Starting Pension

mealmond

Hi

I turn 40 of this year, and have decided I need to get a pension organised, sharpish.

It was something I always had planned to do, but never did and time has gone so quick.

I had thought about doing it last year, but decided it was to late as I was starting so late.

Must be a potential mid life crisis as I relaised if I don't do something I will not have a good retirement.

I don't want to be rich, just comfortable. My mortgage will be payed off, before I retire, so I have something right.

The biggest problem I have is that I do not have a lot of money left over at the end of the month, I have looked at how much I would need to put into a pension, given my age, and there is no way I could afford that, not at the moment anyway.I also have no cash savings.

My thought last year was to try saving money and the invest the money to make a comfortable retirement, rather than having a pension, but, you guessed it, I have got nowhere.

So I now feel, locking any money away would be the best option.

I would need to start with a fairly low starting payment but then look to increase at reguar intervals.

I am also thinking, when my mortgage is paid off, it will be paid of when I am 58, if not sooner, I can then put that money into my pension as well.

I have been advised it would be cheaper to set up my own pension, where would be the best place to start.

I did think about building some cash savings first, however I feel this would just delay me starting a pension and do not want to be in this position in another 5 years.

So, where what would be the best starting point for me??



Thanks

Martin

dunstonh

I have been advised it would be cheaper to set up my own pension, where would be the best place to start.

Its a little cheaper if you know what you are doing. However, like any DIY, if you bodge it up it can cost you more in the long run.

Questions you first need to consider are:
1 - where and how do you want to invest? shares, funds, investment trusts?
2 - which type of pension best suits your needs? (stakeholder, personal or SIPP)
3 - which provider should you use and who should you arrange it through?
4 - how much should you pay into it and what is that likely to give you in retirement?

In the meantime, it is worth you getting a state pension forecast which you can arrange online. This will let you know what you will get from the state pension arrangements. If you qualify for a full basic state pension, then you will get £4381 a year. There is also the potential for graduated, Serps and S2P which may take you up to £8k/9k if you have full qualification for that (self employed dont qualify for those for the period of self employment for example).

Once you know what you are going to get from the state (which will be age 66 in your case), you can work out how much you need to fund for.

Pensions are not the most flexible of the tax wrappers. ISAs are more flexible. However, pensions are the best product for giving the highest income and considering your late start, the pension would seem to be the best option for you.

EdInvestor

Yes, start by getting your state pension forecast:

https://www.thepensionservice.gov.uk


If you have a problem saving, then i would suggest that overpaying your mortgage may be a better bet for the time being.

jamesd

One secret to successful investing is compounding of growth/interest. You talk of paying off your mortgage earlier than scheduled, then starting higher pension contributions. It's better to put the overpayments into the pension now so that the money will have longer to grow at a higher rate than the interest rate on the mortgage.

You've been advised that it would be cheaper to set up your won pension. What were the alternatives?

Curious_Moose

Do you work for a company? Do they have a pension scheme available?