Am I on the correct tracks?

Therooster100

I would love some advise/help to make sure I have my pension on track for retirement.
Some background I am 25 (earning £45K+) and planning on retiring at 55 or 60. I have 2 pensions at the moment: 

1. Pension 1 open since 2014 & has £18.6K in it which has been performing at 10% per year 
2. Pension 2 opened since 2018 & has 13K in it which has been performing at 9% per year.

I am still paying into pension 2 at a rate of 12.5% per month (Salary Sacrifice) & my employee is putting in 10%. 

I plan on been mortgage free by the time I am 45 & have stocks/shares as well but wanted to check that I am paying in a good enough amount to retire on? 

gm0

Doubt you will get much response as nobody knows what "enough" looks like 40 years hence for your circumstances then.  The range of possible portfolio values at retirement is also huge.

More constructively - as a basic approach to saving for a pension. For your age.  It looks pretty good.  You have started.  And are putting in a decent amount across you and employer.  At this stage (20s) the other thing to understand and check is what assets is it getting put in (funds) and at what cost.  And are these fixed (buy and hold) or does your scheme play around with asset allocation as you age e.g. 40+.  (Often called lifestyling).  Understand what is happening and also how your savings and fund value responds to short term volatility and longer term returns around the world which you can see in the public indices. 
There probably shouldn't be any currency FX hedging going on. But if there is - examine the fund options open to you again with increased rigour - and then make your choice.

What you really need to check is whether you are taking the right amount of risk for the fund(s) you chose (or were defaulted into) by the scheme.  And whether the costs for these are reasonable for these kinds of assets.   My scheme put me in 100% equities at your age (1980s) which was good, but all UK (which was less good).  The "safe default fund" thinking of pensions trustees has moved on.  Understand your investment horizon 25-60 + retirement, and your risk appetite.  And make sure you are taking as much risk as you want to.  We are unlikely to be living through a period of higher than normal returns.  On the plus side you will likely be saving through a valuation correction at some point.  I was fortunate to see a couple of these on my journey.

[Deleted User]

Sorry but I find it funny when 25 year olds dream of an early retirement.

“On track” is meaningless in this context.  Invest as much as you can into equities but don’t forget to have an actual life before retirement. 

Terron

You are doing better than I was at your age and I pretty much retired when I was 53. I didn't put anything into a pension until I was 26.

Therooster100

Deleted_User said:

Sorry but I find it funny when 25 year olds dream of an early retirement.

“On track” is meaningless in this context.  Invest as much as you can into equities but don’t forget to have an actual life before retirement. 

I didn't say I was dreaming of early retirement I said between 55-60 which albeit would be before state pension (if there is one when I get there) it isn't drastically early? 

Albermarle

Therooster100 said:

Deleted_User said:

Sorry but I find it funny when 25 year olds dream of an early retirement.

“On track” is meaningless in this context.  Invest as much as you can into equities but don’t forget to have an actual life before retirement. 

I didn't say I was dreaming of early retirement I said between 55-60 which albeit would be before state pension (if there is one when I get there) it isn't drastically early? 

I think what he means is that most 25 year olds probably never give any kind of retirement a moments thought.

hugheskevi

Therooster100 said:

I didn't say I was dreaming of early retirement I said between 55-60 which albeit would be before state pension (if there is one when I get there) it isn't drastically early? 

Your State Pension age is 68, and very likely to increase a couple of times before you get there. Minimum Pension age (the earliest you can commence a pension) is planned to be 10 years earlier than State Pension age.

The future is very unlikely to be like the past. Retiring at age 55-60 will be very early, with most retiring between 65-70 unless ill-health dictates otherwise.

Having said that, targeting Minimum Pension age for retirement is very sensible, as it leads to very good tax efficiency. Retiring prior to Minimum Pension age can be done, but due to having to use non-pension vehicles is much more costly due to no tax relief being available.

Priority of mortgage, pension and ISA saving is a key decision at this time. Pension is subject to policy change risk, ISA is convenient for tax-free returns, but that isn't much of a bonus, mortgage is psychologically important, but things like planning to repay mortgage from pension lump sum could be far more tax efficient.

Understanding the pension incentives you have is very important - employer contributions, salary sacrifice (and whether employer passes on NI savings), and whether higher/additional rate payer all strongly influence the incentive you have to save into a pension.

You are paying in a good %, but there is usually a more intelligent pattern of contributions to maximise returns than simply setting a % contribution, and that can mean contributions to ISA/pension/mortgage changing quite significantly year-to-year.

Brenster

I think you have made a great start, i only started sorting my pension aprox 3 years ago (37) !!!  i had student debt, mortgage, kids, bills etc to concentrate on, but now i have well and truly got the bug and still hope for a retirement in my late 50's if i really push my yearly contributions.
But as someone says above, whilst it is very important to plan for your future, dont forget to allow yourself live for today.
Good Luck

atush

I think you have made a good start.

Now start an emergency fund, and a S&S isa

Therooster100

atush said:

I think you have made a good start.

Now start an emergency fund, and a S&S isa

Thank you! I have an emergency fund of 6 months bills (Including mortgage) a S&S Isa with 4K in and LISA with 3K in.

I am also saving to buy another Buy 2 Let property which should be later this year.