Is my pot looking ok?

MaxiRobriguez

Cammywatson033 said:

So what I’ve said might have been a bit misleading, sorry.

I'm surprised you got two pages worth of people rushing to congratulate, because the figures looked wild to me without doing any calculations!

FWIW, to generate a £250k pot on those contributions by 35 then you'll have had to had entered the workforce at 18, on the same salary you are now (ie, touching higher rate taxpayer), with the 10%/16% contributions applying throughout, and on top of that consistent returns on the portfolio of 5% a year, over a timeframe which includes both great recession and Coronavirus knocks.

For comparison sake, what I suspect is going to ring true for far more people (on this forum at least) is my scenario. I started work after uni at 21, joined a grad scheme paying a very average wage. I didn't contribute for the first two years of work because I couldn't afford to. Now 32, so ten years on - I've upped contributions from a £400 a month to £1,000 a month halfway through that timeframe and more recently over the last few months been able to up to £2,300 a month (taking advantage of HRT breaks, and because I dont need the cashflow). My current portfolio is £65k, after being knocked down a bit in recent months.

I think I've done OK. If anyone has over £100k in their pension by 35, I'd say you're doing well. It takes a lot of effort nowadays to get to that. £250k figure at 35 was ludicrous for a DC pension!

jonnygee2

For sure when you are younger you should be invested at the higher end of the scale. Suggest you find out your username and password for the pensions providers website and have a look at where your money is invested.

And the first lesson of investment - distrust anyone who says something is 'sure'.

You can make your own mind up about risk. But honestly don't trust people who say that the risk 'always' pays off in the long run. Historically it has done. But unprecedented does not mean impossible, there are no guarantees about the future. Risk is risk.

Norman_Castle

Oh, pension pot, rather misleading title.

blisteringblue

Albermarle said:

Otherwise larger employers may typically pay 7% to 10% as a guess.

We lost our DB back in 2006 when we were sold.  We very much fall into the above.  Company will match up to 8%.  

Dalfman

mcooke999 said:

cfw1994 said:

I would agree, the numbers for someone 35 are very good indeed.....I hadn’t reached those sort of numbers until probably late 40’s, although lucky (shrewd?!) fund choices have seen me okay, I feel!

I’d be interested in the source for that pdf, don’t recognise it as cfiresim: mind sharing it so I can have a play please?

It's just taken from an Excel spreadsheet that I built myself a year or so ago. I wanted to try to answer the question 'how much do I need to save for retirement' and all the online tools you find on various platform websites weren’t really giving me enough information or scope to play around with the variables...

You're welcome to the file (see attached) so you can have a play around with it yourself. I can't guarantee it's accurate as it's a work in progress but it would be good if someone could independently check it to be honest.

I want to expand on it so you can enter real-life figures each year to track progress etc. I'd also want to add a more detailed drawdown facility so you can account for one off purchases in the drawdown phase etc.

This is excellent! Thank you for sharing

JoeCrystal

andrew_m said:

My employer thinks they are the bees knees because they contribute 5% - is that sort of double digit contribution (let alone 16%) common?

  Well, I believe that the average across the private sector to be close to minimum auto-enrolment contribution. I have never forgotten that my employer said in their pension literature that they changed from based on the total income to total income above auto-enrollment qualifying earnings to save the contributions made by their employees.

Anonymous101

MaxiRobriguez said:

Cammywatson033 said:

So what I’ve said might have been a bit misleading, sorry.

I'm surprised you got two pages worth of people rushing to congratulate, because the figures looked wild to me without doing any calculations!

FWIW, to generate a £250k pot on those contributions by 35 then you'll have had to had entered the workforce at 18, on the same salary you are now (ie, touching higher rate taxpayer), with the 10%/16% contributions applying throughout, and on top of that consistent returns on the portfolio of 5% a year, over a timeframe which includes both great recession and Coronavirus knocks.

For comparison sake, what I suspect is going to ring true for far more people (on this forum at least) is my scenario. I started work after uni at 21, joined a grad scheme paying a very average wage. I didn't contribute for the first two years of work because I couldn't afford to. Now 32, so ten years on - I've upped contributions from a £400 a month to £1,000 a month halfway through that timeframe and more recently over the last few months been able to up to £2,300 a month (taking advantage of HRT breaks, and because I dont need the cashflow). My current portfolio is £65k, after being knocked down a bit in recent months.

I think I've done OK. If anyone has over £100k in their pension by 35, I'd say you're doing well. It takes a lot of effort nowadays to get to that. £250k figure at 35 was ludicrous for a DC pension!

I'd agree with you on everything you say. My experience is very similar to yours. I'm 38 now and having continued to take advantage of the HRT relief have increased by pension contributions by 100% of any pay rises I've in the last 4 years. I contributed close to the £40k limit for the first time last year.... and my pension is still short of £200k. 

burner01

I guess im lucky to be working in utilities where er DC contribution rates are typically much higher ( I get 12% from them via SS). Guess it's due to the unions when the DB scheme closed to new entrants x years ago.

Albermarle

jonnygee2 said:

For sure when you are younger you should be invested at the higher end of the scale. Suggest you find out your username and password for the pensions providers website and have a look at where your money is invested.

And the first lesson of investment - distrust anyone who says something is 'sure'.

You can make your own mind up about risk. But honestly don't trust people who say that the risk 'always' pays off in the long run. Historically it has done. But unprecedented does not mean impossible, there are no guarantees about the future. Risk is risk.

I did not say any investment was a sure fire thing and would never do . However all mainstream pension advice/guidance says that it is sensible for younger people to be invested at the higher risk end of the scale. Especially for a pension with a long time scale and regular monthly contributions.
Although nothing is guaranteed , the history shows it would be actually more risky to invest in lower risk funds ( if that makes any sense !) 

Albermarle

Thanks for this, I do have a log in so I will go In and have a look. Is it easy to change the investment? Is it a matter of looking at different options and they will tell me rates of return or whatever?

Yes it is easy to change investments and you do not have to change 100% . Just as an example you could move 50% of the current fund, with 30% to one new fund and 20% to another .

The fund info will not tell you a projected rate of return . You can see the historical performance and it will have a risk rating , usually one to seven. Also there will be info about what and where the fund is invested in .

Have a good look and if more questions then come back.