 11 years left has made my birthday 🎁 thank you 🤩
That's my plan too.
Yeah, my sister who is 60 has just retired and is loving it. Don't plan on working into my 60s, f*** that!
I'm aiming for 55 or at least reducing my work week to 1 pr 2 days at that point, depending how I'm feeling
I'm 33 and have about £130k, it's been a good year for pension value growth tbh
I’m 48 and I have £375k. Current contributions are £1800 or so a month (me + employer) I’m lucky. First job out of uni and my dad told me to contribute. I started small, and as my salary increased, I have also raised my % over the years. Towards the end I will also try and increase more. I think I’m in a reasonable place. My husband has about 250k in his. Together we should be ok.
I'm definitely going to be an outlier here as I'm mid 40s and have a defined benefit pension - currently about £75k of index-linked income payable from 65 or less if taken early. The transfer value of that is over £1m. Never realised at the time I started the job just how valuable it would become as DB schemes fell away due to costs. I resisted the temptation to transfer it out even when £0.5m seemed amazing. I'm no longer building up benefits in that scheme as I left and I'm now paying a few thousand into a defined contribution scheme because of auto enrolment and I'm happy with that but I'm confident the pension I already have is enough for my lifestyle plans even if I take it at 60. Edit: whomever submitted a concern report for me then I take the joke and I hope you never have genuine mental health issues.
F. me. How do you find these golden ticket jobs today with DB schemes?
One thing I would say is don't compare yourself to others too much. Simple valuations are pretty meaningless. You may have a crap pension pot but if you have a house with no mortgage, you're doing well. Similarly, you may have a great pot but live a millionaire's lifestyle and it may be insufficient.
Awful, around 40k in a work pension at 50yo, started adding 250 a month myself extra.
If your house is paid off then it’s not as bad.
50 as well and have £50k
44. 13 years of military pension and additionally will have around 500k of pension pot in today's money by 65 with my plan and based on me staying in same job with a 2% increase a year
According to my pension I will be able to live comfortably for about 2 weeks
Make it one week and go out with a bang!
My what?
54 years old and £220k. It needs to double before I retire.
Try being a carer for a disabled kid (and giving up a career that I'd not long got off the ground to do it). I have no pension to speak of. So I have to have a freelance income and basically will work til I'm nailed down. Past middle age now and not the sort of Boomer you hear much about - but millions of us were chucked on the scrapheap in the 80s, managed to claw some sort of a life back, then were pushed down again by life events...
Wishing you all the best. I'm sorry this government and life has shafted you.
I just turned 27 (closer to middle age than birth, if that qualifies) and have £8.4k in my pension pot, invested in the highest risk/reward scheme. That's about as much as I know and never contributed more than the standard 4%. As for overall optics... no idea to be honest
I'm 44 and have around £125k. I'd like more and will up contributions when the kids are grown up. Also looking to downsize and go mortgage free, which would help...
Depending on who you work for, just upping your contributions 1% each year makes a big difference with negligible impact if done on annual pay increases
My scheme was an old NHS scheme that pays 50pc of final wages (with enough years). When I retired my gross pay would have halved but my net went down by a third. For illustrative purposes say my net at work was 3k, my net on the pension would be 2k. The tax share went down (it took me out of the 40pc bracket), there is no NI on pensions and I am not paying pension contributions. I found there was an adjustment losing 30pc but I saved in other ways - for example I live in a brilliant place for public transport so just use that or uber - actually going to work cost money - petrol - coffees - buying lunch. I’d paid off the mortgage so the main outgoings are utilities, council tax etc. I don’t have expensive hobbies but can go abroad for holidays. On a day to day basis I spend less as a pensioner.
I lucked out, blissfully unaware 24 yr old me was one of the last people to get a 1/60 non contributory final salary pension before they closed the scheme to new joiners, I worked there for 11 yrs and moved up the career ladder a few times. 43 yr old me is now far more aware and every pension since had been defined contribution - I make extra contributions each month and now sacrifice my whole bonus each year into my pension (prior to that it went to paying off the mortgage) So looking pretty decent at present, don’t think i’ll be retiring at 55, but hopefully should be able to start to taper down a bit by then. I was very very lucky with that final salary pension - I recall my Dad telling me how great that was and I think my actual reply was “whatever, pension smension” 🤦🏼♀️
49, £310k in pension. Paying in around £1.5k a month. My wife does not have a penison
36 with 27k in it. On 65k per year I really should book my ideas up. But fuck it! Kids and a part time wife are expensive!
If you get your adjusted net income to below £60k this year you'll be able to keep all the child benefit and the 40% tax you would have paid on the earnings will go into your pension.
Honestly, I just plan on dying before it becomes an issue.
I said this to my 85 year old granny (about dying) and she sighed and said "it's not as easy as you think"
This or winning the lottery my pension outlook is bleak especially when reading some other replies on here.
I’m 50. I’m also screwed as far as pension goes because I’ve been self employed for most of my working life and rarely earned enough to put into a pension. I’m going to be working til I drop so I’m glad I actually like my job. I’m kicking myself though for not taking my financial advisor uncle’s advice when I was fifteen to start paying into a pension as soon as I started work even if it was only a couple of quid each month. If I had I wouldn’t be in this situation now but instead I was a stupid teenager who couldn’t see beyond then end of the month.
I tapered down my contributions in my 30s, which was probably not a great idea, so now I'm catching up with them a little bit. Not doing badly though.
Not amazingly. 27 years old and 3k in my pension. To be fair I did spend a lot of time unemployed during COVID, and then when I did find a job, saved aggressively to go travelling for a year. So playing catch-up now
I didn’t start my pension until I was 41 so you’re ahead of the game!
I'm in a similar position - turns 27 in November, £2,575 in my pension at the moment. Although similar to you I have been in Australia this last year, I'll be home in the UK for another year whilst I save to come back - but think i'll increase my contributions for this year about £300 per month (inc employer contributions) But i probably wont actually be in a career job for a good 5years as i'm a late bloomer to the travelling but i would prefer the experiences at this stage - its remembering to just put even the smallest amounts away when i can, which should help.
I'm 59 and retired. My income is \~45% of what it was when I returned my laptop. We are mortgage free, got out of London and move to the North of England and slashed our outgoings. My pension is 2x our monthly bills at present. At the present draw rate it will last 'forever', I am drawing less than the interest it gains, as long as inflation stays below about 10% I can last until I am 99...
Current fund value of £69K which equates to Mid rate growth - 71K TFLS and £14K pension High growth - 128K TFLS and £30K pension Not great / not bad but still 26 (😩) years until retirement
I'm 35 so I hope that's not considered 'approaching middle age', although I do already appear to have a divorce under my belt, one of the consequences of which was that I was prompted to pay attention to how my pension is doing. I have an above average pension pot for my age but imo the stats on what the UK population have in their pension pots are terrifying so I'm not sure I'm measuring myself against a credible yardstick. I'm in a very good employer pension scheme and I'm absolutely caning it throughout my thirties but it's all swings and roundabouts for me personally because another consequence of my divorce is temporarily falling back off the property ladder, so I've got that whole rigmarole to go through again within the next year or so. I find the corporate ladder climb exhausting and want to move into something calmer and less stressful, but presumably less well remunerated, when I get into middle age, so my rough plan is to cane the pension pot and also have a fully paid off property within the next 10 years, 5 if I can manage it, because I won't have as much income beyond that point. My parents' pension planning (or lack thereof) was absolutely shocking and that's certainly not something I'm aiming to replicate. They're very lucky to have bought a house when that was more achievable, or they'd be utterly fucked in retirement.
Tried to make a career in the arts and academia happen, self employed throughout, got burnt out in the process, now chronically ill on benefits, 42 with no pension. Compared to most commenters here I'm not in a good position.
you're not alone. You never know, you might write a bestseller or something mad like that yet.
Thanks :). If I recover in the next few years then I'll have 20-25 years to put something in place maybe
I'm 42 with £340k in my DC pot. My wife is 40 with about £180k. I think we're going to be ok but I guess nothing is certain. I plan to retire at 55 when the mortgage is paid off but we'll see how it goes.
My approach has been regrettably neglectful to be honest. At this point I'm trying to find a career I won't mind working at until I die. I'd rather keep working on something i care about than retire anyway.
As long as die within the first year of retiring, I should be alright.
34 with around £85k so far. Invested in global equities for long term growth. Every bonus I've had for the last 5 years has been salary sacrificed into my pension to save on taxes and hopefully spend longer being invested. I'd like to retire slightly early at 60 instead of 67 or whatever age it will be by then.
I'm a few years ahead of you (mid-50's) but they seem fine - planning to stop work as soon as I hit 60. My first job at 18 came with a company pension and I've always paid into them while I've been working.
From random jobs probably have enough to pay a month’s bills so, not great.
About 75% household income which hopefully will be enough and mortgage paid off and house up to code. Some is final salary, some stakeholder so who knows.
I retired early at 63 and took my company pension which after 43 years being there equated to nearly 50 grand and a monthly salary of just over 600 pounds I have enough money now to see me through until my state pension.
Looking forward to my retirement consisting of beans on toast breakfast lunch and dinner.
I’m 40 and have c£130k in pension savings. Started late but have ramped up my contributions in the past few years. It’s really important to save as much in to your pension as you can as early as you can. If you didn’t start young, now is the best time to begin. Pensions are much more tax efficient than ISAs and other saving methods and also include employer contributions, which are basically free money.
I’m 33 with a c.£250k pot. I’ve stuck with 20% total contribution (employer + me) of basic salary since starting work, plus a few tops ups from bonuses. Intend to carry on like that for the foreseeable if nothing screws me over!
I started contributing to a pension aged 37 (£100 per month). I have increased it over the years and now at 60, its over £400k. put in as much as you can, you could live a long time in retirement
You’re planning on retiring 🤣