Saving for retirement (advice rquested)

mouche

I’m 29 (30 in April) and OH is 34. We would appreciate some advice on saving for retirement.

We have some savings in cash ISAs and savings accounts but this is earmarked for the deposit on our first home. I have a company pension to which my company contributes 6% of my salary and I contribute 1% (I can contribute as much as I like but when I started the pension, I wasn’t really focused on saving for retirement and started it simply to take advantage of the company’s offer to contribute 6%). I’m not sure but I think the total contributions by both must be around £3800 by now. OHs company offers one of those matching contributions pensions but he hasn’t taken one out yet as he’s unsure about locking away the money.

We are here on work permit though we will be eligible for permanent residentship in another 2 years. We may or may not remain in the UK till retirement so whatever form of saving we do would need to be repatriable to India if necessary. Also, if we move back to India, it would probably not be possible for us to continue pension contributions in the UK. There is no guarantee we will move back but we want our savings to be flexible in case we do.

I would very much appreciate any advice on how best to save for our retirement.

dunstonh

I’m not sure but I think the total contributions by both must be around £3800 by now.

So, you are a little bit behind then. Ideally a rough yardstick is to have £35k in your retirement planning by age 35. Its only a rough guide and is one of those easy to roll off the tongue benchmarks but its a good guide.

OHs company offers one of those matching contributions pensions but he hasn’t taken one out yet as he’s unsure about locking away the money.

Give him a slap and get him in there ASAP. Nothing beats matched contributions. Its more than 100% gain overnight. You pay £80. Govt rounds it up to £100 and employer pays £100. Thats £200 paid in that has only cost you £80.

Also, if we move back to India, it would probably not be possible for us to continue pension contributions in the UK.

Correct.

There is no guarantee we will move back but we want our savings to be flexible in case we do.

So, dont pay in any more than you need to get the maximum employer contribution. Pensions can be moved between many countries and even if rules change later that stop that you can still keep your UK bank account open and have the pension paid into that. With internet banking as it is now just think how easy global transactions will be in 30 years time.

mouche

Thanks dunston...I really appreciate that! You confirmed what I suspected about OHs pension. Will get him to take one out pronto.

I doubt we'll have any spare cash left if we both contribute 6% to our pensions but if we do, what is the next best place to invest for retirement income? Or is that one of those everyone-has-their-own-opinion things?

dunstonh

Remember that a 6% contribution isnt really 6%. Its actually 4.8%. The pension contribution comes off before tax.

what is the next best place to invest for retirement income?

Nothing will come close to the pension with employers contribution and for retirement income pension still beats ISA even with no employer contribution but the difference is much smaller. Given the flexibility you are after I would max the employer contribution and then go with ISA after that.