Scared/Anxious I'm not saving enough for my future.

cfw1994

kev2009 said:

I often wonder the same, i'm slightly older than the OP, total contributions between myself and company are 18% so not too far off the OP's 20% but unfortunately my contribution is no where near the ops £1400 per month, however I am single, only 1 income and no dependants so i'm hoping this level of contribution will be sufficient.  I do worry if this will be sufficient for to retire on, i'm home owner also, have approx 20 years left n mortgage (if it runs the full course) but i'm hoping to get it paid off within next 10 years I've started to make yearly OP to reduce it and clear it.  I'm hoping when i clear mortgage to then start to increase contributions a bit but I'm also aware than when i get to 55, company will move my pension into a lower risk/cash type investment as i'm down to retire at 65 (this was the age when i started working) as opposed to my official state pension age which is currently 67 but due to move to 68 i believe.
State pension for me is on target for the full SP providing I continue making contributions each year.  My online portal via company has a Model which predicts what my fund would be worth when i get to 65 based on various factors like x% increase each year, fund making x% etc so its ok for a general looks but no one knows what they will be.  Based on default settings, it predicts a 10k a year income with SP on top so seems bit low to me but realise its a fair bit away to be anywhere near accurate etc.

My advice to my younger self would be to NOT overpay on the mortgage, but to pay that into my pension.   
Interest rates on the mortgage should be super low compared with growth of that money (+ HMRC contribution!) in a pension.  IMHO, of course!
Tax relief, a lump sum at some point that (if needed) can pay off the mortgage.

kev2009

Thanks, I thought about this but seeing how much my pension lost recently has made me a bit more cautious and worry that if there is another crash when i want to retire, i could loose out on both counts i.e lower pension, lower tax free amount and still owe mortgage.  My pension is paid via salary sacrifice so i'm not 100% sure if I get the tax added into my pension, i have a feeling not as i effectively pay the pension first and am then taxed on the remainder.  I'm currently planning to OP mortgage to get it down to a low monthly repayment and then stop OP and potentially let it run its course and then pay extra into pension as with the low monthly payments, even if interest rates suddenly shot up, it would be a massive rise in monthly repayments when i owe much less and on low monthly payments so even then worse case, pension is low so i don't take tax free amount and leave it all in pension, i should hopefully be able to continue paying it if needed for a few months as my mortgage is effectively paid for a few months after i should officially retire at present as had to take over 30 years as didn't fit into 25 which i had wanted but on plus side it has made repayments a bit cheaper and now working on getting it out of the clouds and much lower
How did people work out there Number they need?  I have a budget sheet which i believe is pretty accurate but I don't really keep much of an eye on food etc, Other bills are accurate as I know exactly what i pay per month on DD etc but food is generally bought as needed or a big shop and then buy more as and when required.  I don't spend more than my monthly income as a rule, only time i go over is if there is a large unexpected bill or Christmas for example whereby i'll dip into savings to get any additional money.
Kev

AlanP_2

It sounds like you are pretty close to your number then if the only item missing is food.

Can you not work out from Bank / CC statemements your typical monthly spend and then add a bit for and bits & pieces paid for in cash?

marycanary

cfw1994 said:

kev2009 said:

I often wonder the same, i'm slightly older than the OP, total contributions between myself and company are 18% so not too far off the OP's 20% but unfortunately my contribution is no where near the ops £1400 per month, however I am single, only 1 income and no dependants so i'm hoping this level of contribution will be sufficient.  I do worry if this will be sufficient for to retire on, i'm home owner also, have approx 20 years left n mortgage (if it runs the full course) but i'm hoping to get it paid off within next 10 years I've started to make yearly OP to reduce it and clear it.  I'm hoping when i clear mortgage to then start to increase contributions a bit but I'm also aware than when i get to 55, company will move my pension into a lower risk/cash type investment as i'm down to retire at 65 (this was the age when i started working) as opposed to my official state pension age which is currently 67 but due to move to 68 i believe.
State pension for me is on target for the full SP providing I continue making contributions each year.  My online portal via company has a Model which predicts what my fund would be worth when i get to 65 based on various factors like x% increase each year, fund making x% etc so its ok for a general looks but no one knows what they will be.  Based on default settings, it predicts a 10k a year income with SP on top so seems bit low to me but realise its a fair bit away to be anywhere near accurate etc.

My advice to my younger self would be to NOT overpay on the mortgage, but to pay that into my pension.   
Interest rates on the mortgage should be super low compared with growth of that money (+ HMRC contribution!) in a pension.  IMHO, of course!
Tax relief, a lump sum at some point that (if needed) can pay off the mortgage.

I don't think this approach is automatically the right one, especially for a single person like kev2009 because it does not take account of the risk of being unable to pay the mortgage following redundancy or illness. In my 40's I was a lone parent with a large mortgage when  I was made redundant.  It was a horrible feeling and I decided then that, once I was back in work I would pay the mortgage off as soon as I could.  What this decision cost me in terms of lost pension has been worth every penny. A couple of years ago I had a health issue and the knowledge that I had a paid for house was a great comfort. 

Mary

kev2009

Thanks all, problem is I generally withdraw cash and then use it for whatever I want/need so I can't say simply oh I withdrew £200 this month for example so i'll add that to the budget per se as next month I may spend more or less as I don't use the cash just for food it could be for anything.  

Yes, i agree @marycanary - As i'm single, my worry is something happening and then not having enough money to cover bills etc.  Hence why I started to OP, initially reducing Monthly payments so I could have a bit more in my hand so to speak, although as I just finished my 5 year fixed, the last OP i decided to reduce the term, in hind sight probably shouldn't of but not a huge issue.  I have manged to reduce my monthly payments through OP and now my new fixed rate deal is better than my previous one but it's still quiet costly and if i was out of work, it would soon burn through my savings so my plan is to try and continue to OP as much as I can and reduce the monthly payments.  My thinking is (and this has a loooong way to go but ultimately, if I can get mortgage down to say £100 a month then i'd be much happier and would not be too concerned about the remaining years I had to pay £100 as interest would be minimal and if there was a jump in interest rates, only £100 a moth, its not going to suddenly become £200 a month for example.  Plus then I could potentially save up enough money to them put aside to potentially pay it off in one go when I wanted to but also then increase pension contributions.  As i say, currently 18% is going in, i'd like it to be 20% but I just can't stretch to the extra amount and in current climate, no one knows what will happen with jobs, work etc so i'm just trying to rain in any expenses where possible.  Travel has currently gone up as i'm not using public transport as I don't feel comfortable using it so just trying to cut back in other areas where possible.
Kev

cfw1994

marycanary said:

cfw1994 said:

kev2009 said:

I often wonder the same, i'm slightly older than the OP, total contributions between myself and company are 18% so not too far off the OP's 20% but unfortunately my contribution is no where near the ops £1400 per month, however I am single, only 1 income and no dependants so i'm hoping this level of contribution will be sufficient.  I do worry if this will be sufficient for to retire on, i'm home owner also, have approx 20 years left n mortgage (if it runs the full course) but i'm hoping to get it paid off within next 10 years I've started to make yearly OP to reduce it and clear it.  I'm hoping when i clear mortgage to then start to increase contributions a bit but I'm also aware than when i get to 55, company will move my pension into a lower risk/cash type investment as i'm down to retire at 65 (this was the age when i started working) as opposed to my official state pension age which is currently 67 but due to move to 68 i believe.
State pension for me is on target for the full SP providing I continue making contributions each year.  My online portal via company has a Model which predicts what my fund would be worth when i get to 65 based on various factors like x% increase each year, fund making x% etc so its ok for a general looks but no one knows what they will be.  Based on default settings, it predicts a 10k a year income with SP on top so seems bit low to me but realise its a fair bit away to be anywhere near accurate etc.

My advice to my younger self would be to NOT overpay on the mortgage, but to pay that into my pension.   
Interest rates on the mortgage should be super low compared with growth of that money (+ HMRC contribution!) in a pension.  IMHO, of course!
Tax relief, a lump sum at some point that (if needed) can pay off the mortgage.

I don't think this approach is automatically the right one, especially for a single person like kev2009 because it does not take account of the risk of being unable to pay the mortgage following redundancy or illness. In my 40's I was a lone parent with a large mortgage when  I was made redundant.  It was a horrible feeling and I decided then that, once I was back in work I would pay the mortgage off as soon as I could.  What this decision cost me in terms of lost pension has been worth every penny. A couple of years ago I had a health issue and the knowledge that I had a paid for house was a great comfort. 

Mary

That is a reasonable viewpoint, & it is certainly a great feeling to not have the mortgage payment to make, absolutely.
My point was that long term, financially speaking, it is probably better to be taking advantage of tax benefits by paying the money into the pension instead.  FWIW, I was overpaying ours for a few years before I had that lightbulb moment and flipped round....hence my earlier comment about advice to a younger me!

It is possible to take out redundancy insurance if that is your major concern (*note, I have no idea what that costs, or indeed whether it is worth it!)

@kev2009, you said “seeing how much my pension lost recently has made me a bit more cautious and worry that if there is another crash when i want to retire, i could loose out on both counts i.e lower pension, lower tax free amount and still owe mortgage.“
Again, not an unreasonable concern.....but the financial markets have recovered pretty well - most people’s funds will be at or above where they were at the start of this year.  Is yours still below the start of the year?

The pension is “just” a tax efficient wrapper: if the value is still below the peak of Feb, perhaps look at what funds are used inside it.   It is well worth spending some time finding out what options you have inside that wrapper.

fraserkerr1984

I'm 36 and have a DC workplace pension pot of £150,000 which I'm concerned is not enough at my age. I'm contributing 4% and my company contributes 6%. I'm contributing a further 21% through AVCs. I hope to have a sufficient pot large enough to be able to retire by 60.

1813

Well my main concern is not being a homeower and not ever likely to be through my own back, what rent may be like in 2050 as I just want to ensure I have a roof over my head.

garmeg

fraserkerr1984 said:

I'm 36 and have a DC workplace pension pot of £150,000 which I'm concerned is not enough at my age. I'm contributing 4% and my company contributes 6%. I'm contributing a further 21% through AVCs. I hope to have a sufficient pot large enough to be able to retire by 60.

£150k at 36 is probably in the top 5% of fund sizes i would guess.