Realistic pension gains?

Rich1976

Albermarle said:

Plus a 20% drop in stock markets is not really massive in historical terms, although if you had a diversified medium risk portfolio, a 20% drop would be quite a lot.

A 20% drop would equate to both our combined pensions falling by around £35000 which is a hell of a lot to me psychologically even though bit would probably go back over time. I remember only too well the previous crashes in 2008 and 2013 I think it was and that was enough to scare me off totally until things looked ok again. But that was only when I had my personal scheme. With employer schemes I do not have the option of running for the hills

[Deleted User]

B0bbyEwing said:

What bothers me is say for example, the VLS range is quite popular. Often gets brought up in set-&-forget approaches but has the grumble of home bias. Not really an accurate home tracker. Another similar option could be the HSBC Global Strategy line. 

Now after reading the limited literature I've read (Tim Hale, Lars Kroijer) I'm in agreement about the passive side of investing, the global tracker funds. 

Yet I saw a website recently listing off other possibilities to the VLS range (as I don't want to be blinkered towards VLS or HSBC) - and it mentioned HSBC as a managed fund but VLS as passive.

Whereas I've read articles in the past which claim them both passive & others argue managed for both.

Brain = frazzled.

I try to understand what is behind words.  What is so good about “passive”?  In its original intent “passive”

- minimizes the impact of human emotion
- minimizes costs
- maximizes diversification 
- insures returns close to market totals
- improves investor’s behaviour 

Does it mean zero human input? Of course not.  Someone decides which stocks are included in the index. Someone decides asset allocation.  Or puts algorithms into software if software is used to make investment decisions.

So, in the absolute sense nothing is “passive” or free of some human input.  Doesn’t matter as long as the advantages of being “passive” are captured. Claiming that VLS range is “active” isn’t helpful exactly because its confusing.  Its not binary. While the vendor has the ability to make changes, VLS has very stable allocations.  HSBC is more actively managed. So VLS is more “passive”. But both products capture many of the advantages listed above.  More than one paths to success.

Dh6

Im in a similar position to you Bobby but I’m coming at it from from the opposite direction. 

I have a relatively adventurous portfolio at 35 ( 80% global equities 20% cash ) but I’m working on my long term investment gains being 1% above inflation and working back from there to see what percentage of my income I need to save NOW.

If my long term returns are less than planned I should have enough for a basic retirement. 

If my long terms gains are above my 1% target, I’ll be able to stop working earlier and enjoy a comfortable retirement. 

IMO it’s pointless working on a 7-10% target and being deflated when you’re falling further and further behind your target. I find it easier mentally to have a low bar and try and exceed my ( hopefully ) conservative predictions!

B0bbyEwing

Dh6 said:

I have a relatively adventurous portfolio at 35 ( 80% global equities 20% cash ) but I’m working on my long term investment gains being 1% above inflation and working back from there to see what percentage of my income I need to save NOW.

Sounds like you have a plan, which is always good.

Stupid question time - how do you do that? I don't mean how do you have a plan but how do you do the calculation in the above quote & then work back to see what you need to put in now?

Simon11

Rich1976 said:

we both earn well below the national average at around 22k a year each and our employers only put in and match the minimum required and this has always been the case.

we would have liked to have retired at 60 but based on projections that isn’t going to happen and so like most people are likely to be dependent on the state pension for well over half of what we need. This is based on fund growth of 5% per year and charges of around 0.5% to 0.70%.

without the state pension our funds would only provide 12k between us at most based on 5% growth per year. We are both in medium risk lifestyle funds for our work pensions and our own sipps are invested in the Vanguard LS60 and HSBC Balanced Global Strategy funds respectively. We were heavily invested 100% in equity trackers until earlier this year but realised due to the downturn this was way above our risk tolerance.

so really it is all out of our control. All we can hope is things work out. Things have changed for us personally over the last couple of years and have had to rethink how we do our finances but we are doing the best we currently can.

but it still all plays on my mind like I said and maybe it doesn’t because everyone else I know just buries their head in the sand when it comes to pensions and have the attitude what will be will be.

You state it is out of your control, however surely you have the ability to boost your income? I don't know where you live, your skills and experience, however for most people they should have the ability to increase their income.

I know too many friends who have taken it easy work wise, with a similar income and not bothered to challenge themselves early on in their career. After 10 years of hard work and career moves, I am on at least three times their salary, with fantastic benefits and actually work less hours!

This would make a huge difference to the quality of life you would have now and in the future- without doing it, you would unfortunately really struggle to retire early.

[Deleted User]

Simon11 said:

Rich1976 said:

we both earn well below the national average at around 22k a year each and our employers only put in and match the minimum required and this has always been the case.

we would have liked to have retired at 60 but based on projections that isn’t going to happen and so like most people are likely to be dependent on the state pension for well over half of what we need. This is based on fund growth of 5% per year and charges of around 0.5% to 0.70%.

without the state pension our funds would only provide 12k between us at most based on 5% growth per year. We are both in medium risk lifestyle funds for our work pensions and our own sipps are invested in the Vanguard LS60 and HSBC Balanced Global Strategy funds respectively. We were heavily invested 100% in equity trackers until earlier this year but realised due to the downturn this was way above our risk tolerance.

so really it is all out of our control. All we can hope is things work out. Things have changed for us personally over the last couple of years and have had to rethink how we do our finances but we are doing the best we currently can.

but it still all plays on my mind like I said and maybe it doesn’t because everyone else I know just buries their head in the sand when it comes to pensions and have the attitude what will be will be.

You state it is out of your control, however surely you have the ability to boost your income? I don't know where you live, your skills and experience, however for most people they should have the ability to increase their income.

I know too many friends who have taken it easy work wise, with a similar income and not bothered to challenge themselves early on in their career. After 10 years of hard work and career moves, I am on at least three times their salary, with fantastic benefits and actually work less hours!

This would make a huge difference to the quality of life you would have now and in the future- without doing it, you would unfortunately really struggle to retire early.

Bragging is a vitally important emotional response to any comment but no need to avoid the real issue.  Why limit comparisons to salaries when we could be measuring pennises? 

retiringtoosoon

Deleted_User said:

Simon11 said:

Rich1976 said:

we both earn well below the national average at around 22k a year each and our employers only put in and match the minimum required and this has always been the case.

we would have liked to have retired at 60 but based on projections that isn’t going to happen and so like most people are likely to be dependent on the state pension for well over half of what we need. This is based on fund growth of 5% per year and charges of around 0.5% to 0.70%.

without the state pension our funds would only provide 12k between us at most based on 5% growth per year. We are both in medium risk lifestyle funds for our work pensions and our own sipps are invested in the Vanguard LS60 and HSBC Balanced Global Strategy funds respectively. We were heavily invested 100% in equity trackers until earlier this year but realised due to the downturn this was way above our risk tolerance.

so really it is all out of our control. All we can hope is things work out. Things have changed for us personally over the last couple of years and have had to rethink how we do our finances but we are doing the best we currently can.

but it still all plays on my mind like I said and maybe it doesn’t because everyone else I know just buries their head in the sand when it comes to pensions and have the attitude what will be will be.

You state it is out of your control, however surely you have the ability to boost your income? I don't know where you live, your skills and experience, however for most people they should have the ability to increase their income.

I know too many friends who have taken it easy work wise, with a similar income and not bothered to challenge themselves early on in their career. After 10 years of hard work and career moves, I am on at least three times their salary, with fantastic benefits and actually work less hours!

This would make a huge difference to the quality of life you would have now and in the future- without doing it, you would unfortunately really struggle to retire early.

Bragging is a vitally important emotional response to any comment but no need to avoid the real issue.  Why limit comparisons to salaries when we could be measuring pennises? 

I’m 43 and have £400k in my pot.
Is mine average sized?

JoeCrystal

retiringtoosoon said:

I’m 43 and have £400k in my pot.
Is mine average sized?

May I recommend that you check the ONS webpage regarding the pension wealth: https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/datasets/pensionwealthwealthingreatbritain

Off the top of my head, I would say your pension pot is much higher than the median pension pot of someone of your age. 

Rich1976

Simon11 said:

Rich1976 said:

we both earn well below the national average at around 22k a year each and our employers only put in and match the minimum required and this has always been the case.

we would have liked to have retired at 60 but based on projections that isn’t going to happen and so like most people are likely to be dependent on the state pension for well over half of what we need. This is based on fund growth of 5% per year and charges of around 0.5% to 0.70%.

without the state pension our funds would only provide 12k between us at most based on 5% growth per year. We are both in medium risk lifestyle funds for our work pensions and our own sipps are invested in the Vanguard LS60 and HSBC Balanced Global Strategy funds respectively. We were heavily invested 100% in equity trackers until earlier this year but realised due to the downturn this was way above our risk tolerance.

so really it is all out of our control. All we can hope is things work out. Things have changed for us personally over the last couple of years and have had to rethink how we do our finances but we are doing the best we currently can.

but it still all plays on my mind like I said and maybe it doesn’t because everyone else I know just buries their head in the sand when it comes to pensions and have the attitude what will be will be.

You state it is out of your control, however surely you have the ability to boost your income? I don't know where you live, your skills and experience, however for most people they should have the ability to increase their income.

I know too many friends who have taken it easy work wise, with a similar income and not bothered to challenge themselves early on in their career. After 10 years of hard work and career moves, I am on at least three times their salary, with fantastic benefits and actually work less hours!

This would make a huge difference to the quality of life you would have now and in the future- without doing it, you would unfortunately really struggle to retire early.

No not really. We both enjoy our jobs and do have a great quality of life. Our bills are around 50% of our take home pay and we do not struggle in anyway. I did actually take a step down from a more senior role a few years ago as the added stress and pressure seriously wasn’t worth the extra money. 

I have a much better and happier life since then. Money is only one aspect to the quality of life.

Workerdrone

Deleted_User said:

Simon11 said:

Rich1976 said:

we both earn well below the national average at around 22k a year each and our employers only put in and match the minimum required and this has always been the case.

we would have liked to have retired at 60 but based on projections that isn’t going to happen and so like most people are likely to be dependent on the state pension for well over half of what we need. This is based on fund growth of 5% per year and charges of around 0.5% to 0.70%.

without the state pension our funds would only provide 12k between us at most based on 5% growth per year. We are both in medium risk lifestyle funds for our work pensions and our own sipps are invested in the Vanguard LS60 and HSBC Balanced Global Strategy funds respectively. We were heavily invested 100% in equity trackers until earlier this year but realised due to the downturn this was way above our risk tolerance.

so really it is all out of our control. All we can hope is things work out. Things have changed for us personally over the last couple of years and have had to rethink how we do our finances but we are doing the best we currently can.

but it still all plays on my mind like I said and maybe it doesn’t because everyone else I know just buries their head in the sand when it comes to pensions and have the attitude what will be will be.

You state it is out of your control, however surely you have the ability to boost your income? I don't know where you live, your skills and experience, however for most people they should have the ability to increase their income.

I know too many friends who have taken it easy work wise, with a similar income and not bothered to challenge themselves early on in their career. After 10 years of hard work and career moves, I am on at least three times their salary, with fantastic benefits and actually work less hours!

This would make a huge difference to the quality of life you would have now and in the future- without doing it, you would unfortunately really struggle to retire early.

Bragging is a vitally important emotional response to any comment but no need to avoid the real issue.  Why limit comparisons to salaries when we could be measuring pennises? 

The above comment made me chuckle. I have always worked in very technical industries. I've had plenty of opportunity over the years to watch people come in and rocket up the greasy pole. I'm not sure how it compares with other industries but the pattern is always the same. Person joins who is clearly ambitious but lacks the skill and more importantly the passion for the brass tacks job. They ingratiate and often schmooze their way into promotions after very little time often zigzagging to get to a high salary where no technical skills are required.Such people are brilliantly lampooned in the character of Gilbert's pointed haired boss.

The sort of people I work with are on average late 50's onwards, rocket scientist types. Ive seen many of them actively refuse to move into higher paid management positions because its not something they love doing. I similarly have no such pretensions. 

But its really interesting to see a comment from someone who has tripled their salary in 10 years and believes their path to be more merititious than a person who prefers not to leave the coal face.