Is my pension contribution "worth it"

atush

I agree with most above, paying into an employers pension with matched contribs is a no brainer. So i'd up mine to at least 5%.

I'd scratch the idea of an expensive wedding and do a cheaper version incl a trip to france for Champagne (spend a night or two and that is your pre wedding honeymoon), plus a marquee tent and a hog roast.

Saving for a house and retirement are good ways to spend your money, and paying for an expensive wedding pretty much isn't.

dunstonh

There is always going to be an excuse for not paying into the pension. Marriage, saving for house, refurbishing the house, children etc. Then you find yourself in your late 40s and realise that you are heading for a poor retirement with little time to make any difference.

So, if you are looking for an excuse, it is easy to find one. However, it does not change the fact that turning down 6% of your salary as free money is really silly.

Also, would it make that much difference?
Lets say you are on £25,000 a year (you dont say. so giving an example figure).
That is £1500 a year gross contribution from you. However, you get tax relief on that so its only costing you £1200. And if its salary sacrifice, its less still. So, for £1200 a year cost, you are getting £3000 paid into the pension. Absolute no brainer.

Snakey

I was in your position. I'm now 42.

1. Wedding: I haven't seen or heard from my husband since the divorce was finalised in early 2001, and having moved cities I am no longer in touch with anyone I knew back then (other than my mother, my sister and her ex-husband). I am very glad that we got married on the cheap, 24 people including us and no evening meal/do (we got married at lunchtime and had a "wedding breakfast" directly afterwards), with a weekend away as our honeymoon. It was a lovely day with lots of nice memories (my god, we look so young in the photos!) and many of my friends who went down the route of having 100 people for a sit-down meal and 150 at the evening do and table centrepieces and champagne toasts and two weeks in the Dominican Republic (the place to go, at that time) etc got divorced as well so I don't think there's a correlation.

2. Property: I made some money on the sale of our house, which was nice, and it was lovely to be a homeowner while it lasted. I would definitely buy as soon as you can, as a lifestyle choice as much as for the investment.

3. Pensions: I signed up to my work's pension just as soon as I could. Like you, we were also saving for a house and a wedding, and I would frequently run out of money before the end of the month. However, although I can remember having to walk to work because I couldn't afford the bus fare, and bring sandwiches from home (or pretend I was on a diet) when other people went to the sandwich shop or a pub, I can no longer really remember what it felt like - it's just words. But I get a lovely warm glow when I look at my pension fund balance (I recently lost my job and it's perhaps the only piece of security I have, if I end up having to use my ISA savings for living expenses), and whenever I see one of those heartbreaking posts from someone who is my age and hoping that if they start a pension now with £100 or £200 a month they'll be able to retire at 55 I think "that could have been me" and congratulate Younger Snakey on her common sense (and good fortune for being able to afford to make that choice, don't get me wrong - recategorising bus fares and lunches as "luxuries" and therefore cutting down on them wasn't comfortable but it was possible, I couldn't have done the same with the mortgage or the electricity bill).

It's not an easy decision. There are a lot of demands on your income, and there's always the possibility that your career will skyrocket in the future to the point where you will be able to set aside a year's worth of your current salary out of your pocket change each month thus rendering anything you save today quite pathetically pointless. However, that also may not happen (or it may be matched with an increase in your lifestyle and responsibilities), and so I say you owe it to your future self to do what you can. I'd prioritise it as follows: house, pension, big white wedding, and actually I think I might even take it slower on the house-buying front in order to pay into the pension since I really can't imagine that a few hundred pounds less into the deposit fund is going to set you back ten years or something. Good luck!

kidmugsy

Ad86 wrote: »

Im in my 20s, live in a rented house with my other half, and we were "trying" to save for a first home and wedding.

Noooooooo!!!!!

Expensive weddings are madness. If you want an expensive wedding you're not grown up enough to get married or own a property.

Retyre

Well said Snakey.

bamgbost

kidmugsy wrote: »

Noooooooo!!!!!

Expensive weddings are madness. If you want an expensive wedding you're not grown up enough to get married or own a property.

Bit harsh! I thinks down to the individuals concerned!

But back to the main point. Try & keep doing the pensions mate. And upping it to the 6% matched. Trust me its the best decision in the long run.

lippy1923

Up your pension to the max your employer with match. Free money - come on who says no to free money!!

Do an SOA and work out where to save money. Save this on the house deposit.

Theres no rush to get married. Wait until you get settled in your house before you start a new savings goal for a wedding.
I am getting married next year but I have been with my fella for over 8 years now. We brought our house first and have been saving for the wedding for about 5 years now! I want a biggish wedding so I have waited.

If you really want to marry now, then do the deed in a reg office on the cheap and save up for a big posh do in a few years if that's what you want.

Don't try saving for everything at once or you will be in for a long miserable wait!

Good luck

gadgetmind

lippy1923 wrote: »

If you really want to marry now, then do the deed in a reg office on the cheap and save up for a big posh do in a few years if that's what you want.

We did a registry office wedding, and had the reception on a boat, which was fairly cheap and kept the numbers down.

We then went on honeymoon in a brand-new and bright red Mazda MX5 that we'd (kind of) bought with the money we'd saved.

kidmugsy

lippy1923 wrote: »

Don't try saving for everything at once or you will be in for a long miserable wait!

That's half the battle. The other half is (probably, but not always) don't look a gift horse in the mouth - accept free money.

kangoora

I'll add my 2p'orth supporting most of the above. The difference between contributing 4% (2+2) for the next 40 years and 12% (6+6) for the same period is massive.

You will gain a huge amount from the effect of compound interest (even though it's not strictly compound interest) and re-invested dividends.

Yes, it's a big commitment, but I wish I'd done it in my 20's instead of having to throw the equivalent of 33%+ of my salary at my pension in my 50's so I can retire early. I could always bimble along until I'm 67 and have a respectable pension pot but that's what I'm trying to avoid now

You will find virtually no-one on here who would not recommend at least making sure you put in the maximum that your employer will match. Hey, it's free money! (even if you can't get at it until 55, maybe 58 for you, given your age)