30 Years Old With No Pension!

0Credit

As a sole trader and a person who pays taxes/NI I have the basic pension only currently.

I have never saved or had a private pension due to my income being very unstable since I was 15. 4 years ago I was earning £16k P/A and this past tax year is £54,000. The upcoming year will be approx £65,000.

So now is the time to open a private pension... I guess? But which should I go for? How can I plan for retirement effectively with all the changes (financial) going on in the world right now?

I am single with no kids. My outgoings can be what I choose for them to be so I can effectively push a fair % into this. I also have to think of tax situations?

I would love to retire at 50 in an ideal world but how possible is this? What pension would be best?

Very lost on this one and a complete newbie so every bit of help will be appreciated.

Brynsam

Have a look at https://www.pensionsadvisoryservice.org.uk for loads of general info on pensions generally. Give TPAS a call for more information if you want to talk anything through. They can't give you financial advice but clear information is often enough to enable you to take your own decision.

The minimum age at which you can draw benefits from your pension is 55 (likely to rise), so if you plan to retire at 50, make sure you have other types of savings on which you can rely. The 'Banking & Saving' tab at the top of this page has plenty of relevant info.

dunstonh

As a sole trader and a person who pays taxes/NI I have the basic pension only currently.

Luckily you do not any more. The basic state pension is what the self-employed used to only get. Now you qualify for the single state pension. About £60 per week more. (which makes the moaning that the self employed did about the increase in NI by an average of 55p a week seem a bit greedy now).

So now is the time to open a private pension... I guess?

About 10 years ago was the time. But better late than never.

I would love to retire at 50 in an ideal world but how possible is this?

Its possible. However, it will take serious retirement planning to do that.

What pension would be best?

None of them directly meet your objective. So, you would need a multi-product approach something to fund the pre-retirement age and then something to fund the later years. Typically an S&S ISA AND a pension.

The pension is more tax efficient than an ISA but the lack of accessibility before 55 (rising to 58 by the time you get there) means you need to use both options to to fund the two phases.

xylophone

https://www.moneyadviceservice.org.uk/en/articles/your-first-pension-the-options

Read through and refer to links concerning financial advice if you require it.

https://www.charles-stanley-direct.co.uk/Our_Services/SIPP/

http://monevator.com/using-vanguard-lifestrategy-funds-life/

http://monevator.com/vanguard-target-retirement-funds/

AnotherJoe

One thing to consider when saving into a pension and in your case potentially getting hold of the high rate tax payer benefits, is that you are locked in until at present age 55 but maybe 60 by the time you retire.
So you'll need something to "Bridge that gap" which would probably best be investments within an ISA, nota LISA because that is age 60 already (and thinking about it it makes sense for the government to eventually equalise the pension/LISA age)

John_Jones

0Credit wrote: »

As a sole trader and a person who pays taxes/NI I have the basic pension only currently.

I have never saved or had a private pension due to my income being very unstable since I was 15. 4 years ago I was earning £16k P/A and this past tax year is £54,000. The upcoming year will be approx £65,000.

So now is the time to open a private pension... I guess? But which should I go for? How can I plan for retirement effectively with all the changes (financial) going on in the world right now?

I am single with no kids. My outgoings can be what I choose for them to be so I can effectively push a fair % into this. I also have to think of tax situations?

I would love to retire at 50 in an ideal world but how possible is this? What pension would be best?

Very lost on this one and a complete newbie so every bit of help will be appreciated.

Ok, you can spect to need to plan for forty years retired, and have twenty years to save for it.

Very roughly this means that you need to be saving not a million miles from twice the amount each year that you hope to live off when retired. If you plan to take fifteen thousand a year then you need to find a way to put thirty thousand into your pension.

Above-inflation returns drop that a bit, but ball-park it is about right. This amount means that you can afford to scale back once or twice over the next twenty years if you have an unexpected expense that comes ahead of the pension.

0Credit

John_Jones wrote: »

Ok, you can spect to need to plan for forty years retired, and have twenty years to save for it.

Very roughly this means that you need to be saving not a million miles from twice the amount each year that you hope to live off when retired. If you plan to take fifteen thousand a year then you need to find a way to put thirty thousand into your pension.

Above-inflation returns drop that a bit, but ball-park it is about right. This amount means that you can afford to scale back once or twice over the next twenty years if you have an unexpected expense that comes ahead of the pension.

This makes a lot of sense and is somewhat what I thought would need to be done. I think a balance of this with good savings, LISA's and potentially earning more in the next 10 years may help me achieve it.

ThePants999

John_Jones wrote: »

Above-inflation returns drop that a bit, but ball-park it is about right.

Errrrr - above-inflation returns drop that a LOT! We're talking 20 years of growth here - it might not be the 50 years that someone starting early might get, but there's still time for money to grow a fair bit in 20 years. Earn 4% above inflation, and that £30K/year you need to save drops to less than £20K/year. Not saying that's the right number, just highlighting that it's not something to be swept under the carpet.

atush

Starting at 30 means retiring at 50 might be a stretch- and you c ant use your pension money at that age so maybe think about age 55?

If I were you, starting late- i'd play catch up with all that money you earn over the HRT threshold. If you do, every 100 into your pension will only cost you 60. so put in 11K this year.

If you have spare cash over that, after you build up savings of 6 months outgoings for emergencies, then open a S&S isa too. This one could help you retire before 55 iff you really want to.

John_Jones

ThePants999 wrote: »

Errrrr - above-inflation returns drop that a LOT! We're talking 20 years of growth here - it might not be the 50 years that someone starting early might get, but there's still time for money to grow a fair bit in 20 years. Earn 4% above inflation, and that £30K/year you need to save drops to less than £20K/year. Not saying that's the right number, just highlighting that it's not something to be swept under the carpet.

And the bit you strangely cut points out that it makes sense to plan for a few years when you have to put less in, which knock the total back quite a bit.

But yes, I agree, if you cut important pieces out of a post then what is left can make little sense.

marlot

0Credit wrote: »

...I would love to retire at 50 in an ideal world but how possible is this? ....

You don't say if you're male or female. If male, you have a 16.6% chance of living to 100. 22.5% if female. https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/lifeexpectancies/articles/howlongwillmypensionneedtolast/2015-03-27



You are going to need to save a serious amount of money over 20 years if you're to fund 50 years of retirement.


I'm aiming to go at 54 or 55, but I've been saving seriously for a number of years - peaking at 70% of my gross salary for several years on the trot.


The secret is living a modest lifestyle! But finding hobbies and so forth that you enjoy without costing a fortune!