Indexation

hugheskevi

surely noone else here is contributing 20% of their salary into pension provision.... are they?

How about almost anyone with a final salary pension? About 7.5 million people give or take.

village_life

hugheskevi wrote: »

How about almost anyone with a final salary pension? About 7.5 million people give or take.

True, but those are the lucky few (7.5 million), what about the rest of us who are on MP schemes.....

I've always foreseen a two tier society in retirement anyway between FS and MP pensioners, nothing can be done about that really.... so I'll rephrase, anyone out there on a MP scheme contributing 20% of their salary?

hugheskevi

anyone out there on a MP scheme contributing 20% of their salary?

I put 33% into my personal pension, as well as having a final salary one too.

The tax breaks are too good to ignore, particularly as tax relief will be more restricted from next year, and we live in a time when borrowing is ridiculously cheap. For me, the incentives are to pension off higher rate tax, and not bother paying down mortgage. That debt will be sorted out either by inheritance or from pension income post age 55.

village_life

hugheskevi wrote: »

I put 33% into my personal pension, as well as having a final salary one too.

The tax breaks are too good to ignore, particularly as tax relief will be more restricted from next year, and we live in a time when borrowing is ridiculously cheap. For me, the incentives are to pension off higher rate tax, and not bother paying down mortgage. That debt will be sorted out either by inheritance or from pension income post age 55.

How old are you out of interest?

I agree tax breaks are usually too good to ignore, however sometimes you have to pick between not spending extra "real" cash to get the tax break benefit.....

I'm also going for the opposite approach of paying down mortgage pre retirement, as I see that a "must not have" before contemplating retirement....

what do people consider the best calculator to be? - so far I've used Hargreaves Lansdowne ( i think thats it!) plus a couple of calculators from my ex providers (Fidelity and Bluefin).... be interested if anyone uses any others?

Next Jan I can review my pension contribution, I'll probably up it to 5% (matched by employer), I cant bring myself to throw more into it though, I'd rather pursue my mortgage cleardown/2nd home strategy as it seems more tangible.........

dunstonh

yet I know of people, and I see people posting who are 30,40+ without a bean saved in a pension - so surely I am better off than them!

That says more about them and their lack of forward planning and is a serious negative of the consumer driven society we have today where people are more willing to spend money they dont have to buy things they dont need but do so to keep up with the Jones'

There are going to be a lot of poor people in retirement and the country cannot afford to pay for them all.

surely noone else here is contributing 20% of their salary into pension provision.... are they?

I'm not putting 20% into pensions but I have increased my pension and investing by more than that. I prefer a mix of tax wrappers.

It was very common to see double digit contribution levels in the past. 10-20% was frequent. Nowadays its less common but that is down to society.

You have a choice. Follow society downhill and be poor or take your retirement into your own hands and protect yourself.

Next Jan I can review my pension contribution, I'll probably up it to 5% (matched by employer)

Thats 10%. Its getting there.

village_life

dunstonh wrote: »

That says more about them and their lack of forward planning and is a serious negative of the consumer driven society we have today where people are more willing to spend money they dont have to buy things they dont need but do so to keep up with the Jones'

There are going to be a lot of poor people in retirement and the country cannot afford to pay for them all.
I'm not putting 20% into pensions but I have increased my pension and investing by more than that. I prefer a mix of tax wrappers.

It was very common to see double digit contribution levels in the past. 10-20% was frequent. Nowadays its less common but that is down to society.

You have a choice. Follow society downhill and be poor or take your retirement into your own hands and protect yourself.



Thats 10%. Its getting there.

dunstonh
I do value your advice, you seem to talk sense most of the time.... i guess the issue for me is that we're that early into the process that we can see people are going to struggle in the future, but its yet to hit home really yet..... i dont know any retirees also, never have, so difficult to understand the pressures.....

I can get to the 10% from January next year, meanwhile the mortgage overpayment is an enabler for future strategies (second home or future savings once mortgage paid off etc) -what other kind of investments/strategies could one pursue?

zygurat789

village_life wrote: »

At an income of £67k pa (OK I've just started this job, but anyway) I consider myself very fortunate and at the higher end of mainstream income.... so surely that would afford me the ability to buy one cake for the future, and a second cake to nibble at in the present :-)....

interested in your final comment though - why is £20k inadequate? what do you think you'd be comfortable with in your retirement? what stage of retirement are you at (i.e how long in), whats your lifestlye factors that would make £20k inadequate as when I look at my budget, strip out all the things I wont need, then £20k seems like it'd do?

Just started and incurring extra expenditure already (Ramblers subscription - got to fill all that free time somehow). I have always been careful with money all over the place, privatisations, BS possible privatisations etc and I haven't borrowed anything for 30 years but I didn't actually plan for retirement and I didn't (and still don't) really trust financial institutions so I've no one big pension pot. But, when I put it all together I ended up with just short of £40K at todays interest rates, now if they were to go up I'd be happier than Larry.
I also need to find the rent for my new allotment.
If you need ideas on what you might spend in retirement look for a thread entitled The Number last used a few weeks ago.
My biggest item is likely to be a mortgage to my single parent (abandoned) daughter when her house situation is settled, could be up to £85K. Does anybody plan for this type of outlay?

hugheskevi

How old are you out of interest?

Age 32, plan to stop working about age 42, give or take.

Admittedly, my pension saving rates are rather bizarre, but that is due to plans to travel extensively and when taken together with house, mortgage and ISA strategies it all comes together into a nice tax-efficient plan.

village_life

hugheskevi wrote: »

Age 32, plan to stop working about age 42, give or take.

Admittedly, my pension saving rates are rather bizarre, but that is due to plans to travel extensively and when taken together with house, mortgage and ISA strategies it all comes together into a nice tax-efficient plan.

ok so how are you modelling it? i.e. are you using any meanstream calculators to conclude that your plan is indeed viable?

CLAPTON

village_life wrote: »

Your maths is correct, my core salary at the moment is £67k per year. However I dont expect to get anywhere near to £67k per year (or half that) in retirement, as at the moment my salary is spent on mortgage, nice holidays, normal bills, insurance, and a good lifestyle..... in retirement my expectations are much less for pension provision.

In my mind I was thinking of somewhere between £20-25k pension in retirement, my state pension and second state pension should come in at ~£10k pa?, so I'm looking to make up £15k via my own provisions.....

W.R.T 20% of my salary, there is no way on this earth I am able to put aside £1k per month into a pension pot, let alone one thats not guaranteed to see that investment return - I'm still at the mercy of the markets whether I contribute my 3% or 20% of salary.....

surely noone else here is contributing 20% of their salary into pension provision.... are they?

I suggested 20% in total of your salary
your employer pays 5% so that leaves 15%
the taxper will pay 40% of that

so you actually pay 67,000 x 15% x 60% = £6030net pa or 502 net per month