New job: pension or debt?

MSE_Martin

Hi folks,

That's a very small line in a an article - intended to ensure people don't divorce pension planning from their wider financial situation. As always there are exceptions - e.g. 0% debt, low interest debt, even frozen interest debts.

Yet someone with 18% on credit cards, which could grow and cripple their interest will generally be better off focusing on sorting those out.

Thanks for drawing the note to my attention - I will tweak the phrasing slightly.

ffacoffipawb

dunstonh wrote: »

Ok, so the yardstick of having £35k in a pension by age 35 is a little off the mark for you but you are aware that you are starting late. So, thats a postive.

Sorry to butt in.

Is there a yardstick for 45 (say £100,000) or 50 (say £150,000)?

Thanks

jamesd

Age times 1,000 is one measure. But there's really a better one. There's nothing wrong with hitting a pension target too early, so if you have lots of free spending money you might consider making higher pension contributions so you can relax later. Or do it only when the stock markets are down, as they are still now, so you're buying more when the prices are relatively cheap.

Best to use a pension calculator like the one at Hargreaves Lansdown. Add 7,000 to the final income you get to allow for the state pensions if you'll wait for state pension age. If you want to retire earlier, you'll need to plan on doing without that for a while.

If you can, allow a safety margin of 50% in your target income so that you'll be well covered for changes in stock markets. It's easy enough to go on a long cruise if you find you have to much money, not so easy to fix having too little.

Lois_and_CK

Thanks everyone for your thoughts; you've all been really helpful. And thanks for the clarification, Martin.

I have another question if that's ok. When I meet with the finance guy at my new job to discuss setting up a pension, what sort of questions do I need to be asking?

dunstonh

Sorry to butt in.

Is there a yardstick for 45 (say £100,000) or 50 (say £150,000)?

No. Over the years the life companies used to come out with little phrases that were designed to be easy to remember. Some are now obsolete and others are heading that way but the 35 by 35 was one I recall seeing some years back for a certain income (cant remember if it 10k, 12k or 15k but something like that).

However, if you work on the basis that your investments would double in value every 10 years, you would need at least £70k at 45 plus 10 years more contributions from 35. It is possible to work out what you need by certain ages based on what you want at retirement and how much you are paying (assuming you are paying enough).