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  • FIRST POST
    • lifebegins
    • By lifebegins 10th Oct 17, 6:09 PM
    • 134Posts
    • 144Thanks
    lifebegins
    Where to start
    • #1
    • 10th Oct 17, 6:09 PM
    Where to start 10th Oct 17 at 6:09 PM
    I have a small defined contribution pension pot (£60,000) and will qualify for the full state pension when I retire in 18 years but have suddenly realised that this is very little.

    I have never seen a financial advisor and feel it would be too much to start from a basis of no knowledge so can anyone recommend where to start looking at investments and savings for retirement? My husband has a much healthier DC pot 8 times as much as mine and will also get a full state pension.

    He is a higher rate taxpayer. I am not and earn much less.
    Should I simply add to my pension fund or would it be worth considering other things?
    Last edited by lifebegins; 10-10-2017 at 6:23 PM.
Page 1
    • TARDIS
    • By TARDIS 10th Oct 17, 6:28 PM
    • 51 Posts
    • 33 Thanks
    TARDIS
    • #2
    • 10th Oct 17, 6:28 PM
    • #2
    • 10th Oct 17, 6:28 PM
    Are you sure it's a DB pension as these are usually described as an estimated annual value at whatever the usual pension age is for that scheme. I assume it's not £60k pa as you describe it as small? Is that the transfer value or something else? What will you get per annum? How much extra do you think you will need? Same applies to your husband as you refer to his DB pot and DB schemes don't have "pots"
    When do you (both) hope to retire?

    Have you got a recent state pension forecast to confirm you will get full amount?

    So many questions! But it really is a very individual thing.
    If you have the time I found reading the (very) long thread "early-retirement wannabe" by Marine_life very educational - currently on pg 3 of this forum or use the search as I can't link directly.
    • lifebegins
    • By lifebegins 10th Oct 17, 6:36 PM
    • 134 Posts
    • 144 Thanks
    lifebegins
    • #3
    • 10th Oct 17, 6:36 PM
    • #3
    • 10th Oct 17, 6:36 PM
    Sorry, they are both defined contribution pensions! I've edited it now.
    I got both pensions forecasts within the last week so hopefully our entitlement to the full state pension won't change.
    We both plan to retire in 15-18 years or so, unless health or other circumstances change though we might look to reduce our hours before then.
    Thanks for the tip on the thread by Marine_life- I'll have a read.
    • BLB53
    • By BLB53 10th Oct 17, 6:44 PM
    • 1,173 Posts
    • 962 Thanks
    BLB53
    • #4
    • 10th Oct 17, 6:44 PM
    • #4
    • 10th Oct 17, 6:44 PM
    I have never seen a financial advisor and feel it would be too much to start from a basis of no knowledge so can anyone recommend where to start looking at investments and savings for retirement?
    I can recommend 'DIY Pensions' by J Edwards which I think should cover all the basic information you require on starting (or continuing) your long term pension investing.
    If you choose index funds you can never outperform the market.
    If you choose managed funds there's a high probability you will underperform index funds.
    • AlanP
    • By AlanP 10th Oct 17, 9:46 PM
    • 998 Posts
    • 707 Thanks
    AlanP
    • #5
    • 10th Oct 17, 9:46 PM
    • #5
    • 10th Oct 17, 9:46 PM
    My first thought is that you should probably be looking at this from a joint point of view?

    Assuming you are still together your join pensions are what you will be living off, and i guess that is the intention?

    Overall you have over £500k between you plus an expected 2 * full State Pension which is a pretty good position to be in.

    Have you worked out what income you will need / want in retirement as that will start to give you a view on how large the joint pot needs to be ideally?
    • enthusiasticsaver
    • By enthusiasticsaver 10th Oct 17, 9:52 PM
    • 4,848 Posts
    • 9,155 Thanks
    enthusiasticsaver
    • #6
    • 10th Oct 17, 9:52 PM
    • #6
    • 10th Oct 17, 9:52 PM
    Well done for looking at this now when you are still young enough to do something about it.

    The first thing you should do is familiarise yourself with your existing pension rules and make sure you are maximising your employer contributions. You could also look at avcs or upping your monthly pension payments.

    You should also get a state pension forecast so you know whether you will make the necessary contributions to get full SPA.

    If you intend to take early retirement it may be worth reading up on SIPPs and stocks and shares ISAs so you have another pot to draw on prior to taking your DC pension depending on the age you want to retire. Track down any missing pensions from previous jobs.
    1 week to go until early retirement. Debt free and mortgage free.

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
    • lifebegins
    • By lifebegins 11th Oct 17, 10:19 AM
    • 134 Posts
    • 144 Thanks
    lifebegins
    • #7
    • 11th Oct 17, 10:19 AM
    • #7
    • 11th Oct 17, 10:19 AM
    I've ordered the DIY pensions book to get up to speed with this all.

    Yes, OH and I want to maximise our joint retirement planning and would plan to enjoy retirement together. That said, a friend's husband left out of the blue for someone else after 25 years of marriage so I'd rather not rely completely on his pension pot just in case he has a mid-life crisis! It does feel very skewed at the moment.

    We have completely joint finances, current account etc. and have similar views about finances.
    One other point, he is due quite a decent one-off extra payment at work (c25K) and is wondering whether to put it into his pension to avoid being hit with 40% tax on it. I don't think there's any way he can transfer to me for my pension or savings without incurring the 40% tax is there? He'll happily do whatever seems to make sense long term.
    I'll start looking into AVCs, SIPPs and ISAs- I know I'm rather late to the party though- we have spent a lot on the children (and still will be until they are out of uni in approx. 8 years time).
    Last edited by lifebegins; 11-10-2017 at 10:24 AM.
    • atush
    • By atush 11th Oct 17, 10:48 AM
    • 16,381 Posts
    • 10,137 Thanks
    atush
    • #8
    • 11th Oct 17, 10:48 AM
    • #8
    • 11th Oct 17, 10:48 AM
    He should pay some/all fo the 25K into his pension to avoid HRT.

    You should boost your own pension contribs. How much do you curently pay in a sa %, and how much does your employer? Is that the Max they will pay in?

    You can also consider S&S isas.
    • lifebegins
    • By lifebegins 11th Oct 17, 12:26 PM
    • 134 Posts
    • 144 Thanks
    lifebegins
    • #9
    • 11th Oct 17, 12:26 PM
    • #9
    • 11th Oct 17, 12:26 PM
    Okay, thanks. What is sa%? I currently pay 5% which is matched by my employer. My understanding is that 5% is max employer contribution possible but I can increase mine.

    What size pension pot we would need is part of what I need to investigate. I think we'd like the equivalent of £35-40K including state pension (or whatever the equivalent of that will be when we retire) between us.
    • crv1963
    • By crv1963 11th Oct 17, 3:39 PM
    • 159 Posts
    • 420 Thanks
    crv1963
    Okay, thanks. What is sa%? I currently pay 5% which is matched by my employer. My understanding is that 5% is max employer contribution possible but I can increase mine.

    What size pension pot we would need is part of what I need to investigate. I think we'd like the equivalent of £35-40K including state pension (or whatever the equivalent of that will be when we retire) between us.
    Originally posted by lifebegins

    You have 500k pension savings between you at present and at a draw down of 3% pa that gives you 15k pa plus both your SP total about 16.5k pa so you'll have 31.5k pa as it is on the present figures so you are looking to build pots up to increase this to your target figure of 40k pa or another 8.5 pa between you.


    That will need around another 300k savings to achieve.


    I'd look to build your pot up a bit more in your name as it is heavily skewed toward your OH. We are in a similar situation and are going to push more funds into my OH name a mix of pension (SIPP) and S&S ISAs. Whilst also continuing to build my pension pot up as otherwise we'd miss out on the tax contributions to me.


    Having ISAs and SIPPs builds some degree of flexibility into the equation for timing retirement/ill health etc.
    Last edited by crv1963; 11-10-2017 at 3:41 PM.
    CRV1963- Light bulb moment Sept 15- Planning the great escape- aka retirement!
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