35 yr old with existing pot, how much to save?

SamCLondon

Hi, I'm 35, and have a work pension with a pot of about £43k. My deductions happen before I get paid, and it looks like about £580 goes into my pension. I've had a pension for about 9 years but didn't earn a lot at first.
I've read a lot about how much to invest, the % of your salary etc, but a lot of it seems to be based on choice of lifestyle in my late 60s, which of course I've no basis for.
I earn about £75k a year, and hope/assume my salary will go up significantly over the next few years, but no idea where it will plateau. So I hope to be able to put in more and more each time I get a pay rise.
Is there any way to get a good indicator of how much to top up my work pension per month? (I already pay in the maximum my work will match). If the only way is to find a pensions advisor and pay them for a consultation that's fine, it just seems like there should be an easier way, without me being expected to decide if £20k/£30k/£40k is what I want to live on when I'm retired (also assuming I own a house which is fully paid for).

Any advice would be much appreciated!

Thanks

Not_Me_Officer

I've asked this recently also.

Basically what do you spend now minus bills you wont be paying out (likely mortgage) would put you somewhere in the region of a figure is what i was told but it depends on if you want to go cruising around the world 2-3-4 times per year or not. If you want to live the millionaire lifestyle or not.

Those with more know will be along to answer much better than me.

SamCLondon

Thanks! I guess I'm not sure on how much my current lifestyle will be like my future - assume I will be out about 10% as much, but will have family cost etc. Plus am I putting in per month now, and then looking at the pot size and working out how much it'll give me based on how long I think I'll live past 68?

atush

Read the thread called the number.

A good start is to figure out how much you spend a month now, and deduct mtg (as yours will be paid off) and pension (as you will be retired) etc- anything you wont spend due to work such as commuting daily ie season ticket etc.

Then think how many foreign holidays will you want, how often do you replace your car, what you will want to spend on food and other thing like meals out luxuries.

This is your number you need to live on, and you use an online pension calculator to help you find out how much to put in. HL have one, but you c an google one too.


For now, if you dont have a lot to spend your extra on, I would be stuffing your S&S isa allowance away and putting as much spare as poss into your pension up to the 40K allowance if you c an afford to do so.

Basically if you earn that much, every 1000 into a pension only costs you 600.

ComicGeek

I'm 36, and after spending a while worrying about future pot sizes have realised that there's no way to predict what will happen in 30 years.


So I've made sure that both myself and my wife have pensions, and that we pay as much as possible into them each year. I pay significantly more into my pension now with a £40k salary than I used to with a £70k salary - I always found that I spent up to my paycheck.


In your position I would be looking to increase my pension contributions to at least 15% of salary, and asking your employer about salary sacrifice. There are a number of online calculators where you can plug in your current pot size, monthly contributions etc and get an idea of final pot sizes - but we're both too far off from retirement to be able to look at that accurately.


Lots of very knowledgeable people on this forum, but probably more info than you need at the moment. In my opinion the key is putting away as much as you can in the early years, and getting used to making pension contributions a key part of your expenditure.

SamCLondon

Thanks Comic geek, I think I do effectively put in 15% in per month, if it's based on both mine and what my work match. After tax I earn £3600 (besides bonus months), so 15% of this is £540, and my pension contribution (EES + ERS) = £583.
Or is it 15% just on my own, without work?

Kynthia

SamCLondon wrote: »

Thanks Comic geek, I think I do effectively put in 15% in per month, if it's based on both mine and what my work match. After tax I earn £3600 (besides bonus months), so 15% of this is £540, and my pension contribution (EES + ERS) = £583.
Or is it 15% just on my own, without work?

What can you afford to lock away right now in addition to other accessible savings you have? Do you have reason to think you won't be able to contribute as much in the future, as I wish I had saved more before children and our household income dropping due to part time working and childcare costs. If so then contribute more now and reduce it later. I don't have a DC scheme but I was always told that what you put into a pension when you were younger had the most time to grow with compound interest, so not to delay joining a scheme.

SamCLondon

I can probably afford to put £200/£300 more in, but I'd like to save for a house. I don't have kids and you're right it's probably the best time to save, I'm just not good at it (have no debt luckily).
I've only got reason to think that I'll earn and contribute more in the future, which is why I'm hoping not to have to go crazy right now - although I spend like an idiot, so I could definitely stop that

Kynthia

SamCLondon wrote: »

I can probably afford to put £200/£300 more in, but I'd like to save for a house. I don't have kids and you're right it's probably the best time to save, I'm just not good at it (have no debt luckily).
I've only got reason to think that I'll earn and contribute more in the future, which is why I'm hoping not to have to go crazy right now - although I spend like an idiot, so I could definitely stop that

It has to be money you are prepared to lock away. You can always put that extra £200-300 into regular saver accounts which pay slightly higher interest. Or a LISA is an option as it's for retirement and you will be penalised if you remove it early, but the exception is when buying a property. Perhaps take a look at tgem while you are young enough to qualify for one.

atush

I woul put 15% of gross salary, not net.

Having said that, if you are saving for a house do so.

If within 5 years, you are looking at cash. If 5 years plus, split your extra savings into cash and your S&S isa allowance. Use a global tracker or Vanguard fund.

If you are bad with spending, do a spending diary of every pound you spend to find waste.