Realistic pension gains?

B0bbyEwing

resk said:

I know you've tried to negate any comments about your workplace pension, but I really think you should include the value of any workplace pensions you have, past or present, in your total pension pot.  "They'll only pay the minimum" doesn't mean that it won't add up to a decent amount of money over a working life.  My workplace pension is by far the largest part of my overall pot, although I do accept that you are in a very different situation.  

The reason I said that about the workplace pension was because people knee-jerk talk about employer matching and big numbers. 

All I was trying to do really was save peoples effort & have them not waste their time. 

I appreciate probably most of the people on this forum have employers who go above & beyond. I've seen the threads & it seems to be a majority here.
But I also feel (feel - so may be wrong) but that people who frequent this forum, the investing forum, the banking forum, are people who earn or did earn a fair bit more than me anyway. I suspect I'm holding conversations with a lot of HR tax payers here. Not all will be that but that's the strong impression I get. 

Which isn't a bad thing. I also think these people are more switched on about money than people I work with. While I may not earn as high as these guys, I am probably as interested as these guys are, whereas the fellow low earners I work with only care if they have enough to urinate down the drain on a Friday night (I'm generalising but I'm also talking about the majority too).
But while it's not a bad thing - when I ask questions like these they need to see what angle I'm coming from - which is a low earner, or at least under average earner (which to me is low).



The way I see the workplace pension is like a bonus. It's a low earner, it seems to progress poorly, I think it's not invested all that great, but it's a necessity in order to get some free money from my employer.

B0bbyEwing

Workerdrone said:

1) I don't worry too much about this. I've got about 14 years left to contribute but can add another 8 onto that if I need to. I just see this years contributions as hopefully buying more units at a lower price.

2) My salary at £38k is the highest I've ever earned. I live modestly, keep my bills low and every time I make a saving or get a pay rise I up my contributions. I'm presently 46 and my combined pots are valued at £224k

1) Basically how I see it also. If i gave the impression that I was stressing out because "this" year has been a non-mover then that's people getting the wrong end of the stick.

2) We've freestyled our savings for years, which overall has worked out to be in the black but it's not really a great way to do it I know that. Having no kids, we really should've done better, but we could've done worse. We did what we did.

Starting this month, we've begun a budget spreadsheet to track what is going where. Give it a few months & it should be bedded in well. Right now we're still having to tweak things as it's the first time we've done it, but one of the main goals of this spreadsheet was to not guess if we can afford to put more to retirement but made an informed decision. Retirement is the goal anyway.

B0bbyEwing

ewaste said:

3:- What does that work out to in percentage terms? between you and your employer. Do you hit the rough rule of thumb? at a minimum an employer contributes 3% although it's possible to find an employer with better pension provision.

I've just had a look now. I've never broken it down in to percentages really.

My contributions to my workplace pension vary. Could be £90 per month, could be £120, could be £130. For example, January this year I paid in £138, February I paid in £98. If we're on a 5 week month it'll be more, if I do more hours it'll be more. Basically it varies.

So I went with £100 from myself as a rough figure. 
Used a ratio calculator which said if I'm doing £100 (5%) then employer is doing £60 (3%).
£200 to SIPP for total of £360. Not enough, I know.

As said, my pay varies all the time & that's just comparing 4 week months, never mind once you factor in a 5 week month.

The takehome in Jan was about £2,500, Feb was £1,900. Gross for Feb was £2,500.
My takehome will generally be in the £1,800 - £2,200 range.

I say takehome because I never look at gross as gross doesn't go in my pocket. I've only been able to give you a gross figure there because I just looked at a slip.


So whatever that works out as a percentage.

As for your end comment - yeah, that's a whole other debate. Let's not go there. I battle myself all the time

B0bbyEwing

billy2shots said:

We tend to move up in our careers from 20 years old to 40 and wages can increase a fair bit 

Thanks for your overall post, though to highlight this one -

While I've "moved up", it's nothing to get excited over.

I'm near 40. Same overall job as when I was 20. I was a gopher in the department then, I'm the manager of the same department now.

But don't think that means huge increase. It really doesn't. It's a bit extra. I know "back in the day" the manager was on 50p more per hour than the workers. I know this because he'd just leave his payslip laying around. Canteen, on the floor somewhere. So of course, I had a nosey (it was already open).

I know our current department have rates of pay scattered depending on their age (I'm not talking about minimum wage here). From what HR said to me, I suspect the eldest of the group is very very close to me in hourly rate but don't know for sure. 
I can't remember what it is now, I think it's more than 50p but I don't think it's a lot more between me and the rest of the guys. 

I'd have to dig out my old papers but I'm sure 10 years ago I was getting like £18k-£20k so I've increased, of course, but we're not talking about doubling wages here.

QrizB

B0bbyEwing said:

Used a ratio calculator which said if I'm doing £100 (5%) then employer is doing £60 (3%).
£200 to SIPP for total of £360. Not enough, I know.

If £100 is 5% then £200 is 10% and the total monthly payment is 18%. That's not too shabby.

Is the £200 your payment into your SIPP, so you get another £50 added in tax relief? If so, don't forget to count that too.

B0bbyEwing

QrizB said:

B0bbyEwing said:

Used a ratio calculator which said if I'm doing £100 (5%) then employer is doing £60 (3%).
£200 to SIPP for total of £360. Not enough, I know.

If £100 is 5% then £200 is 10% and the total monthly payment is 18%. That's not too shabby.

Is the £200 your payment into your SIPP, so you get another £50 added in tax relief? If so, don't forget to count that too.

Yeah that's correct.

I understand most people seem to talk along the lines of - I pay in £100, yet what they mean is they pay in £80 but it gets bumped to £100.

Like with most things, I tend to be different. When I say I pay in £100, i mean I put £100 of my money in. I only really focus on what I put in, the rest (employer, tax relief) is what it is. I'm the only part of the equation that can vary - their parts are a result of my part so I don't bother thinking about it.*

* but of course, it all builds the pot.


Oh and I forgot - each year I aim to max out the L-ISA as well as. Don't always make it.

This last year we did. £4k in each.

Year before I think we only managed £2k each.

In addition to the SIPPs & the workplace pensions

QrizB

B0bbyEwing said:

* but of course, it all builds the pot.

Yes, including the tax relief that's £410 a month, £4920 a year you're putting into your pensions. A bit over 20% of your income.

You haven't told us your current pots or what your retirement plans are but, if you're 35 with another 30 years to work and have already got £40k invested, 2%pa real growth will get you to £272k by the time you retire.

B0bbyEwing said:

Oh and I forgot - each year I aim to max out the L-ISA as well as. Don't always make it.
This last year we did. £4k in each.
Year before I think we only managed £2k each.

On the same basis I think that could be another £150-200k each at retirement. You could easily be worth half a million (in today's money) by the time you retire.

anonmoose

I think it sounds like you are doing really well with the LISAs aswell B0bby.

We are non higher rate tax payers too so know it can be a struggle to invest enough especially as we aim to retire early. 

I did until recently focus on overpaying our mortgage but we have realised we need to start taking the pension more seriously. I wish we had put more in the pension and less in the mortgage previously. I didn't understand about compounding. We are mid 40s now so have to really ramp up our pension savings.

What I do is try and squirrel away any little bits of money I can and then pay it into the pension as a bonus on top of our regular payment.  

For example I have recently started selling old nice quality clothes/household items we no longer want rather than giving to charity shop and that money goes straight into the pension. Also when I claim my cashback from topcashback I then transfer that amount of money into my pension account.  If I earn more money than usual in a month then I will try to save that straight away. It's small bits but every penny counts so it adds up. 

I treat it like a competition and see if I can beat last months number. It is harder to save a big pot on a modest salary but is very possible with consistency and chipping away with small amounts. 

[Deleted User]

B0bbyEwing said:

QrizB said:

B0bbyEwing said:

Used a ratio calculator which said if I'm doing £100 (5%) then employer is doing £60 (3%).
£200 to SIPP for total of £360. Not enough, I know.

If £100 is 5% then £200 is 10% and the total monthly payment is 18%. That's not too shabby.

Is the £200 your payment into your SIPP, so you get another £50 added in tax relief? If so, don't forget to count that too.

Yeah that's correct.

I understand most people seem to talk along the lines of - I pay in £100, yet what they mean is they pay in £80 but it gets bumped to £100.

Like with most things, I tend to be different. When I say I pay in £100, i mean I put £100 of my money in. I only really focus on what I put in, the rest (employer, tax relief) is what it is. I'm the only part of the equation that can vary - their parts are a result of my part so I don't bother thinking about it.*

* but of course, it all builds the pot.


Oh and I forgot - each year I aim to max out the L-ISA as well as. Don't always make it.

This last year we did. £4k in each.

Year before I think we only managed £2k each.

In addition to the SIPPs & the workplace pensions

Keep doing what you're doing Bobby. It's not easy to save these days and it appears that you're doing all the right things.
Stick with it, little acorns and all that.... 

B0bbyEwing

QrizB said:

B0bbyEwing said:

* but of course, it all builds the pot.

Yes, including the tax relief that's £410 a month, £4920 a year you're putting into your pensions. A bit over 20% of your income.

You haven't told us your current pots or what your retirement plans are but, if you're 35 with another 30 years to work and have already got £40k invested, 2%pa real growth will get you to £272k by the time you retire.

That isn't because I'm hiding anything (I know you didn't say it was), I'll give any info that may help anyone help me. I know some don't like to talk figures, they're a bit private that way, but you're all strangers to me anyway so who cares.

I'm 40 next year, wife is 40 already.
As of end of August:
My SIPP was a few quid shy of 32k, 
Wife's SIPP 100 quid shy of 29k
My workplace pension was at 10k
Wife's workplace pension was at 6k which is where it's sat since April which is when she moved to the NHS & is on their pension scheme. Gross per year she will earn a little less than me (for a lot less hours <insert cry emoji>)
Both our LISAs were sat at 6.5k, although that was without the bonus money invested (AJ Bell seem to stick it on as cash rather than investing it in what you're already invested in & I wasn't sure how it worked). I learned about the bonus money situation this past month so with that now invested, they'll be both sat approx 7.8k.

Quick maths, 49.8k for me, 42.8k for wife plus whatever her NHS setup will be.

So with

 anonmoose said:

I think it sounds like you are doing really well with the LISAs aswell B0bby.

Your quote & anonmoose's quote, it's a little reassuring that while everyone could always do with more, maybe we're not doing as badly as I thought. 
I've just thought all along that due to our late start (28-29) and low contribs, we're forever chasing & not doing so great.

As far as goals - THE goal is to retire yesterday. By that I mean ASAP. That'll probably be mid 60s at the earliest I imagine but whatever it is, I want it to be as early as possible.

I've always known I don't need work to keep happy/active. Working life is not for me at all. 
Wife thought she'd get bored easy without work but furlough taught her otherwise. 

Not interested in a lavish lifestyle in retirement. Yes it'd be nice. Who wouldn't want an endless pot of money? But to stay happy & active, a lot of our happiness comes from things that don't cost any money, or very little (gardening, walking, hiking, cycling.....).

anonmoose said:

What I do is try and squirrel away any little bits of money I can and then pay it into the pension as a bonus on top of our regular payment.  

For example I have recently started selling old nice quality clothes/household items we no longer want rather than giving to charity shop and that money goes straight into the pension. Also when I claim my cashback from topcashback I then transfer that amount of money into my pension account.  If I earn more money than usual in a month then I will try to save that straight away. It's small bits but every penny counts so it adds up. 

I treat it like a competition and see if I can beat last months number. It is harder to save a big pot on a modest salary but is very possible with consistency and chipping away with small amounts. 

That's funny because if I was just randomly scrolling through a thread, that bit could read as something I'd have posted myself. I do the exact same thing. 

Without drifting off topic too much - bit of a situation these past few months, knock on effect is it gave me time to sort through the house. Part of which was gutting wardrobes & drawers. Sold a few clothes as well as a few other items. So far I think I've made £200-£300 since April from stuff that would've just gone in the bin.

Wife also had a sort out of clothes. We got rid of many many bin bags, stuff I wouldn't even bother trying to sell but as I walked past the door I saw one clothing with a tag on. Said what you doing?
Oh this is going as well she said. 

No it's not I said. It's got a flipping tag on it. It's brand new. 
Yeah but I wont wear it / doesn't fit she said.
Don't care says I.......

Up on eBay it went. Twice. Second time it sold.
Only £10, but £10 more than throwing it out.