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How big should my pension pot be ?
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# 1
russ311
Old 27-08-2009, 8:53 AM
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Default How big should my pension pot be ?

I'm trying to find an easy way to see if I'm on track with my pension. Does anyone know of a calculator that allows me to say (a) how old I am (b) how big my current pension fund is (c) how much I'd like to have when I retire and (d) how old I expect to be when I retire.

If not then I'm 40 (ish), have a fund of around 35k and would like to retire at 67 with 1000 per month. Can anyone tell me if I'm on target ?
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# 2
bendix
Old 27-08-2009, 8:57 AM
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How much do you contribute each month?
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# 3
russ311
Old 27-08-2009, 9:06 AM
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Default How much do I contribute

Currently 225 employer contribution with nothing from me but this is increasing to 262.25 from my employer plus 112.50 personal contribution (374.75 total) from 1st Sept.
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# 4
worto03
Old 27-08-2009, 9:30 AM
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http://www.h-l.co.uk/pensions/pension-calculator

This might be the sort of thing your looking for?
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# 5
McKneff
Old 27-08-2009, 9:39 AM
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In 27 years time, you'll be able to buy a couple of loaves with 1000 a month.
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# 6
bendix
Old 27-08-2009, 9:39 AM
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The HL calculator says you're pretty much on track, assuming you get 7% per annum growth. You'll have a pot woth 540k which will give you an income of around 25,000 per annum, but you have to remember that that is in future value money. Given pretty average inflation rates of around 2.5% per annum, that will give you around 12000 per annum in today's terms.

Personally, I'd be erring on the side of caution and increasing my payments now while you can, to at least matching the employer's contribution.

At the age of 40, you need to be contributing 15-20% to be safe.
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# 7
dunstonh
Old 27-08-2009, 9:45 AM
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Your current pension provider will be able to tell you how much you have as a pension fund and how much it could be using example growth rates to a specific age.

A rough yardstick is 35k by age 35 but that doesnt take into account the fact that some pay less initially and more later etc.

For income purposes, it is a good idea to use 5% of the fund value as guide to income.

So,if you want 12,000 a year, that means you take (12,000 / 5) /*100 = 240,000 investment fund.

You also need to take inflation into account as 12,000 wont have the spending power at age 67 as it does at 40 (ish). It will probably be closer to around 5,000. So, you need to factor that in as well by increasing the pot value. Of course, investment returns can go some way to cover inflation as well as increasing your contributions with inflation. However, far too many people dont increase their premiums.
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# 8
worto03
Old 27-08-2009, 10:13 AM
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I'm only just getting the hang of this myself so correct me if I'm wrong but you should also get your state pension ontop of anything from your company pension which should help too
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# 9
russ311
Old 27-08-2009, 10:28 AM
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Thanks all, it's good to see that I'm not too far off being able to survive when I retire. The calculator provided by worto03 seems particularly useful and easy to use but thanks to all who've responded.
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# 10
marklv
Old 27-08-2009, 12:34 PM
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You'll survive, but make sure you monitor your investments closely. Don't put everything into the stockmarket or you could face a nasty shock - ensure a good portion of your fund goes into gilts/bonds. I also feel a 7% per annum growth rate is a little optimistic.
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# 11
bendix
Old 27-08-2009, 1:46 PM
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Quote:
Originally Posted by marklv View Post
You'll survive, but make sure you monitor your investments closely. Don't put everything into the stockmarket or you could face a nasty shock - ensure a good portion of your fund goes into gilts/bonds. I also feel a 7% per annum growth rate is a little optimistic.

He's got 26 years to go before retirement. Plenty of time to ride out a few bumps in the stockmarket.

At that age, he should be at least 75% in stocks, with a chunk of that overseas and in emerging markets.
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# 12
russ311
Old 27-08-2009, 2:13 PM
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Checking my current pension, the 3 funds that I currently invest in (Axa Global Equity, Axa Overseas and Axa UK Tracker) are showing up 10.9%, 13.9% and 21.4% against cost at last statement so that's fairly positive I guess.
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# 13
marklv
Old 27-08-2009, 2:29 PM
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Quote:
Originally Posted by bendix View Post
He's got 26 years to go before retirement. Plenty of time to ride out a few bumps in the stockmarket.

At that age, he should be at least 75% in stocks, with a chunk of that overseas and in emerging markets.
It depends on one's risk tolerance. Personally I would go 50% global tracker, 50% gilts.
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# 14
Paul_Herring
Old 27-08-2009, 7:43 PM
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Quote:
Originally Posted by worto03 View Post
I'm only just getting the hang of this myself so correct me if I'm wrong but you should also get your state pension ontop of anything from your company pension which should help too
Depends. Do you think there'll be a non-trivial (non-means tested) state pension when you retire?

I'm doing my planning assuming there won't be in 30 years time. If there is it'll be a nice surprise.
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# 15
marklv
Old 27-08-2009, 9:02 PM
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I reckon the state pension will soon cease to exist as anything except a safety net for the poor. I believe Cameron is already planning to get rid of it.
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# 16
JoeCrystal
Old 27-08-2009, 9:23 PM
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Indeed, that why I reckon it would be even more vital for people who have their own pensions. Which is why I am looking into having one starting from this January.
Attempting to build Sustainable Portfolio with twenty new companies. Bought ACE, BSIF, EDEN, GOOD, GRPH, UKW, ONE, TRIG and VRS so far.
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# 17
dunstonh
Old 27-08-2009, 11:14 PM
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Quote:
Originally Posted by marklv View Post
I reckon the state pension will soon cease to exist as anything except a safety net for the poor. I believe Cameron is already planning to get rid of it.
I reckon that may end up being the case or something along those lines with the second state pension over the long term. I think the basic state pension is pretty safe though.

Pension credit is more likely to go first though. Although ironically it may end up be raises in the basic state pension that take care of that.
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# 18
marklv
Old 27-08-2009, 11:18 PM
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I doubt all this. I think the state pension will simply become another benefit, like JSA or disability benefit and become fully means tested.
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# 19
dunstonh
Old 27-08-2009, 11:38 PM
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Quote:
Originally Posted by marklv View Post
I doubt all this. I think the state pension will simply become another benefit, like JSA or disability benefit and become fully means tested.
The move to state pension age to 68 is a reduction. That is likely to get extended to 70. Each increase in age reduces the draw on the pot that allows them to keep it running.

You never know, if obesity continues as it has been going then a good proportion of the UK population arent going to make it to retirement and we could see life expectancy fall.
I am a Financial Adviser. Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
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# 20
marklv
Old 28-08-2009, 12:43 AM
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Quote:
Originally Posted by dunstonh View Post
The move to state pension age to 68 is a reduction. That is likely to get extended to 70. Each increase in age reduces the draw on the pot that allows them to keep it running.

You never know, if obesity continues as it has been going then a good proportion of the UK population arent going to make it to retirement and we could see life expectancy fall.
Well, moving the goalposts is the same as abolishing goals! They might as well move the state pension age to 80.
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