Worried 25 year old

marklv

vaporate wrote: »

lol

Let's be totally frank about this. How many people are going to have £100,000 in the bank for retirement? If I do I will bloomin hop it abroad and live it up in my final hours lol not in this dump.

Secondly, how many ppl are able to attain this amount? Extremely small.

Another thing, retirement age will change as the years go by. The last I heard, according to sky news, is that state pension is not available until you're 70 for men. Or 68? Can't remember which. That is if you survive.

I saw a ad in the Kent Messenger paper detailing the death of my old school teacher at age 58, yes cancer. I was darn shocked and upset as I respected this guy alot.

My advice? Save all that you can but enjoy life at a reasonable level when you can. 100k is too daunting, if achieveable. Every situation is different.

£100k in the pension pot is very achievable, but it will only generate a flat pension of £6k a year or so at age 65. Realistically, I would aim for a pot of at least £200k for a retirement above the poverty line. In 40 years it can be done by anyone on average income.

marklv

miss_independent wrote: »

I'm in the same boat as the OP! I think it is a good idea to start saving for retirement now, rather than waiting until its too late and I had no idea you could start a pension on just £20 a month, I can't afford much as I'm self-employed but £20 I can manage! I will watch this thread with interest, the way I look at it is, I don't drink, I don't smoke and I'm single at the moment, so even though I don't make much I don't spend alot either, why not start saving for my future?

It's up to you what you want to do. £20 a month is very little, but it is a start, however I would suggest upping it to at least £100 a month if you possibly can. When you retire you get a minimum pension guarantee of £130 a week, so having a small personal pension makes no financial sense - it needs to be big enough to be worthwhile.

vaporate

marklv wrote: »

£100k in the pension pot is very achievable, but it will only generate a flat pension of £6k a year or so at age 65. Realistically, I would aim for a pot of at least £200k for a retirement above the poverty line. In 40 years it can be done by anyone on average income.

Depends how you define average. 200k is out of the question. Nobody I know or heard of has that amount. Not even my now retired distant uncle who was a bank manager.

afaiac, 100k if you are very lucky. Else rely on state pension as many do.

Example, my dad has a 700 a month pension from siemans, but he wouldn't get that now if he retired as he got that 'deal' during the 90's. Pensioned off due to ill health

miss_independent

Lokolo wrote: »

What are you doing? Company pension? Stakeholder? Private?

I'm not doing anything at the moment, I've just found this thread and want to see what is advised. I pay my NI contributions and save money in my ISA but that is it, I'm self-employed so there would be no company pension for me.

miss_independent

marklv wrote: »

It's up to you what you want to do. £20 a month is very little, but it is a start, however I would suggest upping it to at least £100 a month if you possibly can. When you retire you get a minimum pension guarantee of £130 a week, so having a small personal pension makes no financial sense - it needs to be big enough to be worthwhile.

Now that is totally impossible at the moment! But I can dream.... perhaps one day I could put that aside. I think I could manage £35 at a push . But I am a good saver, whenever I can I put £250 per month in ISA.

TMFTP

Don't forget tax relief. £250pm (or £100....or £20) into a pension is worth more than £250 into an ISA. Once in the pension you can make the same type of investment as you can in an ISA.

HOWEVER, that needs to be balanced against the fact you CANNOT access it once it's in a pension until you retire. With the ISA you retain control.

Perhaps worth considering how much you need as an emergency fund, and once you've achieved that number start to split the £250 between pension and ISA.

And it's nice to see how constructive Mark can be when he loses the flippancy.

marklv

miss_independent wrote: »

I'm not doing anything at the moment, I've just found this thread and want to see what is advised. I pay my NI contributions and save money in my ISA but that is it, I'm self-employed so there would be no company pension for me.

An ISA is ideal for a small saver. As the government already provides the GMP at state retirement age you really need to have a substantial pot in order to make having a pension worthwhile.

marklv

vaporate wrote: »

Depends how you define average. 200k is out of the question. Nobody I know or heard of has that amount. Not even my now retired distant uncle who was a bank manager.

afaiac, 100k if you are very lucky. Else rely on state pension as many do.

Example, my dad has a 700 a month pension from siemans, but he wouldn't get that now if he retired as he got that 'deal' during the 90's. Pensioned off due to ill health

If you work in the public sector you still get a defined benefit pension, though no doubt Cameron will end this sharpish when he gets in.

jh2009

vaporate wrote: »

lol

Let's be totally frank about this. How many people are going to have £100,000 in the bank for retirement? If I do I will bloomin hop it abroad and live it up in my final hours lol not in this dump.

Secondly, how many ppl are able to attain this amount? Extremely small.

Another thing, retirement age will change as the years go by. The last I heard, according to sky news, is that state pension is not available until you're 70 for men. Or 68? Can't remember which. That is if you survive.

I saw a ad in the Kent Messenger paper detailing the death of my old school teacher at age 58, yes cancer. I was darn shocked and upset as I respected this guy alot.

My advice? Save all that you can but enjoy life at a reasonable level when you can. 100k is too daunting, if achieveable. Every situation is different.

I know this got uprated to £200k in a later post, but:

1. Sad about someone dying at 58. I had a relative who died at 21 without any warning so you can never tell. But The problem is when will you die?? Unless you are standing near a cliff edge as you read this you probably cant answer this.

If i knew id die at 58 pensions wouldnt be a concern, but then was your old school teacher married? If so his wife might be benefiting from a widows pension.

On the same token, you cant assume you will live to be 120! I think you have to assume you will have some sort of average life, with a reasonable period of retirement, and fund that accordingly.

State provision is just under £7,000 per year from state pension age if you qualify for maximum pensions credit. Would that be sufficient to meet your income?

2. £200,000 or £100,000, you dont just write a cheque out. It comes from long term saving/investment.

As a basic rate tax payer, 20% of it is from tax relief. Then what you pay in at an early age gets investment returns.

£1000 paid in at 25, retire at 65, thats 40 years, if it grows at just 3% each year, would be worth £3262 at 65. Also remember 20% of that £1000 was tax relief.... so £100,000 isnt impossible.

3. State Retirement Age may very well change to 70, as already scheduled for 68. BUt if anything , this means you should even more be considering provision if you want to retire earlier!

I can see a lot of people in their 20s/30s today having to work much later than they expected due to lack of provision.

4. The problem with pensions is people not saving enough sometimes and having unrealistic expectations. Its generally people who put away £10 a month from their early 50s.

But Miss independent's thinking the right way as even a small amount at a young age will soon build up. It may only be £20 or £35 now but things might change and once in the habit, then you're contributing and its easier to change than to start.

If i was her id consider maybe splitting the saving shes currently making, so part ISA / part pension as thats generally a good combination. Give it some thought what your reasons for saving are. If an you're using an ISA for retirement provision then its probably better to save in a pension. If the ISAS there to target say a property deposit or something for her business then maybe pay more into the ISA.

Also if Miss independent ever in the future works for a company that offers a scheme with an employers contribution, she should take it as its free money from the employer topping up her own contribution.

She seems to have quite a smart head on young shoulders though. I notice in her earlier post she says shes single and i hope she isnt offended if i say she sounds a good catch for someone.

miss_independent

jh2009 wrote: »

But Miss independent's thinking the right way as even a small amount at a young age will soon build up. It may only be £20 or £35 now but things might change and once in the habit, then you're contributing and its easier to change than to start.

If i was her id consider maybe splitting the saving shes currently making, so part ISA / part pension as thats generally a good combination. Give it some thought what your reasons for saving are. If an you're using an ISA for retirement provision then its probably better to save in a pension. If the ISAS there to target say a property deposit or something for her business then maybe pay more into the ISA.

Also if Miss independent ever in the future works for a company that offers a scheme with an employers contribution, she should take it as its free money from the employer topping up her own contribution.

She seems to have quite a smart head on young shoulders though. I notice in her earlier post she says shes single and i hope she isnt offended if i say she sounds a good catch for someone.

First things first, I must apologise as I really didn't mean to hijack the OP's thread and I realise I have done that, so sorry OP! Hopefully we have both got some useful information from the replies!

Second, in reference to jh2009's post above. Thanks for the advice, I do think it is better to put a little aside now no matter how small as it is better than doing nothing and, like you say, gets me into the habit of saving now. I don't know what exactly my ISA money is for right now but I am concerned that I may want to access it one day and do not want to lock it away long term i.e in a pension fund. I see it as my "dream fund" (cheesy, I know ), and its nice to know that its there if I need it and I can access it instantly. I am going to speak to an IFA and see what I can do on £25 or £35 a month in some sort of pension fund and one day, when I am earning more money, I can contribute more to it. My mum gave up work to become a housewife when she had me and became totally dependent on my dad financially which she hated and I have always known that I wouldn't want to be like that; she just has her state pension whilst my dad has state pension, NHS pension and a private pension and he calls all the shots financially. Like my username says I like to be independent lol! As it is, my dad will not advise me on a pension or savings or anything else like that so that is why I am asking my questions here and I am grateful for all the advice. The way my Dad sees it is that he has provided for me and I am set to inherit quite a bit in terms of property so I will never need to buy my own home and hopefully I will have a nice husband to "take care of me" as well so why do I need to worry? The way I see it is, although I know I am very lucky (and grateful) to be in that position, it isn't my hard work that has earned it and I don't feel it is fair to expect anyone to provide for me financially. It does nothing for the self-esteem!

With regards to the last comment, I'm not offended at all ! I agree wholeheartedly, I just haven't found a young man who is an equally good catch yet :rotfl:!