Some pension advice please

Nelson1100

Pat38493 

Thanks for your reply.

Yes I think once I retire my basic outgoings will be around £600 pm plus a bit of food - they're significantly more at the moment because I'm running a modern car, paying for station parking and train fares to get to/from work plus buying lunches, coffees etc in central London. Once I retire all that will go. I mean if I do end up with more money I'd spend more - the £600 would be the bare minimum I could survive on if I had to. I'd still like a few holidays and be able to buy the family Christmas presents but if it means doing a job a hate for another 5 years then I'm prepared to forgo all that!  

I understand what you're saying about keeping cash in the house but I have to have a safety net & its well hidden. 

Pat38493

Nelson1100 said:

Pat38493 

Thanks for your reply.

Yes I think once I retire my basic outgoings will be around £600 pm plus a bit of food - they're significantly more at the moment because I'm running a modern car, paying for station parking and train fares to get to/from work plus buying lunches, coffees etc in central London. Once I retire all that will go. I mean if I do end up with more money I'd spend more - the £600 would be the bare minimum I could survive on if I had to. I'd still like a few holidays and be able to buy the family Christmas presents but if it means doing a job a hate for another 5 years then I'm prepared to forgo all that!  

I understand what you're saying about keeping cash in the house but I have to have a safety net & its well hidden. 

Have you checked your state pension forecast online just to make sure you are entitled to full new state pension (or more)?  If you have been working full time for 43 years and you haven't been paying into a defined benefit pension for significant periods of that time, and paying full NI, there is a chance that you are actually going to get more than the full new state pension due to protected past benefits from obsolete additional state pension schemes in the past - therefore I recommend that you check your state pension entitlement.  If you have a government gateway account it's easy to do online but you can also call them and they will post it to you.

To give a very rough rule of thumb, you have about £360K of assets (not including your motorcycles etc).  Assuming full normal new state pension, you might expect such an amount to give you a gross annual amount of something in the region 18K over 30 years (gross before tax).  This is a very rough rule of thumb.  That's if the funds would be invested in a recommended way.  This is just a very rough back of an envelope thing so far from exact.  You might even do a lot better than that with good investment decisions.

If you insist on keeping everything mainly as cash or savings accounts, (which most people on this board would classify as "sub-optimal" investment decisions ), you might expect to fund a lifestyle more like 15K or less over the 30 years.  Again this is a very rough back of an envelope thing but the point is that if you are keeping all your money in cash for a 30 year retirement period, you will be worse off in the long run, especially in periods of high inflation like now.

Putting it into that perspective, getting some advice from an expert that you feel you can trust (key point) could be worthwhile.

One thing to be careful of is about taking out large amounts out of your fund in the early years - the withdrawals you make in the early years have a bigger impact on your long term prospects than the later ones due to the effects of inflation over time, so you have to be a bit careful on that front as well.

By the way this doesn't consider that you could do what was posted above and put as much as you can into a pension this year - I am just taking this based on your current assets. 

My recommendations would be (and I am not a financial adviser just a random forum member)
1) Get an exact state pension forecast so you know where you stand on that front.
2) Either get some IFA advice or do some more reading around and posting here and look into the option of putting as much as you can into a pension in the year before you retire (even if you want to have it as cash inside the pension).
3) Check what investments your current 2 pension schemes are invested in (post here if needed for comments).
4) LOL Put your cash in the bank!  I can't think  of a scenario where you would need £10K of cash in your house that wouldn't have us all in trouble anyway, and if you can use this forum you can use internet banking which means you always can have instant access to your money anyway.

All that said - based on what you are saying there is no reason for you not to retire at 60 and you will be fine - it's just a question of how much money you will have to spend each year in the rest of your life.  Especially if you are unhappy in your work and so on.

xylophone

Have you obtained a state pension forecast?

If so, what exactly does it say?

If not, try here

https://www.gov.uk/check-state-pension

Should you decide to take professional advice, you could try

https://adviserbook.co.uk/

You would tick "confirmed independent" and such other specialisms as required.

Nelson1100

My Gov state pension starts in January 2031 and is forecast to be £200.89pw or £10,482.15 pa - I missed one year of NI payments but it says it won't make any difference if I pay it now.

I have £30k in my Legal & General workplace pension (which my company still contribute to) and £40k in a Zurich Adaptable Pension plan which I haven't paid into since the 90's when it started diminishing in value. I don't even know how I ended up with the Zurich one - I think it was something to do with some dodgy advisors on behalf of a company called Allied Dunbar who may have passed me on to Zurich but I honestly have no recolection of what made me sign up to it. 

dunstonh

Basically I'm extremely risk averse which is why I stopped paying into my first pension. 

Its funny to hear a comment that says you are extremely risk averse and therefore you stopped putting money aside for your retirement.  You took a high risk decision to leave yourself short in retirement.

I'm wary because of the bad experiences I've had in the past, I'm one of the idiots that was sold an endowment mortgage, 

idoit?  The vast majority of endowment policies paid out a surplus.  It was only the final ones that started to fall short.  And even when they fell short, endowment mortgages were typically around £20pm cheaper than a repayment mortgage.  Over 25 years, that means that even if you had a shortfall, you could actually have still ended up paying less over the term. 

On your recent posts, it appears you have made continuously bad decisions on the back of not understanding how these things work.    Until you understand how these things work you are likely to continue making bad decisions.  So, you need to decide whether you put some effort in to learn and understand or continue to make a mess of things.  Only you can decide what you want to do.

Audaxer

Nelson1100 said:

Pat38493 said:

Mainly yes you are correct.

As an aside, if you want to post some more details about your situation, assets and spending needs there are lots of knowledgeable people on here who can sense check your plans a bit if you are interested - you can very likely make your money go a bit further by investing at least some of it in other things than cash savings accounts, depending also on your risk tolerance.

I have got a Vanguard fund but its barely made me 1% the past year so that seems utterly pointless.

I have £260k spread accross 3 different savings accounts, £20k in a stocks & shares ISA that's in a Vanguard fund. I have an old pension with Zurich that has £40k in it and a workplace pension with £30k in it (that gets about £350 paid in a month) I have about £10k at home in cash. I'll also be getting my full state pension at 67.

I've been working full time for 43 years and have very little left in the tank, I need to stop working by the end of the year while I still have some semblense of sanity so does anyone have any wise words?

If your one Vanguard fund has made a positive return of 1% over the past year, that is a better return than from most investment portfolios, as most of us have made a loss over the last year. It is not pointless providing you are investing for the long term, and providing you don't panic and sell if it does fall in value. It would be interesting to know which Vanguard fund you hold?

Keeping £10k cash at home, apart from the security risk, is losing it's value to the current high inflation rate. Putting that £10k in a one year fixed rate savings account could earn you at least £400 in interest!

Nelson1100

dunstonh said:

Basically I'm extremely risk averse which is why I stopped paying into my first pension. 

Its funny to hear a comment that says you are extremely risk averse and therefore you stopped putting money aside for your retirement.  You took a high risk decision to leave yourself short in retirement.

I didn't stop putting money aside - I just stopped putting it into that pension fund because at the time it was losing more a year than I was paying into it.

Nelson1100

Audaxer sai

If your one Vanguard fund has made a positive return of 1% over the past year, that is a better return than from most investment portfolios, as most of us have made a loss over the last year. It is not pointless providing you are investing for the long term, and providing you don't panic and sell if it does fall in value. It would be interesting to know which Vanguard fund you hold?

Keeping £10k cash at home, apart from the security risk, is losing it's value to the current high inflation rate. Putting that £10k in a one year fixed rate savings account could earn you at least £400 in interest!

I'm in the Vanguard Lifestrategy 100 fund which is part of a H&L isa, I've had it just under 18 months, I was told it was a safe bet but on reflection it would have done much better if I'd just left it in the savings isa.

Pat38493

Nelson1100 said:

My Gov state pension starts in January 2031 and is forecast to be £200.89pw or £10,482.15 pa - I missed one year of NI payments but it says it won't make any difference if I pay it now.

I have £30k in my Legal & General workplace pension (which my company still contribute to) and £40k in a Zurich Adaptable Pension plan which I haven't paid into since the 90's when it started diminishing in value. I don't even know how I ended up with the Zurich one - I think it was something to do with some dodgy advisors on behalf of a company called Allied Dunbar who may have passed me on to Zurich but I honestly have no recolection of what made me sign up to it. 

That's good that your State pension is actually more than the normal full new state pension.

Do you have any information about what investments the two pensions are actually invested in?  

Normally a pension fund is just a kind of "wrapper" and inside that fund, the money will be invested in particular fund or funds.  If your company has an online pension portal, you can probably find out what the pension is currently invested in, and whether you can directly control that with an online tool. 

Also - you have the ability (and right) to transfer the pension out of the current provider and into a different one if it's not doing what you want.  In fact, for the Zurich one you probably will need to end up doing that if it's a very old one because very old pensions often don't provide the same flexibility in how you want to take the money out.

Are you are least paying in the maximum amount into your L&G pension that your employer will match?  Normally employers will match contributions up to a certain %.  If you are not at least doing that, you are sacrificing further free money because when the employer matches your contribution, you are effectively making an instant 100% return in that year - you will never match that with any other investment of your own, let along keeping the money at home.  To put it another way, even if the pension fund crashes by 50%, you will still have the same amount that you personally put in.

The next thing you may want to  research a bit is your approach to the changing value of the pension.  Pensions are designed to provide an income during a retirement period of 30 years or more.  The fact whether the pension fund was going down faster than you were putting money into it at some point during the 1990s may well be irrelevant if it was during a time when everyone eles' was going down too.  If you pension lost 30% of it's value in 1993, that's irrelevant because you don't need to take any money out of it until 2023.

My pension also lost 30% of it's value at some point in year 2000 and probably in the early 90's, but so did everyone elses and then they recovered over the following years.

Even though the headline value of the pension might be going down faster than you are putting money in, which has happened to all of us at one time or another whether we even noticed it or not, the amount of units of the fund that you own and you are buying will still be the same, so when the value per unit goes up, you will benefit.

In fact, when the markets have gone down a lot is arguably a time to put more money into your pension not less because you are buying units at an attractive price.

I realise this is not very helpful as that's all in the past, but I'm just trying to explain a bit how it works, and why it would still be beneficial even now for you to start putting more into the pension scheme, even in your last year.

To put it another way - if your pension or investment is going down in value in a particular year - don't panic - look at the overall market and see if similar investments to yours are all going down as well - if so it's a bad time to sell.

Of course, it could also be that your Zurich pension was indeed badly invested, but it's still worth 40K after all these years.  If you can find out more details of the Zurich scheme and the underlying investments there are experts on here who can comment and perhaps suggest if you should transfer it out into a more modern scheme.

Audaxer

Nelson1100 said:

Audaxer sai

If your one Vanguard fund has made a positive return of 1% over the past year, that is a better return than from most investment portfolios, as most of us have made a loss over the last year. It is not pointless providing you are investing for the long term, and providing you don't panic and sell if it does fall in value. It would be interesting to know which Vanguard fund you hold?

Keeping £10k cash at home, apart from the security risk, is losing it's value to the current high inflation rate. Putting that £10k in a one year fixed rate savings account could earn you at least £400 in interest!

I'm in the Vanguard Lifestrategy 100 fund which is part of a H&L isa, I've had it just under 18 months, I was told it was a safe bet but on reflection it would have done much better if I'd just left it in the savings isa.

Wow, for someone so risk adverse that is is the highest risk of the Vanguard LifeStrategy funds as it is 100% equities. It actually made a loss of 6.25% last year, but gained 19.15% in 2021 and also had positive returns in the two previous years. It is a good fund to hold long term, but in most years will be more volatile that the lower-risk multi asset funds in the LifeStrategy range.