Pension Newbie - quick questions

tommer82

dunstonh wrote: »

You are not going to retire early with such a late start and such a small contribution. If you pay that amount then you are looking at 68 (probably 70 by the time you get there).

its a shame you have thrown away free money by not joining the scheme earlier.

I know you're right, but I really only started working a real job a few years ago and I spent the first couple years saving for a deposit, which was 25% ltv (I really didn't want a 5 or 10% ltv).

dunstonh

Working till 70 is definately a no-go, would rather be poor

In which case you will be unless you do anything about it. State pension age is 68. It will likely rise to 70 by the time you get there. So, if you want to retire earlier than that, how are you going to fund it?

the 5% that I pay to be part of the scheme, could I theoritically bump my contribution up from 5% to 10% or more in order to 'catch' up? I suppose If I paid 10% for 5 years I would be in same situation of someone that started 5 years ago and paid the standard 5% (give or take)?

If you are after normal retirement at stage pension age then there is a rough guide that says you should aim for £35k in your pension by age 35. Its not accurate enough but its a guide to see the sorts of amounts you are looking at.

You are looking for earlier retirement. So, unless you start looking at larger amounts than 15%, it is unlikely to happen.

Triumph13

tommer82 wrote: »

Quick question.

the 5% that I pay to be part of the scheme, could I theoritically bump my contribution up from 5% to 10% or more in order to 'catch' up? I suppose If I paid 10% for 5 years I would be in same situation of someone that started 5 years ago and paid the standard 5% (give or take)?

Cheers again

That would catch you up on the employee's contributions, but you'd still be behind by the employer's contributions and by the investment growth on both lots of contributions over the last five years. To catch up for five years missed you'd need to be contributing well over 15% for the next 5 years - another reason why you shoulodn't delay any further.

Seabee42

Whilst you could decide to save somewhere else, you have a double your money option from day one by investing through that company pension.

atush

I am cautious of pensions, I don't want to be working for a pension way into my sixties,

You aren't working for a pension, you save for a pension. How long it takes you to do this depends on when you start, and how much you put in.

I guess then I need to find out if there would be a benefit paying it for 20-25 years.

Of course there is a benefit! It is called Free Money from your employer (5% of your salary) plus tax relief on yoru contribution. Join it immediately and put in as much as you can afford (ie 10, 15 or even 20%). You have been throwing away 5% of your salary each year, so you need to stop this now and start saving.

Once you have done that, and have more spare cash, then save into S&S isas too. This will also help you retire early.

tommer82

Thankyou all for the replies.

I think I really need to research and find out what the best option for me is, i've never really had money so I need to figure out for me the best option.

£1250 a month spare is fine but I need to make the money do something and the minimum contribution to a pension would still not make much of an impact to that amount, would still be enough to save isas, over pay mortgage etc.

hmm mo money mo problems.

greenglide

tommer82 wrote: »

£1250 a month spare is fine but I need to make the money do something and the minimum contribution to a pension would still not make much of an impact to that amount, would still be enough to save isas, over pay mortgage etc

The money in a pension scheme at your age is invested rather than saved so it certainly will " make the money do something" as long as the appropriate funds are chosen.

Overpaying a mortgage, at present, makes much less sense than investing in a pension. Interest rates are very, very low and will continue so for a while yet.

bigadaj

tommer82 wrote: »

I know you're right, but I really only started working a real job a few years ago and I spent the first couple years saving for a deposit, which was 25% ltv (I really didn't want a 5 or 10% ltv).

What were you doing out of interest?

I took advantage of redundancy and contract work to travel in my twenties. I think it's nice to have the option to retire early but isn't practicable for many people; after all to an extent it's a view on quality of life and I think travel is enjoyable at any age but there are more options when you're younger.

It's always going to be a hell of an ask to earn and save enough in 25 years to maintain yourself to a reasonable living standard for another thirty or forty.