Contributions - Advice Needed

dunstonh

Hardly helpful!

What? Telling you that you are not paying in enough is not helpful?

Ok. You are paying in enough then. Just don't blame me when you get to retirement and you dont have enough.

notanewuser

BlondieLondon wrote: »

Thanks, yes I know but I did a four year degree, a masters and a year out travelling and as I mentioned coming to the end of my professional qualification now which hasn't paid particularly well doing it but will have me on quite a decent salary relatively soon. I fill my ISA's and saving a home deposit, proving difficult living in London.

What is the 14.5% based on?

Rule of thumb - whatever age you start your pension you need to contribute half that number as a percentage.

BlondieLondon

dunstonh wrote: »

What? Telling you that you are not paying in enough is not helpful?

Ok. You are paying in enough then. Just don't blame me when you get to retirement and you dont have enough.

You're clearly being rude for the sake of being rude, why on earth would I blame you for anything as you have given no advise other than make an ignorant statement. You didn't qualify you're answer or give any useful input given the circumstaces I outlined. If you don't have anything useful to say please don't bother.

BlondieLondon

notanewuser wrote: »

Rule of thumb - whatever age you start your pension you need to contribute half that number as a percentage.

I'm currently saving about 20% of my take home pay every month, realistically after London rent, bills, travel etc that's what I can afford to forego every month. So you think I should save a bit less but put more in my pension pot?

On the one hand I think I really just want to get my house deposit together as renting is so expensive and is just money down the drain but I don't want to neglect the pension either. I'm looking for the happy medium ratio.

mark5

BlondieLondon wrote: »

You're clearly being rude for the sake of being rude, why on earth would I blame you for anything as you have given no advise other than make an ignorant statement. You didn't qualify you're answer or give any useful input given the circumstaces I outlined. If you don't have anything useful to say please don't bother.

donstonh is blunt with answers but hes honest,says it how it is and is arguably the most clued up on this board.

He could be nicey nice and waffle on for a few minutes telling you what you want to hear and how a 1% contribution is better than nothing but he tells you the truth.

I've got people working with me who earn £50,000 a year, pay £100 per month into a pension and think they will have a good retirement, ppl are in denial with pension contributions!

Good luck with the new job and pension.

notanewuser

Your pension will cost you more the longer you leave it. Cash savings are losing money due to inflation. Personally, I'd start putting 10% into the pension NOW. That way you will get used to not having the money immediately, you can still save 10% (or more) towards a house. You'll also be benefitting by at least 20% tax to your pension straight away.

Your 10% plus employer's 3% (shortly) plus tax relief will put you in a good position. You should probably aim to increase to 15% as soon as you can.

dunstonh

BlondieLondon wrote: »

You're clearly being rude for the sake of being rude, why on earth would I blame you for anything as you have given no advise other than make an ignorant statement. You didn't qualify you're answer or give any useful input given the circumstaces I outlined. If you don't have anything useful to say please don't bother.

I have told you that your 1% wont be enough for someone starting as late as you are. How is that not useful?

It seems that you want people to tell you that it is enough. It isn't. Not unless you are planning on living a lower quality lifestyle in retirement. You have been given a link in post 4 to a calculator to work this out for yourself. Perhaps you should use the information supplied by others to help yourself. We cant tell you how much you should pay to any precision as we know nothing about what you earn, when you want to retire and what you want to retire on as well as other external factors. All we can say with confidence is that it is not enough.

BlondieLondon

dunstonh wrote: »

I have told you that your 1% wont be enough for someone starting as late as you are. How is that not useful?

It seems that you want people to tell you that it is enough. It isn't. Not unless you are planning on living a lower quality lifestyle in retirement. You have been given a link in post 4 to a calculator to work this out for yourself. Perhaps you should use the information supplied by others to help yourself. We cant tell you how much you should pay to any precision as we know nothing about what you earn, when you want to retire and what you want to retire on as well as other external factors. All we can say with confidence is that it is not enough.

FYI I have used that calculator, and I’m well aware of thetax relief. I am in no way an idiot and I’m not looking for anyone to tell me1% is ok, I am well aware that it’s nowhere near the optimum to be going intothe pension pot, and I wasn’t asking what was. I will reiterate again - I wastrying to find out was whether I was better off doing given my circumstancesi.e trying to get on the property ladder quicker or putting a higher % in mypension scheme. It is financially impossible for me to put as much as I wouldlike in the ‘flat fund’ and as much as I would like in the pension fund sosomething has to give. I need to assign an amount of ‘give’ to each. I don’texpect anyone to have a magic answer as to what ratios to use but as I saidadvice would be appreciated. Telling me 1% is not enough is entirely useless tome.



My share of rent in a very average flat in zone 3 London is£800 a month, and that is the norm. I save as much as I can and am not sillywith money, I have cleared my student loan and have no major debt to speak of.Ideally, of course I would be putting 14.5% of my salary in a pension pot, butif it was an ideal world I wouldn’t be having to try save £37.5k in the hopethat it will cover me for a deposit for a pokey one bed flat but that’s life.

I am thinking of going with a 9% personal contribution,decreasing my level of cash savings slightly but trying to make cutbacks inother areas so I can save 17% of my current salary, with the intention ofincreasing both later in the year when (hopefully, fingers crossed) my salarywill go up.

Family, friends etc have very differing views on what is best andI’m simply trying to figure out what’s best for me.

BlondieLondon

notanewuser wrote: »

Your pension will cost you more the longer you leave it. Cash savings are losing money due to inflation. Personally, I'd start putting 10% into the pension NOW. That way you will get used to not having the money immediately, you can still save 10% (or more) towards a house. You'll also be benefitting by at least 20% tax to your pension straight away.

Your 10% plus employer's 3% (shortly) plus tax relief will put you in a good position. You should probably aim to increase to 15% as soon as you can.

I think that’s a decent idea, I think I am going to go with9% myself which with employers contributions will bring me to 12%, not quitethe optimum but I think I can make a few cutbacks elsewhere to bring my cashsavings up a bit as I need to take this into account too. Then when I turn 30 my employers contributionswill go up and I will be putting in almost the level I need to and once payinga mortgage I can up my % contribution again. It will just take a little longerto save the deposit. I’m only up to about 5% of a deposit saved at todays houseprices, plus another couple of thousand from when I was younger which amthinking may go towards fees, but when my salary goes up on qualifying I shouldbe able to up the amount I’m saving. I figure once I have at least stoppedpaying rent and am paying into a mortage instead I can significantly increasewhat I’m paying into my pension.

notanewuser

BlondieLondon wrote: »

FYI I have used that calculator, and I’m well aware of thetax relief. I am in no way an idiot and I’m not looking for anyone to tell me1% is ok, I am well aware that it’s nowhere near the optimum to be going intothe pension pot, and I wasn’t asking what was. I will reiterate again - I wastrying to find out was whether I was better off doing given my circumstancesi.e trying to get on the property ladder quicker or putting a higher % in mypension scheme. It is financially impossible for me to put as much as I wouldlike in the ‘flat fund’ and as much as I would like in the pension fund sosomething has to give. I need to assign an amount of ‘give’ to each. I don’texpect anyone to have a magic answer as to what ratios to use but as I saidadvice would be appreciated. Telling me 1% is not enough is entirely useless tome.



My share of rent in a very average flat in zone 3 London is£800 a month, and that is the norm. I save as much as I can and am not sillywith money, I have cleared my student loan and have no major debt to speak of.Ideally, of course I would be putting 14.5% of my salary in a pension pot, butif it was an ideal world I wouldn’t be having to try save £37.5k in the hopethat it will cover me for a deposit for a pokey one bed flat but that’s life.



I am thinking of going with a 9% personal contribution,decreasing my level of cash savings slightly but trying to make cutbacks inother areas so I can save 17% of my current salary, with the intention ofincreasing both later in the year when (hopefully, fingers crossed) my salarywill go up.

Family, friends etc have very differing views on what is best andI’m simply trying to figure out what’s best for me.

I'm sure there must be cheaper accommodation available. 2 friends of mine share a flat in Tooting Bec (zone 2) for £1100 between them. It's 2 bed 2 bath too.

Might be worth looking at that.