Paranoid about my pension, justified or not?

slider09

Hi,
Over the last 18 months I have been taking a more interested / detailed look into my pensions (currently have 2).  I'm 49 years of age and ideally would like to retire at the age of 60 (ideally before but I don't think that will be feasible based on my current pension stats).  Until recently I've never thought of retirement so have only paid the minimum contributions throughout my working life.  There have been maybe 5 years when I've not even had a workplace pension.
Currently, my pension pot stands at around £100k and I am currently paying £15k per year (inc tax relief and employer contributions) into my pensions (combined, not each).  I am also overpaying into my mortgage so should be mortgage free by the time I am 56/57. I will then reinvest the equivalent of the mortgage payment into my pension (around £12k per year) for the remaining 3/4 years, which should see my total fund be £300k+?
I know that's not a huge final fund value and probably only around a £10-12k income once taken, however looking online the average pension pot at the age of 55 seems to be only £80k - which I find hard to believe.
Am I worrying too much, I seem to spending more and more time looking at my budgeting spreadsheets :-)
Thanks

Brenster

Hi, everyones circumstances are different, only you know what you require to be able to live comfortably in retirement.  You quote an average pension pot of £80k, i dont know where this figure is from but i imagine it will include all of society, those with comfortable pension pots, those with average pension pots, those with zero pension and even those in debt, remember it is an average.  There are plenty of people who need (and accept) they will need to work well into retirement, and also those that plan to retire as soon as possible.
You can only focus on your personal circumstance / situation, and plan accordingly.
Good Luck 

Linton

From a quick spreadsheet calculation, if you could get a return of 3% above inflation, which is not unreasonably high, and increase your contributions each year with inflation then you would have about £400K at current prices when you are 60. What funds is your pension invested in? They should not be over-cautious, but you should not need to be wildly adventurous either. 

Have you worked out how much income you will need in retirement? £12K may be OK with a £9K State Pension but you will have the gap between 60 and 67 to fund. If you can live happily on about £20K/year there doesnt seem too much to worry about as long as you make your pension a priority.  You do have the option of delaying you desired retirement  date if need be which will make your pot larger and reduce the time during which you will need extra money in the absence of the State Pension.

 Have you got a State Pension Forecast? If not see: https://www.gov.uk/check-state-pension

How much interest are you paying on your mortagage?  As long as that is relatively low you would `be financially better off if you kept the mortage repayment to the basic amount and put the rest into your pension.  You could then pay off any mortgage remaining from your pension tax free lump sum when you stop working.

Can you contribute more to your pension anyway?

DT2001

Take a look at the ‘my number’ thread and work out what you would like/need for retirement. Maybe you have the option to downsize.
Have you checked your SP forecast to ensure you are on track for the maximum amount.
When you have your number you can see how much your ‘pot’ needs to produce at SPA and what is ‘spare’ to fund the time from retirement until drawing SP.
So you maybe worrying too much, read the number thread and you’ll be much better informed.
Good luck.

Albermarle

You quote an average pension pot of £80k, i dont know where this figure is from but i imagine it will include all of society, those with comfortable pension pots, those with average pension pots, those with zero pension and even those in debt, remember it is an average.

Due to all the variables you mention + a few more , there are various figures mentioned for the average pot , Some well below £80K and some well above, so it is almost a meaningless figure.

 which should see my total fund be £300k+?

As already mentioned , it is not just how much you put in ( although the most important part) but how the investments /markets perform over the next 10 to 15 years .

barnstar2077

There are an awful lot of zero hour contract agency workers in the UK now, they would be lucky to have 8k in a pension never mind 80k.

I would not stress about it too much, the fact that you are doing something about your future now already sets you apart from 90% of the population.  Depending on how secure your job is, and mortgage rate and size, you may want to consider not overpaying as much on the mortgage and putting more into your pension.  The pension is mathematically a better financial deal as you get a twenty five percent uplift on contributions which can then hopefully continue to grow until you need the funds.

slider09

Linton said:

 Have you got a State Pension Forecast? If not see: https://www.gov.uk/check-state-pension

How much interest are you paying on your mortagage?  As long as that is relatively low you would `be financially better off if you kept the mortage repayment to the basic amount and put the rest into your pension.  You could then pay off any mortgage remaining from your pension tax free lump sum when you stop working.

Can you contribute more to your pension anyway?

Thanks for taking the time to reply.
I have done a state pension forecast, currently on around £150 pw and need to contribute for a further 6 years to achieve the full £175.
Mortgage interest is reasonably low (1.94% for the next 3.5 years then SVR).  Mortgage actually naturally ends when I'm 59 so before my planned retirement, I'm only paying a couple of hundred extra to reduce this by a couple of years.
Currently debating whether to up my workplace pension to 20% contributions (currently on 15%).

slider09

DT2001 said:

Take a look at the ‘my number’ thread and work out what you would like/need for retirement. Maybe you have the option to downsize.

Thanks for replying, I haven't seen that thread, I'll take a look now.

LHW99

slider09 said:

Linton said:

 Have you got a State Pension Forecast? If not see: https://www.gov.uk/check-state-pension

How much interest are you paying on your mortagage?  As long as that is relatively low you would `be financially better off if you kept the mortage repayment to the basic amount and put the rest into your pension.  You could then pay off any mortgage remaining from your pension tax free lump sum when you stop working.

Can you contribute more to your pension anyway?

Thanks for taking the time to reply.
I have done a state pension forecast, currently on around £150 pw and need to contribute for a further 6 years to achieve the full £175.
Mortgage interest is reasonably low (1.94% for the next 3.5 years then SVR).  Mortgage actually naturally ends when I'm 59 so before my planned retirement, I'm only paying a couple of hundred extra to reduce this by a couple of years.
Currently debating whether to up my workplace pension to 20% contributions (currently on 15%).

If that couple of hundred went in to the pension now, it would have much longer for the growth to compound than if you left it till a few years before you actually retire.

atush

Stop overpaying your mtg and up your pension instead.