How am i doing...

SB1980

First post here, and after much googling I can't find a comparator / guide online anywhere. Not sure if a tread already exists on this, so apologies if it does. Just really wanted to know how I am doing in relation to pension pot etc.


I am 38, work full time, 20 years left on mortgage and plan to take 5 years off that when remortgage next year. I am in Company pension scheme I contribute 10%, employer 6%, pot currently just over £90k. I've just opened a LISA to top up retirement planning, but only adding £100pcm at the min.


How do I compare? do I need to do more, nervously asking for advice/guidance/commets as to what else I should be doing, or if I am on track. Ideally I would like to retire before state pension age, so keen to do what I can now.


thanks in advance.

atush

Do you have cash emergency savings of 3 months outgoings plus? (will be smaller than salary)

If so, you arent doing badly for your age cohort.

There are many pension calculators around online that you can plug your details in, and get some idea of pension pot at retirement.

AnotherJoe

You are putting in about the bare minimum for a reasonable retirement at age 67 or so. Is that your ambition?
I would focus more on putting the money into pension instead of mortgage. With mortgage you are saving perhaps 2% on after tax earnings whereas with a pension you are probably getting 5% plus on before tax earnings. If you are a high rate tax payer don't even think about mortgage instead of pension.
A common idea posted here is to get the mortgage done and only then start on the pension "seriously". Trouble is you are then losing out on years of pension growth at rates several times higher than mortgage rates, plus with even modest inflation you aren't letting inflation do it's serious job of whittling down the pension without any help from you.

AnotherJoe

atush wrote: »

Do you have cash emergency savings of 3 months outgoings plus? (will be smaller than salary)

If so, you arent doing badly for your age cohort.

There are many pension calculators around online that you can plug your details in, and get some idea of pension pot at retirement.

Except most people don't save enough in pensions so that's not a great benchmark to go by.

SB1980

AnotherJoe wrote: »

I would focus more on putting the money into pension instead of mortgage. With mortgage you are saving perhaps 2% on after tax earnings whereas with a pension you are probably getting 5% plus on before tax earnings. If you are a high rate tax payer don't even think about mortgage instead of pension.

I suppose I hadn't really thought of it that way, but makes sense. Thanks.

cloud_dog

Are you a HRT payer?

Does your company operate salary sacrifice / salary exchange?

SB1980

cloud_dog wrote: »

Are you a HRT payer?

Does your company operate salary sacrifice / salary exchange?

yes HRT payer, however the 10% salary sacrifice into company pension eats up most of that


Annual Salary £53k
Annual Bonus c£10K (last few years chosen to sacrifice 50% into pension)

cns06

The first questions, IMHO, that you need to ask your self are:

What age do you want to retire?
What sort of income do you want?

cloud_dog

SB1980 wrote: »

yes HRT payer, however the 10% salary sacrifice into company pension eats up most of that


Annual Salary £53k
Annual Bonus c£10K (last few years chosen to sacrifice 50% into pension)

Ok, but even as a LRT payer you will benefit by using SS to make pension contributions by reducing your NI contributions by 12%.

So, even below the HRT threshold, for every £100 you (your company actually) puts in to your pension, it will only cost you £68. Even less if your company is one of those generous firms that give some/all of their NI reductions (payments) to you.

EDIT: Based on the numbers only, paying extra in to your pension scheme via SS is the best option. Having said that you obviously can only access that money from 55 currently (although that age may rise in line with the SPA minus 10 years, i.e. possibly 57 or 58 at some point) so you may wish to consider money outside of a pension /LISA to add some flexibility.

As you have SS I would ignore a LISA at present (although it is useful that you have opened one before 40. At least offers you options).

cloud_dog

Just to help in your original question, regarding where are you in your retirement planing / pot. There is a very simplistic guideline of 25, that may help. Basically, you calculate how much income you think you would like and then multiply it by 25 to see how much you will need. So, £25k pa equates to a pot size of £625k.

Now, before the more seasoned posters on here start shouting at me, this 'rule of 25' is a very, very, very, very (you get the idea) simplistic approach to working things out but, it at least provides you with a ballpark to aim for.

SB1980

cloud_dog wrote: »

Ok, but even as a LRT payer you will benefit by using SS to make pension contributions by reducing your NI contributions by 12%.

So, even below the HRT threshold, for every £100 you (your company actually) puts in to your pension, it will only cost you £68. Even less if your company is one of those generous firms that give some/all of their NI reductions (payments) to you.

EDIT: Based on the numbers only, paying extra in to your pension scheme via SS is the best option. Having said that you obviously can only access that money from 55 currently (although that age may rise in line with the SPA minus 10 years, i.e. possibly 57 or 58 at some point) so you may wish to consider money outside of a pension /LISA to add some flexibility.

As you have SS I would ignore a LISA at present (although it is useful that you have opened one before 40. At least offers you options).

This all makes perfect sense, thank you!


To explain my thinking in the LISA, I don't feel I am going to be in a position to retire pre 60, and plan to gradually increase LISA contributions until age 50 (when I know I have to stop) the range of predictor calculators online suggest c£50K value at this point, which would prevent me from needing to access as much of my 25% tax free pension pot, and therefore reduce tax liability from pension drawdown... I could be totally wrong in this, as it's all pretty new to me, I've been a head in sand burier up to now.