Only have a State Pension

Horsin

Hi Everyone.

So, at the age of 47, I don't have a pension and needless to say it has now started to trouble me ......a lot.
I have always been self-employed/freelance so have never had the simplicity of a company pension. A severe lack of knowledge and often a lack of extra funds has stopped me from starting a private pension.

Here's what I do have:
I have always paid my NI payments and also 'banked'my childcare years.
Savings of £25k
Credit Card 4k (but on 0% interest)
House worth 330k, mortgage of 56k.
1 child at Uni, another about to go.
Able to put aside approx £70/week into savings/pension etc.
Separated from husband, who is also without pension!

I have been having some very sleepless nights worrying about my future as a pensioner! 'The future' is not something I've ever worried about - I'm a hard worker and have always had enough work/monies to pay for 'the now'.

Please don't tell me I should have thought about this before - I have, but paying the mortgage and for the rest of life has sometimes been tough enough.

What would you do?

Thanks for reading

justme111

1.Check how much I am spending monthly and on what.
2. see what expenses will not be there once I am retired (children, work, mortgage - if whatever proportion from marital house will give you enough to be able to pay remaining mortgage till retirement/bandit outright) so that you would arrive at your Number (pension income required)
3.Divide the house with husband (as you separated) so that you know what you have.
Compare the number 2 to your projected SP and see whether it is any higher. If not - think whether it would appeal to lower number 1 in order to put money aside to retire before SP. Do the maths. If it is lower than decide whether you
a) accept drop in living standards once you on pension
b) spend less now and put money aside for when you retired- again, do maths.
c) accept you will have to work until terminal illness, may be part time. Many people enjoy it.
d)if you have paid off property you could do equity release in your older years
Chose a combination of a,b and c with a potential to add d depending on your own circumstances and numbers.

Number75

I would see a solicitor before I started saving any money into a pension.
At the moment, anything you save is potentially a marital asset.
Do you want to give half of it away?
I ensure that your husband has no claim on it when you divorce.

Horsin

Justme111 - I understand the equation of all that and I will do some calculations later....what does SP stand for btw? Great advice that has got me thinking a little sideways/of other options - thank you!

Number75 - at the moment, everything is very amicable re separation etc, but I can see what you mean!

Should have said, house is fully in my name, husband now has his own property in his name. We were fortunate to get on the property ladder early enough to have sufficient equity to help us out at a horrible time.

justme111

Pleased if it helped
State Pension(SP)
This board usually is of the opinion that it is awfully inadequate to live on but if you take an average £27000 working income, remove tax and NI from it, mortgage payments, the proportion of expenses related to children and to work it is not a far cry from full SP amount.

greenglide

You have said you have "always been self-employed/freelance".

Are you truly self employed or are you employed by a limited company which you own? It makes a difference for pension purposes.

smokingsxr1000

What would I do?

Clear the credit card and remortgage using the remaining savings to reduce the outstanding balance to £35,000 on a 10 year fix 2.74% over a twenty year term that'd mean a monthly payment of £190. What a your current mortgage payment? Put the difference into a rainy day fund and pay £250 a month into a low cost SIPP provider. At the 10 year point you should have built a pot in excess of £40k and have a mortgage balance at £20k take £10k from the pot and pay the mortgage down to £10k outstanding. Consider downsizing in the future too if that releases a substantial sum that can be used to provide a retirement the income or rent a room.

Horsin

JUSTME111- Crikey - I've just gone through my monthly costs and removed anything child, eldery dog, work, mortgage etc related and the cost is nearly 2/3 less!!! So, everyday frugal living would be possible (I think I would like to carry on doing a little work when I'm older, health allowing) - I need to have a think about what extras I might like to be able to afford.

Smokingsxr1000 - Wow - how do you see things so clearly like that??? My mind doesn't equate things like that...which is why I'm asking you guys! Current mortgage is £640/month and has 8 years remaining. SIPP providers are many - would I need advice from a IFA for that?

Greenglide - Yes, truly self-employed - freelance riding instructor (checking posts between lessons!). Great job on days like today, harsh back in January. I love it, but there's no mention of pensions etc when you're training .

xylophone

You would not have to use a SIPP - you could look at one of the Personal Pensions offered here

https://www.cavendishonline.co.uk/pensions/stakeholder-and-personal-pensions/

justme111

Beware you likely to want a young dog if your present passes away:)
I am not sure I see it as the previous poster does either, Fforest a start I do not see why would they use savings that bring an unknown interest rate to clear the mortgage which has unknown to them interest just to increase savings again. May be in their case it would be the right thing to do. If you tell us your mortgage rate and where are your savings that would make more sense. Clearing credit card makes no sense other than psychological if it is at 0% and if you keep enough to clear it in easily accessible saving places.
Re SIPP or personal pension- IFA may be prohibitive cost wise with your low numbers and not sure to which extent benefitial. If one has many different assets, complicated family planning , extensive investments and multiple pension then they can be justified but do not see it for you. I reckon they would cost £1000+ .Reading this board for a few days may empower you to DIY , it is simple, honestly. Although I suppose free consultation will do no harm.

nellis10

Hi OP!

I'm just about to turn 46 and I had the same pension panic this year too!

I am fortunate enough to already have something in a private pension from a previous job, but certainly not enough to see me through the pension years.

I am contributing to a new work pension now, which I am seeing I have realistically only about 15 years left (if that) at that high wage before I will have to drop down to a part-time wage or even retire.

What I have done in the past month:

• Calculated all my current expenses less mortgage & any debt
• Worked out what I absolutely need in pension years as an income - £1500/month
• Worked out what I need from 61-67 to get £1500/month and from 67 minus State Pension
• Upped my work pension to ensure the 67+ years definitely give me £1500 with SP
• Started a S&S ISA with only £100/month but will rise to £500 from Jan 18 for 15 years investment
• The S&S is to pay for my pre SP retirement.
• My mortgage won't be paid off early as they good souls have advised me to use the 25% tax free to pay off mortgage balance when I hit 55 (even if I don't retire then!!)
• I'm learning to live on an egg less as my mother would often say! It's never to late to economise and I am living as if I am a pensioner now. Within a budget and putting as much aside as I can,

:):):):)