5% Pension

simarks

I'm 26 and currently work for a company that pays in 5% of my gross salary towards a pension. I started just a couple of years ago at 24. So I'm guessing it will be about 40 years until retirement.

My question is, how much should I be taking of my gross salary to create a pension that will allow me to carry on living reasonably. I don't expect to retire and live the life of luxury, just similar to that which I was when I was working.

Therefore is 5% ok yearly for 40 years or should I contribute myself and up it to 6/7/8/9/10%?

Muscle750

Is the company also putting in the same as you are ? Or is it just you that is putting in ?

john.xs

I work for nhs and pay 7.1% and my employer pays 14.3% apparently so upping it may be a good idea if you have any spare dosh.

PeacefulWaters

My magic made up number for a 20something into a defined contribution scheme is 20% inclusive of personal and employer contributions.

But if you allocate other corporate perks (if available) to funding pensions you can include them as part of that 20% (or other such number). Share schemes maximised and then proceeds funnelled into pension with tax relief can make staggering lower risk returns.

There isn't necessarily a right answer beyond "as much as you can". Once you commit to it you tend not to miss it.

Ensuring your money is spread globally for growth in the early years is also key.

mike5678

PeacefulWaters wrote: »

Ensuring your money is spread globally for growth in the early years is also key.

Can you recommend any funds? I'm currently filling in the forms for a sipp pension with cavendish online fundsupermarket and struggling to decide where to invest the money. I'm starting with a £14k investment plus about £10k yearly for the next 30 years.

atush

So your employer puts in 5%. You should ideally put in enough to get to half you age by % so say 13% total, 8% from you.

then you need to look at the rest of your finances. Pay off any debt, save an emergency fund of at least 3 months outgoings, then save for short/medium term needs such as a house deposit, new car, holiday, home improvements etc. This should be done in cash and S&Sisas depending on the time frame.

Then once the above is accomplished, you can up qwhat you put into pensions. Bearing in mind that if you invest as a % of salary, the pension contributions by you and your employer will go up as your salary does.

Retirement has a number of planks to the preparations. Pension is one, a secure place to live that is ideally yours and paid for is another. then backed up by savings in cash and investments outside a pension. All 4 are needed to provide the best/most comfortable retirement.

Muscle750

Nobodies mentioned that a lot depends on the OP salary to start off with if the employer is matching his 5 per cent the higher the salary the more free money

xylophone

Can you recommend any funds? I'm currently filling in the forms for a sipp pension with cavendish online fundsupermarket and struggling to decide where to invest the money. I'm starting with a £14k investment plus about £10k yearly for the next 30 years.

http://www.telegraph.co.uk/finance/personalfinance/investing/10323642/The-best-foundations-for-a-solid-portfolio.html

might be worth a look.

PeacefulWaters

Muscle750 wrote: »

Nobodies mentioned that a lot depends on the OP salary to start off with if the employer is matching his 5 per cent the higher the salary the more free money

Foolish not to state the bleedin' obvious.

atush

Muscle750 wrote: »

Nobodies mentioned that a lot depends on the OP salary to start off with if the employer is matching his 5 per cent the higher the salary the more free money

thought i did

the pension contributions by you and your employer will go up as your salary does.

For funds, look at Monevator, and motley fool