Pension shock - can this be right?

crv1963

mgdavid wrote: »

I read that as a polite way of saying one can be bright but lacking in common sense.
I agree!

Quite agree with this.

I had a coffee today with a cousin of mine who like me is planning retirement at or before 60. He is a high flyer and told me about some of his colleagues on substantial 70k+ pa salaries who have only started in their 50s ticking the pension box.

Priorities for some before this age was spending, servicing credit cards or paying down mortgages. Like me he has had an approach of pension saving, some mortgage over-payment, and living a reasonable lifestyle without major credit use.

I think the education system possibly in the citizen teaching that is on the curriculum -needs to teach the power of compounding- the positives on pensions/ investment and the negative on debts.

Kit_Katt

I guess in simple terms he has paid on average £4500 pa into the pot over the 20 year duration.

Many advisors over the years say you need to input circa high teens 20% of your salary into the pot - i dont think his contributions come close to that.

Bear in mind if you google average pension pots UK its a shockingly low number - his is much better.

Presumably annual statements arrived through the post every year ... signalling where all this was going.

Look on bright side he still has lots of years left to contribute... combined with hopefully 2 state pensions and whatever pension you have ... the future will get better.

MoneyGeoff

One way of gaining an understanding of how assumptions affect the predicted outcome is to play around with pension calculators. The ones below do not ask for any personal info.

This is an annuity based one. You must click on Advanced Options and fiddle with each setting individually to see how it affects the outcome.

https://www.hl.co.uk/pensions/pension-calculator

These ones are drawdown type calculators:

https://www.calcxml.com/calculators/how-long-will-my-money-last?skn=#results

http://www.cfiresim.com/

blindman

dunstonh wrote: »

With less people buying annuities, the cross subsidy pool has reduced further. And with those buying them usually doing so with an enhanced rate, then that also reduces the cross subisidy pool. Mortality gain is not what it used to be and will probably never return without forced annuitisation.

Don't take this the wrong way but what this forum lacks is NOT expert advise but possibly a sticky that has common terms and acronyms explained.

The above paragraph, has -for me- the following confusing terms which I would need explaining:

My guesses in (........)

Cross Subsidy pool (someone else is paying for it)
Mortality gain (we're living longer)
Forced Annuitisation. (No idea....)

And the acronyms:eek:

Look forward to the sticky:cool:

kinger101

atush wrote: »

What I dont understand is whey 90K over 20 years isnt worth more than 140k?

Our pensions are worth more than double what was put in, in some cases 4x.

I suspect an underperforming default fund with a high bond allocation.

[Deleted User]

seacaitch wrote: »

A lot of bright people have specific domain expertise that doesn't necessarily automatically transfer to or prepare them for other subject domains.

Absolutely nothing wrong with appointing someone else with that specialist domain expertise to do stuff for you. I do that all the time in my own life in all sorts of areas either because they can do a better job than I could or because it wouldn't be an effective use of my time to gain the skills and do the job myself.

Outsourcing stuff under your direction so that someone else with expertise is doing the heavy lifting is still very much you taking responsibility.

Not really. Hiring an advisor is fine as long as you know the interests are misaligned, the charges are often ridiculously high and the threshold to become an advisor is stunningly low - and that the decision is ultimately yours and your family’s. Actually outsourcing decision-making is not smart, whatever the IQ. You and your family will be living with the consequences. Not the advisor. There is plenty of good information from excellent sources readily available on pensions, so that anyone can educate themselves with just a little effort.

capital0ne

atush wrote: »

What I dont understand is whey 90K over 20 years isnt worth more than 140k?

Our pensions are worth more than double what was put in, in some cases 4x.

Because it's Scottish Widows! High fees!