Saving for Retirement - Is employer contributions enough?

ewaste

Short answer is Yes. The long answer I'd guess depends on the student loans, especially if you are eventually going to end up paying them off anyway. Just like any loan the longer you take to pay it off the greater the amount of interest owed. I'm not too familiar with them but some can be pretty expensive.

Although investing into a pension via salary sacrifice with employer savings added on top probably 'wins' 🤔

theoretica

Another way of looking at things - you currently earn £32k a year.  To have the same lifestyle in retirement you will need about the same income - less state pension, less paid off mortgage.  So about half your current income. Without early retirement you have 40 years of working life followed by say 20 years of retirement to make the numbers easy. So each year of working (after mortgage payments) needs to pay for one year of living now and 6 months of 'about half' your current income. - so without early retirement this works out at saving about 20%.  Personally, I don't like the thought of working to 68, so save more!

GunJack

Just a thought.... your mortgage payment seems low for a £166k mortgage - is it repayment or interest-only? If it's the latter I'd be quite concerned if you don't have a repayment method (i.e. saving or investment) on the go... 

Cien

GunJack said:

Just a thought.... your mortgage payment seems low for a £166k mortgage - is it repayment or interest-only? If it's the latter I'd be quite concerned if you don't have a repayment method (i.e. saving or investment) on the go... 

No, its repayment it was a 35 year term so we have 32 left. We made it as affordable as possible to get on the ladder. You've also missed its at the moment a 116k mortgage, I purchased the property for 166k. The difference is my 5% plus help to buys 20%.
Regardless when I remortgage is when I will trim years off or keep it at 30 years for flex and just overpay

Cien

theoretica said:

Another way of looking at things - you currently earn £32k a year.  To have the same lifestyle in retirement you will need about the same income - less state pension, less paid off mortgage.  So about half your current income. Without early retirement you have 40 years of working life followed by say 20 years of retirement to make the numbers easy. So each year of working (after mortgage payments) needs to pay for one year of living now and 6 months of 'about half' your current income. - so without early retirement this works out at saving about 20%.  Personally, I don't like the thought of working to 68, so save more!

This is very true. The thought of working 40 years even typing it is making me feel 😷
Will definitely look to increase contributions. Thank you!

YoungSaver20

I am very confident @Cien that we work for the same company.

I am 6 years older but didn’t work for such a good company when I was younger so trying to play catch up with pension contributions, so admit I’m paying a crazy amount into pension at the moment (once we get this pay rise it will be £1463 a month - £967 from me + 13.8 % uplift and £363 employer)

However despite that and having £58 k in pension now, I’ve tried a bunch of pension calculators and they all predict around £500 - £600 k at age 58 (as 10 years before state pension). So I think optimisticly, you would have £150 - £200k at that age. However will depend on fund percentage etc which could be much higher but even if it were £200k…it wouldn’t be enough for a comfortable retirement if you are living until 78 or beyond but could provide a comfortable retirement if you live to your early 60s.

L9XSS

Just my thoughts.......
If your employer is contributing 12% to your pension then you should add at least 13% to it, (25% going into your pension via Sal sac or whatever) gets you into a strong position going forward.
Mortgage, rates have increased, you still have 30? years of mortgage payments to run. Overpay your mortgage every month, use the calculator on the MFW forum to see how many years you will shave off the term and the interest you will save.
Like you I had sharesave schemes, an employer that contributed 10% pension if I contributed 15% (was a no brainier for me).......and a 25 year mortgage term paid off in 14 years. The difference, probably more frugal than yourself, however did spend on cars, holidays etc, then had lightbulb moment in early 40s that I needed to “gear up” on pension and mortgage to achieve FIRE. It’s looking doable for 60 or 62. 
The above gave me the ability to “downsize” my job to a PT less stressful role too.
Good luck with your endeavours.

L9XSS

YoungSaver20 said:

I am very confident @Cien that we work for the same company.

I am 6 years older but didn’t work for such a good company when I was younger so trying to play catch up with pension contributions, so admit I’m paying a crazy amount into pension at the moment (once we get this pay rise it will be £1463 a month - £967 from me + 13.8 % uplift and £363 employer)

However despite that and having £58 k in pension now, I’ve tried a bunch of pension calculators and they all predict around £500 - £600 k at age 58 (as 10 years before state pension). So I think optimisticly, you would have £150 - £200k at that age. However will depend on fund percentage etc which could be much higher but even if it were £200k…it wouldn’t be enough for a comfortable retirement if you are living until 78 or beyond but could provide a comfortable retirement if you live to your early 60s.

Impressive! 

Workerdrone

Have you applied all the usual moneysavirgexpert tips to free up some expenditure. I started upping my pension contributions a good 10 years ago by going for the low hanging fruit. The usual suspects, changing mobile phone provider, going through all the direct debits and looking for better deals, downshift challenge on shopping, batch cooking etc. Every time I made a saving of a few pounds I upped my pensions contribution by that amount so I didn't notice it. I also didn't take any inflationary uplift to my disposable until this past year and put the whole lot straight into pension. Last year for example I realised I no longer watch anything from the BBC or record live tv. It's all just streaming so I dumped the TV licence and now save that too.

I'm about 10 years older than L9XSS but have gradually brought my pension contributions via sal sac (10% employer contribution) up to £1421 a month with £230k in the pension pot on not an exceptional wage of 38k. Trouble is saving becomes quite addictive in itself

YoungSaver20

L9XSS said:

YoungSaver20 said:

I am very confident @Cien that we work for the same company.

I am 6 years older but didn’t work for such a good company when I was younger so trying to play catch up with pension contributions, so admit I’m paying a crazy amount into pension at the moment (once we get this pay rise it will be £1463 a month - £967 from me + 13.8 % uplift and £363 employer)

However despite that and having £58 k in pension now, I’ve tried a bunch of pension calculators and they all predict around £500 - £600 k at age 58 (as 10 years before state pension). So I think optimisticly, you would have £150 - £200k at that age. However will depend on fund percentage etc which could be much higher but even if it were £200k…it wouldn’t be enough for a comfortable retirement if you are living until 78 or beyond but could provide a comfortable retirement if you live to your early 60s.

Impressive! 

Oh I didn’t factor in future promotions or pay rises which will of course have an impact on the pension pot of @cien