40 and no pension, where do i start?
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camso69
Posts: 1 Newbie
NI contributions low, stayed at home with children for 8 years, now working again and need to make pension arrangements - help!
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First of all check your state pension forecast and make sure you have Home responsibilities credits recorded for your years at home.
https://www.thepensionservice.gov.uk
There are 2 state pensions so getting an idea of how much you will get from there is an excellent starting point for your pension provision.
Does your company offer a pension?Trying to keep it simple...0 -
At 40,I'm not sure its worth bothering getting involved in a pension scheme. You can gamble your own money just the same as the institutions can gamble it.0
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Agree with Edinvestor, start off by getting a State Pension forecast, you may be pleasnatly surprised (I was). You need 30 years NI paid/credited to get a full State Pension. Your eight years of childcare should be credited as Home Responsibilities (providing you were claiming Child Benefit).
Then join your Company Pension if they also contribute to it.
I am not a Pensions professional.(AKA HRH_MUngo)
Member #10 of £2 savers club
Imagine someone holding forth on biology whose only knowledge of the subject is the Book of British Birds, and you have a rough idea of what it feels like to read Richard Dawkins on theology: Terry Eagleton0 -
At 40 starting a pension can still be worth it if you are a high earner and prepared to pay 50% or more of salary into said pension (before tax relief). Many people think that now is actually a good time to start a pension as the stock market is still quite low. If not, plan to throw yourself on the mercy of the state instead. The worst thing to have is a small pension - just enough to mean that you are not entitled to any benefits in retirement, or have your pension income deducted pound-for-pound from your benefits.0
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camso69,
time is not in your favour, but timing may be...
I think I read on here somewhere that you should look to put half your age as a percentage of your salary into your pension. So 20% would be the minimum you should start tucking away. Realistically you will be looking for at least 15 years of contributions. The compounding effect should not be underestimated.
As has been stated already, equities (look at the FTSE100 as a crude measure) are relatively cheap and offer good buying opportunities.
Best wishes. It's seldom too late....and then the window licker said to me...0 -
At 40,I'm not sure its worth bothering getting involved in a pension scheme. You can gamble your own money just the same as the institutions can gamble it.
Nonsense.
The OP has at least 20 years in which to acquire a decent pension nest egg. The tax relief alone makes it worthwhile. It should be very easy indeed to generate a pension fund of between £100-£150k in that time, which would put them far in advance of the average person reaching retirement age.
Why on earth would you want to discourage them from doing that?0 -
I did some calculations on this a couple of years ago and worked out that a man starting retirement savings at age 40 would need to put aside about 32% of salary in order to retire on half their final income (increasing at RPI and with allowance for a spouse's pension). A woman would need slightly more.
So ideally, put aiside as much as you can afford.0 -
NI contributions low, stayed at home with children for 8 years, now working again and need to make pension arrangements - help!
If your employer offers a final salary scheme do take it. Even only 20 years of service will pay off - big time. If not, then consider your options - you may be better off by investing in an ISA. You should take professional advice in this case.0 -
bristol_pilot wrote: »At 40 starting a pension can still be worth it if you are a high earner and prepared to pay 50% or more of salary into said pension (before tax relief). Many people think that now is actually a good time to start a pension as the stock market is still quite low. If not, plan to throw yourself on the mercy of the state instead. The worst thing to have is a small pension - just enough to mean that you are not entitled to any benefits in retirement, or have your pension income deducted pound-for-pound from your benefits.
No need to pay as much as 50% of salary! It would hardly be worth working if you are going to contribute this much. :rolleyes:
The key thing is contribute what you can afford - I would suggest 25% of salary between your contribution and your employer's. That should be enough to provide a reasonable pension at 65 - probably only around 35-40% of your final salary, but you have to be realistic about expectations at this stage of your life. You need to balance earning enough to make work worthwhile, and building up a reasonable retirement fund. Even at 40, retirement is still a long way off and you are still relatively young. Aim to enjoy your current life, not just plan for old age.
I also recommend not putting all your money into the stockmarket, regardless of what the 'gurus' say. Spread your investments across shares and bonds.0 -
Nonsense.
The OP has at least 20 years in which to acquire a decent pension nest egg. The tax relief alone makes it worthwhile. It should be very easy indeed to generate a pension fund of between £100-£150k in that time, which would put them far in advance of the average person reaching retirement age.
Why on earth would you want to discourage them from doing that?
If he bought an annuity with his £150k,how much would he get back per month?0
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