Really, how does a person on sub 15k get a good pension pot?

dunstonh

Surely retirement needs to be planned backwards?

It does. However, with the OP looking at it more simplisticly and on a contribution basis then it was a better way to put it.

Surely saying he should be paying £50 - £100 per month is too arbitrary and too much of a sweeping statement.

We know the OP's age and income. So, the contribution level is consistent with providing an amount in line with that level of income if you include the state pension.

The OP was asking how can someone save if they are on £15k a year which suggests they have been looking at large contribution amounts when realistically at that age that is not required for the level of income that is consistent with their current earnings.

Loughton_Monkey

Cautious_Investor wrote: »

Surely retirement needs to be planned backwards?
......
Plan backwards, you may not be able to afford the full contribution required to hit your goals, but at least you will know what it is.

The Cautious Investor

In principle, I guess you're right.

In practice, I would recommend most people do it 'iteratively'. Basically, you do spreadsheets that map out what will happen under assumed future parameters (investment returns, inflation, savings rates, State Pension age & amount, and pension/savings amounts of 'X'.........)

You would project well into retirement, using the same spending as the year before retirement (inflated...) and see if the cash flow 'adds up'. If not, then you would go back and adjust "X" - and perhaps other things [like date of retirement] - until you have a scenario that you can 'live with'.

Bigsmak

I think its great that someone at your age and on your salary is thinking about their future.

However, if I were in your position, I would probably take the money I was thinking about putting away for retirement and taking some night classes or an open university course to try and give myself the chance of earning more than £15k.

I know that sounds like a really cheeky answer, but its something I would think about.

Yes its important to put money away, but if in 2 years you find yourself on £25k or £30k because of this 'investment' (in yourself) it will give you a much better return for your money.

Now, This is not professional advice, it's just what a good friend of mine did and now they earn well over £30k at 32 years old (earning about £15k when they were 25)

Loughton_Monkey

Bigsmak wrote: »

Yes its important to put money away, but if in 2 years you find yourself on £25k or £30k because of this 'investment' (in yourself) it will give you a much better return for your money.

Now, This is not professional advice, it's just what a good friend of mine did and now they earn well over £30k at 32 years old (earning about £15k when they were 25)

A perfectly valid response, albeit perhaps difficult and uncertain.

The thing is though, that earning £30K would be relatively brilliant - but the need to save 20% (or similar) of this remains just as important.

snowqueen555

The problem is that most employee schemes don't really let you put away that much, my scheme only seems to max out at 4% personal contribution. Ideally I could put away as much as 10% of my take home wage

P.S I'm sill waiting on my pension pack, its been over a month already and I've spoken to HR twice about it.

I don't think 25 is young, its just that a lot of people are leaving it too late? I keep thinking that I need to start now to compensate for earning so little.

I also can't assume I will be mortgage free by this time, house prices seem so much and I am earning so little. Who knows?

Cautious_Investor_3

snowqueen555 wrote: »

The problem is that most employee schemes don't really let you put away that much, my scheme only seems to max out at 4% personal contribution. Ideally I could put away as much as 10% of my take home wage

I'd ask your HR department or the IFA who deals with this scheme if your statement is correct.

If it is a group personal pension, as many are these days, whilst your employer may limit the matching of their contributions to 4% there is no reason or rule that says you cannot contribute more.

If it is a money purchase occupational scheme you may be able to contribute more, if not then start a separate personal pension or stakeholder and contribute to that.

Absolutely no reason why you can't put 10% of your earnings into a pension.

I hope this helps.

The Cautious Investor

dunstonh

I don't think 25 is young, its just that a lot of people are leaving it too late? I keep thinking that I need to start now to compensate for earning so little.

20 years ago, 25 was considered late for starting a pension. Its now considered young[ish] because so many people put it off until later than they used to.

The problem is that most employee schemes don't really let you put away that much, my scheme only seems to max out at 4% personal contribution. Ideally I could put away as much as 10% of my take home wage

Most schemes only have a limit on matched contribution. They usually allow you to go above that figure for your own bit. Check that to be sure.

patmil

Thinking about retirement planning at a young age provides you with a lot of options.

The traditional view of saving whatever percentage for many years will work providing the world stays very much the same as it has in the past. Although the likelihood of that looks pretty slim.

However you have options of building alternative sources of income. Like investing in an online business. Or share investing or trading. Property investing may be another option either on your own or in a syndicate.

These are likely to provide far greater returns, within your control and with you managing the risk.

Explore and investigate alternatives and try and ensure that your retirement funds are working for your benefit and not for the benefit of some financial institution or government.

snowqueen555

Just an update, its been 1 1/2 months and no sign on pension pack. I have repeatedly asked for it and it seems to be a central office issue.

How long does it take to enroll usually? Sounds like a good few months?

[Deleted User]

We're all going to be pushed into contributing into a pension scheme from October 2012 anyway, There is an opt out though I believe.

http://www.nestpensionadvice.co.uk/page.aspx?mepaid=55