Any idea how to start with Pension (non-government one) in age of 27?

jumperabv3

I'm not sure how it works ... should I start investing into pension at the age of 27?
I'm self employed so I don't have pension arranged from my employer because I am my own employer...

Should I take care of it?
I have no clue where to start from ... any suggestions or ideas would be very welcome ...

Thanks!

JoeCrystal

I am quite happy to see an self employed considering pension scheme at early age since self employed workers lose out on additional State Pension. Which is why it is vitally important for you to make your own pension arrangements! So yes, you should take care of it!

Cheers,

Joe

xylophone

http://www.pensionsadvisoryservice.org.uk/self-employed-and-pensions
https://www.moneyadviceservice.org.uk/en/articles/pensions-for-the-self-employed
http://www.moneysavingexpert.com/savings/discount-pensions
http://www.thepensionsregulator.gov.uk/docs/making-pension-fund-choices.pdf
http://www.hl.co.uk/pensions
http://www.unbiased.co.uk/pensions if you need to find an IFA to advise.

jumperabv3

Lots to read ... what about Aviva's Stakeholder Pension?

http://www.aviva.co.uk/stakeholder-pension/

Is this a good scheme?
It seems like you have to put a lot into it to get something out of it ...

somethingcorporate

jumperabv3 wrote: »

It seems like you have to put a lot into it to get something out of it ...

Is there anything in life that this is not true for?

JoeCrystal

jumperabv3 wrote: »

It seems like you have to put a lot into it to get something out of it ...

Well, yes. It is for your retirement after all. You spend 40 years working and then using pension fund to help you to live on for another (hopefully) twenty years. Beside the younger you are, the cheaper it is overall. Here is the pension calculator to see just how much it take (LINK).

Cheers,
Joe

jumperabv3

somethingcorporate wrote: »

Is there anything in life that this is not true for?

No no ... that's not what I'm saying ... I used the Aviva "Get a Quote" and it seems like if I invest £200 a month into pension ... I get like £1000 a year when I retire - it doesn't make a sense!

I know nothing in life is free but I think their illustrator is not working right or maybe I'm not filling it out correctly ...

jumperabv3

JoeCrystal wrote: »

Well, yes. It is for your retirement after all. You spend 40 years working and then using pension fund to help you to live on for another (hopefully) twenty years. Beside the younger you are, the cheaper it is overall. Here is the pension calculator to see just how much it take (LINK).

Cheers,
Joe

I used the calculator, Joe, thank you for that.

It shows if I invest £60 per month then when I retire I can get a monthly retirement of £2000 , does it make any sense?!

JoeCrystal

jumperabv3 wrote: »

I used the calculator, Joe, thank you for that.

It shows if I invest £60 per month then when I retire I can get a monthly retirement of £2000 , does it make any sense?!

Umm... No. I did a quick check (I am almost 27 as well! )

Paying £60 per month, retiring at 65, according to calculator is an projected income of £2,400 per year. Remember, it is only projection/prediction, returns depending on investments and so on. So the amount you are looking at are... highly optimistic. Another thing to keep in mind is to increase your contribution by RPI/earnings every year as well.

Cheers,
Joe

jumperabv3

JoeCrystal wrote: »

Umm... No. I did a quick check (I am almost 27 as well! )

Paying £60 per month, retiring at 65, according to calculator is an projected income of £2,400 per year. Remember, it is only projection/prediction, returns depending on investments and so on. So the amount you are looking at are... highly optimistic. Another thing to keep in mind is to increase your contribution by RPI/earnings every year as well.

Cheers,
Joe

Hehe ... thank you Joe
So I need to put £600 a month to make it £24,000 per year, correct?

dunstonh

I'm self employed so I don't have pension arranged from my employer because I am my own employer...

That is important detail as the self employed get lower state pensions than the employed.

Should I take care of it?

Unless you fancy £5000 a year income in retirement, then you need to take care of the rest.

Is this a good scheme?
It seems like you have to put a lot into it to get something out of it ...

It is one of the best basic schemes. It isnt the cheapest and isnt the best (not close on either) but it is designed for people that dont want to put the effort in or dont want to understand. It is also geared more for smaller contributions.

It seems like you have to put a lot into it to get something out of it ...

Welcome to retirement planning. If you are planning to live 30 years in retirement you need enough money to do it. You are not starting late but you have already lost some years (possibly as much as a decade) which you means you need to pay more in to make up for the reduced timescale.

It shows if I invest £60 per month then when I retire I can get a monthly retirement of £2000 , does it make any sense?!

That does not sound at all likely. I suspect that you are using unrealistic growth rates and not factoring inflation into account. Anything less than a £100pm at your age is unlikely to suitable. An 18 year old may get away with £60 but a self employed individual at age 27 will not.

So I need to put £600 a month to make it £24,000 per year, correct?

That would be about right. My calc comes out at £703.90