Pension Panic - Very late starter - Help!

jamesd

djpj81 said:

Is there anything I can do at 39 to fix this in time? ... I guess it's too late to start creating a worthwhile pot as I have missed so many years of interest? ... it's useless to me, free or otherwise, if it's tied up in a mysterious fund somewhere...  Help, where should I start?

It took me less than fifteen years from starting to retired comfortably at 55, investing 60%+ of my income. That's a lot but it isn't too late for you either. You have 29 years to state pension age.

1. extend your mortgage to reduce monthly spend on it. Investments long term grow at 2-3 times currently mortgage interest rates and if you like, at 55 you can take 25% of a pension pot as a tax free lump sum to reduce the mortgage. So use the mortgage savings for that.
2. Other boards like old-style money saving can help with things like preparing a week's meals in advance and bringing lunches to work that can save a lot of money. The budgeting board is good for looking over regular spending.

Modern private sector pensions normally give you your own pot of money where you can choose how it's invested. No mystery in those.

steampowered

I guess it's too late to start creating a worthwhile pot as I have missed so many years of interest? 

Don't think of it like this. You have to do the best with what you've got - it's about finding the best use for your £. A small pension is better than no pension.

If your employer matches contributions, for each £1 you put into your pension, you will receive the following:
- £1 from your contribution
- £1 from your employer
- Tax relief from the government (20% if you are a basic rate tax payer).
- Investment returns (pensions typically return on average about 6-8% per year).
That's a very convincing investment case. On modest pension contributions you would be more than doubling your money. 

It's tough with all the financial pressures you are under. I can only echo the suggestions of others to make sure you are saving where you can and are on the cheapest possible mortgage. If you can't contribute now due to the kids you should be making plans to make big contributions (30% of income?) when the kids fly the nest.

Dazed_and_C0nfused

Another thing to remember is that by not contributing you are probably voluntarily paying more tax than you need to.

As well as giving up free money from your employer.