Good pension for my age?

jaybeetoo

Put your figures into a pension calculator such as https://www.hl.co.uk/pensions/pension-calculator and you'll get an idea if you are on track for a comfortable retirement.

cns06

Assuming the normal "ball park" figures if you are on £37k now you might need around £27k in retirement.

SP is £8k ish. So you need to find about 19k a year.

This will require a pot of about £500k.

With average market returns you should be about on track for a pension pot value of around that figure.

So I would say you are about ok. Review every year as said.

Consider S&S ISA if you do clear the mortgage early to try and create a buffer to allow you to retire earlier and maintain similar income whilst waiting for your SP if your SIPP has done better than expected but not better to bridge the gap between the two - if you see what I mean.

ChrisJ1988

Your pension provider should have some sort of planning tools available. Depending when you want to retire and how much you want to live on will affect how much you put away.

For reference I am 31 have a pot of ~225k and plan to retire at 58-59 with approx 35k per year so need to top up a little more as yet as I want to take the maximum tax free lump sum available.

Clive_Woody

chelseablue wrote: »

Yes my employer is paying the max they should for my pay grade

I've still got 29 years to go on my mortgage (if we don't overpay) so not sure how early I'd be able to retire even if I wanted to

Although we are considering moving to a cheaper area next year which should bring the mortgage down to having about 10 years to go

For us it was about getting into good habits. We have always tried to make overpayments on the mortgage every month, it was only £20 - £50/month early days but now we're in the fortunate position to be able to overpay by £1400/month and the mortgage will be gone very soon, before I'm 46.

Similarly with pensions I've always paid in the max to get max employee pay-in too. Now I pay a decent chunk in AVCs as I have a generous scheme that also adds in employer NI contributions and keeps me away from the 60% tax bracket.

It's a balance between living your life and saving to give yourself options later in life too. I plan on retiring before I get to 60, but who knows I may go part time or be in a role where I want to carry on. At least I know I should have the option to call it a day if I've had enough.

Now is the time when you can make the biggest difference by putting a bit extra away and giving it time to grow.

Muhren

For a comparison op, I am the same age, male and earn roughly the same as you, my pension pot is £81,500. I have been upping my contributions quite drastically though over the past year as I am looking to achieve FIRE as soon as possible.

I do have other investments as well though, but thought I would add my pension figures as we are in a very similar position.

jamesd

chelseablue wrote: »

Im 36 and female ... My pension pot currently is £86,000 ... Is a pot of £86k considered good for 36?

It's excellent for 36. Equivalent to an initial income of about £14,000 variable in today's money in 30 years even if you paid no more into it. How?

Assume 4% growth from a high equity component, plus inflation. 1.04 ^ 30 = 3.24 (^ is x superscript y on scientific calculators like the one in Windows). 3.24* 86000 = 278,640. 5% of that is 13932 and 5% initial with ongoing costs of 1.5% is the expected UK safe withdrawal rate using the Guyton-Klinger rules.

Calculators like the one at Hargreaves Lansdown or in your type of scheme's annual statement are largely useless. Partly because they assume that you'll throw away half of the value of your pot by buying an annuity and partly because they are required to use unrealistically low long term growth rates.

The investments you choose are very important. There's some recent discussion in SIPP portfolio, all equities, what percent in UK?

chelseablue wrote: »

YI've still got 29 years to go on my mortgage (if we don't overpay) so not sure how early I'd be able to retire even if I wanted to ... Although we are considering moving to a cheaper area next year which should bring the mortgage down to having about 10 years to go

You seem to be planning a major mistake. Optimal mortgage term is the longest you can get and ideally interest only. This is because you can get pension tax relief on mortgage capital repayments if you pay money into a pension and then after reaching 55 use the pension tax free lump sum to do capital repaying. Along the way the investment growth is expected to be greater than the interest rate so you gain that way as well.

There are people who just want the mortgage gone as fast as possible. It's a legitimate choice but hugely wasteful and means working for many more years than necessary.

Very early retirement is entirely possible. I did at 55 after 12 years of investing over 60% of income. FIRE is about this sort of thing: financial independence, retire early. Up to you to pick your own balance but a lowish spending lifestyle is very helpful.

fraserkerr

I'm 35 male with an annual salary of £35k. I have £125,00k in my workplace DC pension fund and worried this is not adequate at my age. Looking to retire by 60 with a fund over £750k. Still seems like a long way to go.

Zorillo

OP, I think you're doing well to have such a high amount saved on such modest contributions.

For comparison I am the same age, earn roughly the same, have slightly less in my pot, but contribute roughly double what you do each month. I also try to maximise my LISA each year,
overpay the mortgage, raise two children blah blah blah.

westv

jamesd wrote: »

You seem to be planning a major mistake. Optimal mortgage term is the longest you can get and ideally interest only. This is because you can get pension tax relief on mortgage capital repayments if you pay money into a pension and then after reaching 55 use the pension tax free lump sum to do capital repaying. Along the way the investment growth is expected to be greater than the interest rate so you gain that way as well.

Aren't interest only domestic mortgages rarer than hen's teeth?
And I'm not sure I'd trust the stock market to fund my mortgage. Yes, you are likely to do well but it isn't guaranteed. Isn't that partly why endowments failed?

Anonymous101

westv wrote: »

Aren't interest only domestic mortgages rarer than hen's teeth?
And I'm not sure I'd trust the stock market to fund my mortgage. Yes, you are likely to do well but it isn't guaranteed. Isn't that partly why endowments failed?

All down to the time linkage I'd say. Investing monies you would have used for overpayments is fine IMO but having a fixed end date for repayment of the capital such as an endowment or interest only mortgage doesn't make good sense to me.


Ideally investing in the stock market needs to be open ended to a degree. You need to mitigate the risk that the market falls before your end date... ideally by not having one.