When can I stop contributing to pension?

kimwp

I'm approaching 36 and while I plan to work as long as possible to keep my brain challenged, sense of purpose etc and would likely continue adding to my pension, I'd like to know when I can stop contributing so I know when I could potentially take a wage cut/divert funds to frivolous spends etc. It's really about understanding the maths because all the online calculators assume continuous contributions until retirement whereas I'm pondering when I can consider a lifestyle change having "sorted" my retirement fund for retiring at a later date.

I think I need to take account of likely age of death (fun times!), inflation (though I guess the state pension will match it?) and likely increase in fund value due to fund performance but I'm really not sure what values to use for these and whether I need to be considering anything else (or assuming there won't be a state pension!)

Current pension fund value approx 70k, DC pension, which is now being added to at 24k a year (including employer contribution and hefty AVCs)

The assumptions are: 15k a year in retirement (approx 4k more than I currently spend) and retire at 60, no dependents, no partner, full state pension from 67.

Dazed_and_C0nfused

Do you mean £15k year from 60-68* then just £6k year once State Pension starts?

* your State Pension age will be 68 not 67

kimwp

Yes, effectively - 15k income a year. My plan is to use a LISA to make it 15k tax free income, I'm not sure if that affects the calcs.

Good spot on the pension age, thanks!

Marcon

I think you probably need to go on contributing for another decade or so and then take another look at your finances. At such a young age it's impossible to predict anything with any sort of realism.

Albermarle

The assumptions are: , no dependents, no partner, 
Quite a big assumption at your age . 

MaxiRobriguez

I'm in a similar-ish boat to the OP, three years younger, with £100k in the pot and an annual contribution of £26k.

I'm planning to trim down my contributions to <£20k in a couple of years time to free up cash flow for a bigger family home. I then plan to up contributions around age 45 back to they currently are, using re-mortgaging if necessary, ahead of a retirement at 50 (and therefore no more contributions...) using an ISA as a glidepath. 

So, if OP wants to carry on working until normal retirement age then theoretically should be able to stop contributions within a decade, work until retirement age, and then have that £15k annually suggested.

Whether or not that is enough for 30 years+ is a different question entirely. I wouldn't feel comfortable with that limited amount. Circumstances can and do change, the biggest one being additional healthcare needs in older age.

kimwp

Albermarle said:

The assumptions are: , no dependents, no partner, 
Quite a big assumption at your age . 

True, but I can't plan for children I don't have and a partner would presumably improve the financial situation as costs would be shared.

MaxiRobriguez

kimwp said:

Albermarle said:

The assumptions are: , no dependents, no partner, 
Quite a big assumption at your age . 

True, but I can't plan for children I don't have and a partner would presumably improve the financial situation as costs would be shared.

I'm planning for a second child when our first hasn't arrived yet.

If you don't want children and you are sure that you won't have them then of course no need to plan for it. If it's a possibility and you haven't yet met a partner to settle down with then I would factor it into foreward planning. At 36, still time for that to happen.

Sea_Shell

Pension contributions are like the "Hotel California"...you can never leave (stop)!!! 😉

Joking aside.   If you do decide to stop contributing, it may still be wise to enquire as to your scheme or plan's minimum contributions, as sometimes this can reduce fees payable, compared to making no contribution at all.

DH does this on one of his, paying just £16 pm, to keep it ticking over.

kimwp

Cheers @Sea_Shell, good to know!

Thanks @MaxiRobriguez, it's really good to see how others are approaching it, point noted re healthcare costs. I'm going to be paying into my pension at least for the next ten years, so if children come along in that time, then I would delay plans for winding back work at that point, unless you meant something else?

MaxiRobriguez

Wasn't suggesting anything in particular, just that you should prepare for the unexpected.

My entire portfolio is based around "what if" scenarios. What if I live to 100, what if I only get a 4% annual return for the next 50 years, what if I need to fund 2x kids education and houses...

If you can factor in your what-ifs and still have enough left over to tide you through life then your chances of accidentally running out of money are quite slim. If those what ifs don't come to pass then you simply have more money than you bargained for which isn't a bad place to be in.