Am I paying enough in???

Starbrite

Having kittens here... Ok I left it rather late to start up a pension, I did look into these at 25 yr's old but clubs, pubs, parties etc etc got in the way next thing I know I was 34 and still pensionless, So after watching a tv show in Jan/Feb time this year about pensions and pensioners etc I realised I had to do something..... So a quick google search I opened a pension..

Having since found this forum and it's wonderful catalogue of information, I have become aware of pension calculators etc etc

Just been on a pension calculator and to have a target pension of £20,454 or £1488 a mth I need to pay in £1100 a mth!! I have no idea how much this will be in tomorrows money, not sure if anyone does tbh. But I do know I don't want to be a poor pensioner and would like to buy a yacht and sail the seven seas rather than sit at home awaiting meals on wheels to turn up... Ok health permitting...

All I know is I can't afford to pay in £1100 a mth. At the moment I'm paying in £100 and my company pay in £100 then theres the £25 from the tax man. I'm looking at putting £300 a mth in after Jan time. I know its a stupid question a bit like how long is a piece of string but do you think this will be enough?

What is the average amount people pay into their pensions a mth? I know it should be half your age in % of your salary in my case £400 ish... But Trying to save a deposit for a home at the moment and I guess when I'm 60 I could sell my house down size and use the left over monies towards pension? If there is any left overs monies and I have a house to sell, Big IF!

Just having a omg I'm going to be poor moment:(

CLAPTON

first remember that you will get a state pension .. in todays terms say about 5,000

do an approximate calculation (in todays money terms)

how much will go into your pension pot up to sixty
well if put 300 per month for 26 years thats about 93,600

now look up annunity rates for a 60 year old (sunday money section sometime has these)
and you will find out you can buy an indexed linked pension of about 93,600 x 2.3% pa i.e. 2,150 per annum
or about 93,600 x 5% iflat rate i.e. 4,680 pa
now of course your pot may be a little bigger due dividend /interest but that about the right order


after all if you are saving on 3,600 per annum for 26 years ; at 60 your life expectancy will be about 25 years so what would be expect to get out?

atush

Thats the problem in a nutshell. When you had the extra cash to save/put in, you !!!!ed it away on parties, nightclubs pubs etc. Now that you want to get on the property ladder and pay in, you don't have as much to spare. Renting in most cases is pi**ing money away (if not as bad as in your old party days).

It isn't too late though. In your case, i'd continue to save towards a deposit as building equity into a property will not FUND your pension in old age but can Boost it if you downsize. Some rely too much on their own property but forget you need somewhere to live so cannot sell it and then live off it like you can with a rental property. In our case we converted a barn and spent 230K all in all and now it is worth 1 mil. So if we downsize when we come to it, we could still buy a place for say 400K and use the rest to boost our pension. But you won't make that much unless you retire to a lower priced area and are also willing to take on a project and increase value thru renovation- something many families can't do. our was alrady wotht over 300K the day we finished it so we had already 'made' 70K.

But in the meantime, at least you have now got a pension (and employers contrib). Are you getting the max employer's money? Say they match your contribs up to a point, are you at that point at 100 quid each? If they will pay in more if you do, do that NOW- next payday, as it is what we call 'free money'. If you are already at max it still means you should raise your contribs to 300 and then everytime you get a pay rise. Get a pay rise of 4%? Put at least 1% (hopefully more) more into the pension at the same time as you wont' miss it if you never had it. If you dont' want to put the whole rise in pension, as long as you increase other areas of savings (such ans cash and share ISAs and other things like regular savers and investment trust savings plans) that is fine too.

In your case, you need a min of 3 months spending in cash plus more to raise a deposit- but keep increasing your pension now too. This is a 3 prong approach (Cash, Assets/Property, Pension) that I use and this will give you the best retirement possible.

sandsy

What sort of things did you tell the calculator?

The inputs into the calculator can have a big effect on the outcome. For example, if you tell it you want to retire at 60 rather than 65, the resulting contribution will be much higher - as you will be paying in for 5 years less and receiving a pension for 5 years longer.

It's a fact of life that starting to save for retirement later rather than sooner will reduce the chances of being able to retire sooner.

Starbrite

I was convinced I wasn't going to make my 30th, either that or I was in denial about getting old!

Anyhow's yes I put 60 rather than 65 into the calculator, I also put my nett yearly wage and the 1200 I have in my pension already I'm quite happy to have a part time job after 60, My mum and Nan both did this my Nan stopped working at 75 I think it was... she was part time but still working, she said it kept her in the loop and her brain active.

I have a private pension as I never seem to stay with employers long enough to join a company one! I did have one ages ago, but upon leaving the company they gave me a cheque!!! My company is a small company 4 employees in the UK, My manager agreed to pay into my pension £100 a mth. After a year do I ask him to review this amount? I've not thought about that side of things! That won't be until Feb time...

atush

60 will be young to retire then. 60 will be the new 50 lol.

Work til 65 (you'll still be retiring before you can get your state pension so will need that part time job).

Starbrite

atush wrote: »

60 will be young to retire then. 60 will be the new 50 lol.

Work til 65 (you'll still be retiring before you can get your state pension so will need that part time job).

Yep 67 is my state pension age!

Why will I be to young to retire at 60?

Procrastinator333

Starbrite wrote: »

Why will I be too young to retire at 60?

Because unless you do something drastic (Like start paying in 30-40% of your salary), you won't be able to afford it.

Starbrite

Procrastinator333 wrote: »

Because unless you do something drastic (Like start paying in 30-40% of your salary), you won't be able to afford it.

Good point!!

It's all so scary and worrying! They should teach you this in Maths at school rather than if 5 people go on the bus 3 got of 20 then got on how many left! and should be some sort of Law when everyone has a pension set up before age of 19 even if your just paying in £5 a mth, I do still know people who have nothing set up.

Thanks for all the advice

CLAPTON

Starbrite wrote: »

Good point!!

It's all so scary and worrying! They should teach you this in Maths at school rather than if 5 people go on the bus 3 got of 20 then got on how many left! and should be some sort of Law when everyone has a pension set up before age of 19 even if your just paying in £5 a mth, I do still know people who have nothing set up.

Thanks for all the advice

I've told you how to do the maths

just do that and find out how much you need to save per month

atush

Procrastinator333 wrote: »

Because unless you do something drastic (Like start paying in 30-40% of your salary), you won't be able to afford it.

Agreed. Plus you will be statistically in slightly better health than a 60 yr old today all other things being equal.

People used to be old a 40, but I felt pretty sprightly then. Women used to be hags at 65, now they are glamorous grannies lol.