size of final pension pot
Comments
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I'm 46 with 43K base salary per year, current pension pot is 175K and total going in is £650 per month.
I think it is important not to pour every penny into pensions until you are in the right place to do it. I have other investments in shares, ISA’s and have a decent cash buffer of six months worth of wages along with spare cash for day to day spending. Things can change fast and without warning, a balanced yet diverse savings plan alongside a healthy outlook to life (with the odd treat) is how I am going about it.0 -
Don't forget to factor in tax credits which take the gross figure to £1K p.m.
If you continue at this rate and assuming a modest 5% growth, I calculate your pot shoud be well over 500K in 18 yrs time and this should give you a pension of £20K using drawdown at 4% plus state pension of a further £10K.0 -
I agree £800 combined contribution sounds a lot but it's only 17.5% of your salary and possibly an even lower proportion if you get a bonus, car, overtime, etc. Even after your employee deduction you are still on around double the national average wage so surely it must be possible to contribute more?
This year between the two of us we are contributing around £60k into our pensions, £8k into our long term LISAs, £4,128 into our son's JISA and leftovers into our ISAs.
My basic is not much higher than yours, my wife works part time at a lower rate, we somehow cover 24x7 childcare ourselves (really not easy, not started school yet) and are repaying a mortgage so it is possible if you really want the outcome and are willing to work very hard for it.
Alex
I guess the question is what do you want to achieve. My wife and I put around £30k-35k pa into our pensions each year and it's a huge sacrifice to the standard of living! No point being the richest skelly in the graveyard and all that - enjoy your young family, it won't last long!Thinking critically since 1996....0 -
Wow, I knew from some of your previous posts that you were pretty much sorted financially, but I am amazed at the amount you are managing to contribute to your pensions. I would think you are very well placed to retire early if you want to.This year between the two of us we are contributing around £60k into our pensions, £8k into our long term LISAs, £4,128 into our son's JISA and leftovers into our ISAs.0 -
This year between the two of us we are contributing around £60k into our pensions, £8k into our long term LISAs, £4,128 into our son's JISA and leftovers into our ISAs.
My basic is not much higher than yours, my wife works part time at a lower rate, we somehow cover 24x7 childcare ourselves (really not easy, not started school yet) and are repaying a mortgage so it is possible if you really want the outcome and are willing to work very hard for it.
AlexWow, I knew from some of your previous posts that you were pretty much sorted financially, but I am amazed at the amount you are managing to contribute to your pensions. I would think you are very well placed to retire early if you want to.
but how does it add up?
Alex, you are saving £72k + what you pay into ISA's, plus funding a mortgage, plus living expenses for 3 people, so while your basic may not be much higher I am assuming you get huge bonuses, while I agree with the sentiment of your post, you have missed out a few numbers!0 -
I am in a pretty similar position to many of you. I'm 47, earning £40k a year. I got a CETV valuation of my DB pension earlier this year which was just over £250k. I'm in the USS pension scheme and last year they also opened a DC fund that we could pay into.
The 1st 1% my employer matches so I took that up straight away, but I have only just decided to increase my contributions further into the DC scheme. I am now paying in an additional 14%, so 15% in total to the DC scheme and 8% into the DB scheme. My total contribution is now 42% of my salary. 19% by my employer and 23% by me, nearly £1400/month with salary sacrifice. I still have a mortgage of £113k and this is still over 25 years to keep the monthly payments down which leaves me the freedom to invest more into my pension.
In my view paying into my pension now will be far more valuable in the long run than overpaying my mortgage. The DC fund which has only been running for just over a year now has grown by 21.5%, so more than happy with that
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martinsurrey wrote: »but how does it add up?
Alex, you are saving £72k + what you pay into ISA's, plus funding a mortgage, plus living expenses for 3 people, so while your basic may not be much higher I am assuming you get huge bonuses, while I agree with the sentiment of your post, you have missed out a few numbers!
That was pretty obvious to me too - the post does seem a bit misleading!Thinking critically since 1996....0 -
Yes we both get a car allowance and occasional bonuses but never massive and no overtime. The mortgage is affordable due to historic good decisions. Our living costs are very low and haven't increased much since we were students (both student loans repaid). We have company mobiles, no pay TV, use a lot of vouchers, gain a few thousand a year from cashback and surveys, buy basic unprocessed food, switch energy and broadband regularly, use nectar/clubcard points, etc. Some of my son's favourite toys are from our own childhood and I am not sure they were even new when we had them!
I guess we have mostly resisted the temptation to expand our lifestyle to match our income. I don't think spending more would make us happier.
Still we don't grow our own veg or darn socks (I have a big supply after switching a bank account to M&S) and we go on holiday (paid for by HSBC switching this year) and the water company tells us that my son's bedtime baths are wasteful so we are a bit extravagant.0 -
If you are overpaying the mortgage to pay it off early you would be better off pausing that, paying extra into the pension for a while and letting its growth benefit from compounding, and then resume paying off the mortgage.
A few decades ago endowment policies promised something similar. Ultimately investment returns failed to deliver. Despite a progressive fall in interest rates. Reducing the mortgage while not always the best return. At least provides flexibility and security. Money locked up in a pension. Offers no protection against life's unexpected turn of events.0 -
A quick play with your numbers suggests you should expect a sustainable post-tax income of something in the £20k to £23k range from age 60 if you just keep increasing your contributions in line with inflation each year. That includes state pension. If that sounds like enough, then fine. If not then you need to think of increasing your contributions or retiring later.thanks all for the advice. yes i guess i was being overly cautious with my sums. whether this is because of all the negativity surrounding saving for retirement i don't know. your posts are certainly much more positive and i will re-look at my sums and what my plan of outgoings might be in the future.0
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