Never held a penison...worried...

RedfordML

What would you advise someone with no pension? 38 years young, have 100k equity in my property but have a mortgage for 22 years left on it! (House value around £275k)

Never felt Ive earnt enough from salaries and always "opted out" to give me the £40+ a month extra in my account - short sighted!

Just worried what the impact will be once I hit the retirement age of 70!! (haha! be more like 80, when im done!!)

louloubelle79

You currently employed? Can you opt in now or if not maybe


https://www.cavendishonline.co.uk/pensions/stakeholder-pensions/ or something similar

lisyloo

The impact will be you’ll have to wait until state retirement age which is probably currently 68 for you and you’ll have a state pension of approx £165 per week to live on. It seems like a bit of struggle and subsistence only to me.

JoeCrystal

It is short-sighted, especially you would not have the advantage of the employer's contribution. Opt-in right away and put in enough to get employer's contribution if they match it more than the minimum. Assuming it is £50 employee gross and the gross employer contribution is £33 per month, you are missing out £43 per month, basically a pay-cut. For your sake, I really hope you haven't opted out of defined benefit pension schemes in the past.

Assuming you are on £20,000 salary, estimated annual growth of 5% & other assumptions on HL calculator, you will have a pension pot of £33,900 (5% total) or £54,300 by 68 (if you use next tax year's minimum auto-enrolment contribution, 8% overall). Frankly, if you can afford the mortgage, you should be able to contribute to the pension as well.

dunstonh

and always "opted out" to give me the £40+ a month extra in my account - short sighted!

Very short sighted. And costly.

Just worried what the impact will be once I hit the retirement age of 70!! (haha! be more like 80, when im done!!)

Currently, you are looking at living near the breadline in retirement and having a shorter life expectancy due to reduced living standards.

RedfordML

I have always opted out! V short sighted but I just always felt id rather the money "now"

Thanks for the advice, tbh ive never really understood how they worked. Ive changed jobs many times in the last 18 years and don't understand how pensions worked...naively...

DigForVictory

As long as you can afford your mortgage, go & make supplicating type noises to your HR & See if you can get onto the work pension. Possibly even go for salary sacrifice (depending on how far your employer will match it & again, the mortgage).

It's free money into a savings pot for you (well, your employers bit), it'll make being an old person in another 3 decades or so much less uncomfortable & better to start it as early as possible than wait til you've overpaid your mortgage off.

If you really aren't certain, read the mortgage free wannabes & the FIRE folk, and (if you're feeling brave), post a Statement of Affairs to see where you could be chasing a better deal (it can be a strongly worded forum but the absolute aim of the game is to get the overall spend Down.)

Just do not drift into elderly penury through inactivity.
Best of luck!
(Son starts an apprenticeship this September & is already being coached in signing up for & paying his pension from day one, as it's more money than he's ever had previously, he'll not have a mortgage for a while so he can afford to to save & start to nurture a pension pot!)

RedfordML

Im in a very low paid job right now, had to go PT (14k) but hopefully within the next 12-18months that will improve. I will definitely get into a pension scheme when I do! I see exactly what you are all saying! Thanks again all!
Even if I change jobs another x 10 and take a pension at each job, im not impacted, it pays me automatically on retirement? That's what I struggle to get my head around??

JoeCrystal

RedfordML wrote: »

I have always opted out! V short sighted but I just always felt id rather the money "now"

Thanks for the advice, tbh ive never really understood how they worked. Ive changed jobs many times in the last 18 years and don't understand how pensions worked...naively...

That is why we have this forum to answer questions, no matter how stupid they may be. The most important thing is to get the ball rolling for your retirement provision. At least you recognise the need to which is the most critical point.

Dazed_and_confused

Don't forget you should have the State Pension.

You could look at your forecast on gov.uk and that will at least be a foundation to build on with company or personal pensions.

It should also show you how many years you need to contribute to get to £164.35/week which is highly likely to be the maximum you are going to be entitled to (other than for inflation increases).

RedfordML

Thank you so much JoeCrystal!

Its definitely now on my agenda!

Still not 100% on how it works, if I transfer across jobs and companies at the end but see the value and importance.