Panicking like mad - pension advice needed!

Jo1971

OK, I will try and sum up without going into too much detail.

Just turned 40 - haven't got a personal pension due to being in an abusive relationship for most of my life, however have managed to break free and now trying to get my life in order. Here are the basics:

Work full time, gross salary 22k, net take home per month £1500

Mortgage - £350 per month, 18 years left to run - approx £58000 o/s
No other debts but only a couple of hundred in savings.

Have done a state pension forecast, assuming I work until 67 - then the estimate is £170 per week.

I can live comfortably on my net wages of £1500 per month but having done some research it seems that I would need to put away at leasr 20% of my monthly income to achieve any kind of private pension.

Main questions:

What net monthly income would I require from a pension to assume a similar lifestyle to the one I have now?

What are the increases in contributions I would need to make per year, if I started at £300 net per month from now. I worry about this mainly because when we have a payrise it always works out to around £10 extra per week take home - not sure if that is running in line with pension increase?

I used money service . org. uk to try and get some figures and it mentioned on putting £325 a month away into a pension I would get a lump sum of £50k plus £500 per month pension - would that be £50k in todays money or how would I know how much that would be worth equivalent to todays money?

I will be willing to sell my house to an equity scheme around retirement age or a bit later as I have no dependents.
That would give me a bit extra to live off/buy myself a car.

My colleage really upset me today, she was mentioning pensions and saying I was goin to really be struggling whern I'm old etc (she has a wealthy husband) and then saying that they will have abolished the state pension by the time I reach 67, rendering my forecast useless so I won't have anything to live on etc etc.

All I want to do is be able to pay my bills, go to the cinema or a nice meal once a week and an annual weekly holiday in UK or Europe, so I'm not aiming to be extravagant. A lot of things I do now and enjoy are very ordinary - reading books, cycling, swimming, walking my dog.

I have a partner but just want to get my own finances in order before I tackle his, so just want some ideas of a good starting point or ideas I haven't thought of.

Thanks for helping. x

Lokolo

http://www.hl.co.uk/pensions/interactive-calculators/pension-calculator

Theres a calculator which shows both todays and future values.

JoeCrystal

Does your employer offers pension scheme and do they contribute toward it as well? If so, then bite their hands off!

As for abolishing state pension, very unlikely.

Cheers

Joe

BoGoF

JoeCrystal wrote: »

As for abolishing state pension, very unlikely.

Wish I was as confident on that front. At the very least I'm working on the basis the state pension age will be 70 by the time I get there.

Jo1971

thank you, unfortunately my employer doesnt offer any pension schemes.

I checked that link and put in when it gave annual projected income in todays terms does that mean for example if annual income was £7000 that that would stay in line with inflation too, ie it would be that amount throughout the retirement?

ManicMum

I think if you are panicking, in a way that is good. Think of all the people who aren't panicking! And who should be! You wont be paying a mortgage by then so that's something. I don't think you will be living like a king but you still have a good 25 years (health permitting) to do something about it. Lots of OAPs work too. I am 40 and I hope (at this stage) I will have a part time job because i think i would be bored otherwise. But I think reality is that you will need to be stashing 20% away a month. That;s what we are paying in and we have 3 young children too, plus I don't work (trying but no luck).

Jo1971

hi manicmum

thank you - yes, I agree there, I wouldnt mind working in a part time job when I'm older.

I posted this question on my facebook about worrying about a pension and had some replies about people worrying about having a job, never mind a pension, so that made me feel really bad but on the other hand i've got people saying that I'm doomed for leaving it to late

Lokolo

Todays value is what you would get today. Future value is the actual figure you'll get (approximately). So you may get £15k a year, but actually, in todays value its £7k.

fairleads

Jo1971 wrote: »

OK, I will try and sum up without going into too much detail.

Just turned 40 - haven't got a personal pension due to being in an abusive relationship for most of my life, however have managed to break free and now trying to get my life in order. Here are the basics:

Work full time, gross salary 22k, net take home per month £1500

Mortgage - £350 per month, 18 years left to run - approx £58000 o/s
No other debts but only a couple of hundred in savings.

Have done a state pension forecast, assuming I work until 67 - then the estimate is £170 per week.

I can live comfortably on my net wages of £1500 per month but having done some research it seems that I would need to put away at leasr 20% of my monthly income to achieve any kind of private pension.

Main questions:

What net monthly income would I require from a pension to assume a similar lifestyle to the one I have now?

What are the increases in contributions I would need to make per year, if I started at £300 net per month from now. I worry about this mainly because when we have a payrise it always works out to around £10 extra per week take home - not sure if that is running in line with pension increase?

I used money service . org. uk to try and get some figures and it mentioned on putting £325 a month away into a pension I would get a lump sum of £50k plus £500 per month pension - would that be £50k in todays money or how would I know how much that would be worth equivalent to todays money?

I will be willing to sell my house to an equity scheme around retirement age or a bit later as I have no dependents.
That would give me a bit extra to live off/buy myself a car.

My colleage really upset me today, she was mentioning pensions and saying I was goin to really be struggling whern I'm old etc (she has a wealthy husband) and then saying that they will have abolished the state pension by the time I reach 67, rendering my forecast useless so I won't have anything to live on etc etc.

All I want to do is be able to pay my bills, go to the cinema or a nice meal once a week and an annual weekly holiday in UK or Europe, so I'm not aiming to be extravagant. A lot of things I do now and enjoy are very ordinary - reading books, cycling, swimming, walking my dog.

I have a partner but just want to get my own finances in order before I tackle his, so just want some ideas of a good starting point or ideas I haven't thought of.

Thanks for helping. x

I've yet to see an online pension/retirement calculator that delivers to my satisfaction. Suffice it to say however that saving 300/month for 27 yrs should deliver enough income that will, when combined with your state pension, provide enough to live on.

ses6jwg

wow, I'm 23 and if I delayed by 5 years I would lose out on almost £3,000 a year at 65. scary stuff.

atush

on the other hand i've got people saying that I'm doomed for leaving it to late

You aren't exactly doomed, as you have at least now realised your position is untenable. and you are looking to make a change.

If you can afford it, then contribute 20% of your salary to a pension (which will be less than 20% as you will get BR tax relief). you may find that in years to come, your employer will begin adding some as there are some changes coming in future in this regard. Raising your contribs is a very good thing to do as soon as you get any raise in salary.

But you also need to build up savings outside your pension. For emergencies such as redundancy or for buying or repairing necessary things such as cars and white goods etc w/o going into debt. 6 months resonable spending is a good amt to target for. Save in cash ISAs to save on tax, then you can branch out into other investments once you have 6 months in cash.

Your friend with the wealthy husband isn't much of a friend (nor very knowledgeble- wonder how she'll do when he trades her in for a woman in her 20's?) but in a way I agree with manic that is it good you are panicing now as you will be spurred on to do something about it. It is very unlikely that there will be no State pension when you come to claim, but there could be changes between now and then. No point in worrying abt them now, just get saving ;-)

Good luck.