Where do I begin on pension savings?

IloveElephants

barnstar2077 said:

As others have said, don't beat yourself up, it's not as bleak as you might at first presume.  For a start, you are thinking about it now and starting to take it seriously.  I know plenty of people in their sixties that don't take retirement planning seriously, so straight away you are a leg up on many others!  Many people just think when they get to retirement age that the government and their company will tell them what they are getting and that is it.

You will be surprised how quickly your pot will grow as you start to put extra money in, seeing that number go up will be good motivation and put a smile on your face I am sure.

As well as putting more money aside, take notice of what it is invested in.  My works pensions default fund was massively over weighted to the UK, meaning that the fund primarily invested in UK companies.  I have since moved it (within the same pension) to a more globally diverse fund that has historically had better returns and reduces the risk of one countries performance disproportionally affecting the outcome.

I also use Vanguard for an ISA and SIPP, investing in their own FTSE Global All Cap Index fund for both.  An ISA is useful to bridge the gap should you need to / desire to leave work before you can access your pensions (and assuming you have the allowance, you can always put some or all of it into a pension at a later date if you work longer and don't need the cash sooner.)

I will say though, that you should also live a little now too!  Think of the difference between going on a diet or improving your diet.  If I go on a diet I can lose a lot of weight but it may not be sustainable, it may be too extreme and I can't keep it up for long.  If you create a budget and set aside a realistic amount to keep yourself entertained while investing the rest you will be far more likely to be able to keep it going and not burn yourself out trying to plough every penny into your pension/investments.

Lastly, I always recommend these forums to friends.  There is a board for most subjects and you can not only gain some great money saving advice, but also find a group of like minded people that help to motivate each other.

Hi Barnstar, thank you so much for your kind reply, it has given me a lot of encouragement.

You will be surprised how quickly your pot will grow as you start to put extra money in, seeing that number go up will be good motivation and put a smile on your face I am sure.

I love that quote above you wrote. I agree about trying to live a little as well,

Yes this forum has really kind people on here. I am very grateful to you and everyone on this forum for helping me and giving me advice. I will keep you all posted on this thread how I get on.  

IloveElephants

Linton said:

IloveElephants said:

Hi,

I need some advice and direction please, 

I am 38 and have £3,000 in my nest pension. It was from my old workplace. I am now thinking of opening a private personal pension (ones that I can log in myself and add funds) and set up a direct debit monthly to put money in. 

I am not including employment pension as I worked for companies that did not contribute to my pension and I also worked for myself so I am not relying on this.

I would like some advice on how to get an income of 30k per year by retirement, how much should I save per month, who shall I open the private SIPP pension with? Once I open the pension to play catchup how much shall I deposit as a lumpsum to meet my goals?

I was looking into HL
Aviva
Vanguard
Legal & general
Scottish widdows
Wealthify

Thank you everyone, 

Another estimate....

 Say you work until you are 68.  That gives you 30 years to accumulate a pension pot.

Assuming £20K pension from your pensions plus State Pension of about £10K a very rough calculation suggests you would need to have a pot of about £600K.

To achieve a pot of £600K at current prices another very rough calculation suggests you would need to contribute a total of £12K/year increasing with inflation. £3K is coming from your and your employer's contributions to your NEST scheme.  This leaves a contribution of £9K/year or a payment into a SIPP after tax of £7.2K/year=£600/month increasing with inflation.

So perhaps rather more achievable than gm0's estimate but retiring later.  In both cases it is just to give you a rough idea of the level of extra pension payments required - it's not small. Anything could happen between now and then.

Hi Linton, thank you so much for taking the time to go through the numbers like this for me, I really appreciate it, 

Bimbly

You can only save as much as you can afford into pensions.

Do that and, as life moves on, see how you are doing.

There are many ways to skin this particular cat. From working longer (possibly part time when you get to retirement age) to not needing quite so much money in retirement.

By the way, I also love elephants. They are so very beautiful.

bostonerimus

Dazed_and_C0nfused said:

IloveElephants said:

Dazed_and_C0nfused said:

Will you have any earnings, for example wages or business profits, in this tax year which count for pension contribution purposes?

If so roughly how much will they be?

Is the £30k inclusive of the State Pension or in addition to that?

Hi Dazed,

Thank you for your kind reply

1. - I am working for a company which I just started 1 month ago, the company pays 5% and I pay 5% into my pension. Again its a on a probationary period for the first 6 months.

The £30k would be included with state pension aswell. I'm assuming the way things are going now the government will even abolish state pension and with inflation it wont be worth much. 

Thanks for your comment. 

Interesting view on the State Pension. 

Politicians certainly have some strange views sometimes but a policy likely that is almost certainly going to see them voted out at the earliest opportunity so would be odd even for them!

And since the new State Pension was introduced the standard pension most people will get has significantly increased compared to the previous system.

It's true that the flat rate state pension amount is greater than the old basic state pension, but very few people got just the basic pension under the old scheme. Most people got benefits added on like pension credit or a wage related amount like SERPs etc. The result of the changes brought in with the new state pension is that many people end up with less state pension. It's been good for me as I would have only qualified of the basic state pension and the new flat rate amount is a considerable increase for me.

bostonerimus

IloveElephants said:

Hi,

I need some advice and direction please, 

I am 38 and have £3,000 in my nest pension. It was from my old workplace. I am now thinking of opening a private personal pension (ones that I can log in myself and add funds) and set up a direct debit monthly to put money in. 

I am not including employment pension as I worked for companies that did not contribute to my pension and I also worked for myself so I am not relying on this.

I would like some advice on how to get an income of 30k per year by retirement, how much should I save per month, who shall I open the private SIPP pension with? Once I open the pension to play catchup how much shall I deposit as a lumpsum to meet my goals?

I was looking into HL
Aviva
Vanguard
Legal & general
Scottish widdows
Wealthify

Thank you everyone, 

Is that 30k in today's money or does it need to be inflated to a larger amount at retirement. It's a critical question because if we assume you work for another 30 years and inflation is 3% per year (who knows the real number) then state pension would be 24k meaning that you wouldn't need a very big pot to generate the difference of 6k....maybe a pot of 100k or 150k.....

daz378

Wasn't  the people's pension created to help carry the weight  of the upcoming  demographic   age related burden...21 years  ago   as council carer on lowish wages at 35   the lgps pension  is my only chance of retiring  before 67  grateful now...didnt think of  pensions then

ewaste

daz378 said:

Wasn't  the people's pension created to help carry the weight  of the upcoming  demographic   age related burden...21 years  ago   as council carer on lowish wages at 35   the lgps pension  is my only chance of retiring  before 67  grateful now...didnt think of  pensions then

The People's Pension is a brand name for the B&CE offering used by smaller employers to comply with auto-enrolment legislation.

Arguably auto-enrolment could be argued as a move to "help carry the weight" of an aging population.  

IloveElephants

Bimbly said:

You can only save as much as you can afford into pensions.

Do that and, as life moves on, see how you are doing.

There are many ways to skin this particular cat. From working longer (possibly part time when you get to retirement age) to not needing quite so much money in retirement.

By the way, I also love elephants. They are so very beautiful.

Thanks Bimbly for your kind comments, you made many interesting points that I have taken on board.

Yes Elephants are beautiful, I seen many in India when I visited a few years ago

IloveElephants

bostonerimus said:

IloveElephants said:

Hi,

I need some advice and direction please, 

I am 38 and have £3,000 in my nest pension. It was from my old workplace. I am now thinking of opening a private personal pension (ones that I can log in myself and add funds) and set up a direct debit monthly to put money in. 

I am not including employment pension as I worked for companies that did not contribute to my pension and I also worked for myself so I am not relying on this.

I would like some advice on how to get an income of 30k per year by retirement, how much should I save per month, who shall I open the private SIPP pension with? Once I open the pension to play catchup how much shall I deposit as a lumpsum to meet my goals?

I was looking into HL
Aviva
Vanguard
Legal & general
Scottish widdows
Wealthify

Thank you everyone, 

Is that 30k in today's money or does it need to be inflated to a larger amount at retirement. It's a critical question because if we assume you work for another 30 years and inflation is 3% per year (who knows the real number) then state pension would be 24k meaning that you wouldn't need a very big pot to generate the difference of 6k....maybe a pot of 100k or 150k.....

Hi Bostonerimus, thanks for taking the time to answer my question. I guess it would need to be inflated to a larger amount at retirement as with inflation 30k today would be worth not much by that time. The way inflation is going. 

for me a pot of 120-150k would be a good target to aim for. I like that figure and sounds realistic. Thank you so much for your answer.