Obsessed with pension planning and saving?

gm0

@Rich1976 wrote

"unfortunately we won’t know until nearer the time and that’s why I wish there was still final salary type pensions where you know from the outset what it would be worth and not some as yet unknown number which is wholly dependent on the stock market."

And there it is. 

DC drawdown is a terrible solution for an individual retiree in a death pool of one. Is it 70 or 110 ?
And you need to invest in the stockmarket at a particular time on the way in and out - and have sequence risk, cohort start date to contend with.  With a pot based on the timelines when you were able to contribute and save.

Final salary is a terrible solution with healthcare advance and increased longevity dumping massive unexpected costs decades later, also with interest rate going down. Onto what may be dying due to other technology advance companies - or back on the taxpayer.  The mega zombies - pension schemes with a side hustle. BA. BT.

We need to move past both.  It will be hard.  First the death of a thousand cuts of public sector DB needs to be concluded unless in its death throes it can be swept up into a better than individual DC solution..

Sadly although it will not happen - the approximate shape of possible answers is known.  

Provide death pooling so the individual doesn't carry this risk alone (like annuity)

Based on retention of investment returns for sequence and cohort smoothing.  (so sequence risk and retirement date are mitigated - not entirely - but mitigated.

"With profits" reborn. 

Contributions linked.  What you put in determines the target for what you get out. Plus bonus when there is one.  After cross subsidies. And buffers.

A big asset pool to drive out investment and fund management cost.  Half the UK retail financial spiv world disappears. (which is a cost to the treasury tax take although emotionally satisfying).

At arms length from government of the day.  Air gap. With clear face of the bill foundational principles with at the time cross party support to endure for at least decades.

The individual doesn't have to get to grips with stock market investing. 
The company knows how much pension input it is making at the time and it is done.
Death date doesn't matter. 
It meets the key requirements

Why not ?

It's very hard to move there from here.  There are quibbles.  The international wealthy will always still have their own arrangements at the margin.  But that doesn't mean better systems for the UK citizen than the current one don't, or can't exist.

It will require a groundswell of opinion and pressure to demand something better of our politicians.  To convince them that we are *ready* for such a major change.  They are rightly cynical that the primary losers under such a system are those who do best out of the current system.  Who are also disproportionately the most engaged and vocal about anything which threatens their interests.  (Be that insider DB or wealthy DC).  Even if it would be helpful to a broader group of the population.

Think on it

noclaf

Every now and then I see a thread that has so much useful 'perspective' and experiences that I bookmark it...this will be in of those threads!

There are so many variables and individual circumstances that impact how much we want/can save in a pension and that makes it challenging (IMO) when determining out approach.

I don't mean to be crass sharing numbers but just to illustrate my challenges on this topic; at 30 yrs old I had £15-17k total in my pensions...mid 30's went all out on contributions and tweaking fund choices to hopefully enhance/maximise my returns ..at 41 I have £135k ish.....so progress has been made but ideally I want to end up with a £500k + pot...maybe a bit more as I am the 'worrying' type when it comes to finances. I earn ok but nature of my job is I could be out of a job tomorrow and I'm sure I'm not the only one...this year monthly contributions were anywhere from £1.5-2k per month including employer matching but will be dropping down to minimum contributions to obtain max employer match from this month as feel I need to begin focussing on building my ISA's...it could be a bad strategy as 'front-loading' the pensions esp for any higher rate pay seems.the way forward but the job security aspects for the next 10 and a bit years is making me reassess that approach..sorry bit of a brain dump but it's all these unknown and uncontrollable factors that seems to cause me paralysis and jumping back and forth between approach to pensions Vs ISA etc

Rich1976

noclaf said:

Every now and then I see a thread that has so much useful 'perspective' and experiences that I bookmark it...this will be in of those threads!

There are so many variables and individual circumstances that impact how much we want/can save in a pension and that makes it challenging (IMO) when determining out approach.

I don't mean to be crass sharing numbers but just to illustrate my challenges on this topic; at 30 yrs old I had £15-17k total in my pensions...mid 30's went all out on contributions and tweaking fund choices to hopefully enhance/maximise my returns ..at 41 I have £135k ish.....so progress has been made but ideally I want to end up with a £500k + pot...maybe a bit more as I am the 'worrying' type when it comes to finances. I earn ok but nature of my job is I could be out of a job tomorrow and I'm sure I'm not the only one...this year monthly contributions were anywhere from £1.5-2k per month including employer matching but will be dropping down to minimum contributions to obtain max employer match from this month as feel I need to begin focussing on building my ISA's...it could be a bad strategy as 'front-loading' the pensions esp for any higher rate pay seems.the way forward but the job security aspects for the next 10 and a bit years is making me reassess that approach..sorry bit of a brain dump but it's all these unknown and uncontrollable factors that seems to cause me paralysis and jumping back and forth between approach to pensions Vs ISA etc

Totally true and I get where you’re coming from. I am a ‘worrier’ too and always question is it enough? Will we be ok? What if the market crashes and doesn’t recover enough before we need to access the pensions? Will our health still be ok?

so many unknowns and uncertainties doesn’t sit comfortably with how I am as a person.

Analysis paralysis was totally true for me when I was researching funds. So many funds to choose from and no easy way of seeing which one is the most suitable without going into each fact sheet and then what? Still none the wiser. 

Your contributions a month are excellent and far better than mine which is £275 a month . Is it enough? Who knows. By the time it becomes apparent it maybe too late to do anything about it. Increasing contributions further is not an option until the mortgage is paid.

I guess we just have to do the best we can and hope it’s the right way.

bostonerimus

Obsession with pension planning is good when you are young and in the accumulation phase as it will hopefully allow you to be very relaxed about your finances when you retire. To be obsessed with your pension in retirement would be hell.

SouthCoastBoy

I am a worrier, and constantly worry about money, this has created a problem that at 58 I can't seem to retire, as too concerned I will run out of money. I actually resigned from my current job as I was planning to retire, however suffered anxiety and couldn't sleep so have promptly gone and got another job, working is less stressful than not working. I am now not planning to retire until into my 60s.

Currently my pot is around £1.4m to 1.45m, depending on the stock markets, but when people tell me I may live to 95 (about 10% chance apparently) and need to pay for care homes etc. which are around 1300 to 2k a week I don't think I have enough saved.

My dad never retired, he was working past retirement age, but dropped dead of a heart attack, one Saturday morning, aged 66, no warnings prior to that, maybe I will do the same!

Rich1976

SouthCoastBoy said:

I am a worrier, and constantly worry about money, this has created a problem that at 58 I can't seem to retire, as too concerned I will run out of money. I actually resigned from my current job as I was planning to retire, however suffered anxiety and couldn't sleep so have promptly gone and got another job, working is less stressful than not working. I am now not planning to retire until into my 60s.

Currently my pot is around £1.4m to 1.45m, depending on the stock markets, but when people tell me I may live to 95 (about 10% chance apparently) and need to pay for care homes etc. which are around 1300 to 2k a week I don't think I have enough saved.

My dad never retired, he was working past retirement age, but dropped dead of a heart attack, one Saturday morning, aged 66, no warnings prior to that, maybe I will do the same!

Most people would think over 1 million would be more than enough to retire on. But you know your own mind and what you need to be comfortable and happy

bostonerimus

Rich1976 said:

SouthCoastBoy said:

I am a worrier, and constantly worry about money, this has created a problem that at 58 I can't seem to retire, as too concerned I will run out of money. I actually resigned from my current job as I was planning to retire, however suffered anxiety and couldn't sleep so have promptly gone and got another job, working is less stressful than not working. I am now not planning to retire until into my 60s.

Currently my pot is around £1.4m to 1.45m, depending on the stock markets, but when people tell me I may live to 95 (about 10% chance apparently) and need to pay for care homes etc. which are around 1300 to 2k a week I don't think I have enough saved.

My dad never retired, he was working past retirement age, but dropped dead of a heart attack, one Saturday morning, aged 66, no warnings prior to that, maybe I will do the same!

Most people would think over 1 million would be more than enough to retire on. But you know your own mind and what you need to be comfortable and happy

That was in the days of 2% inflation and reliable public services. Rishi is right to be worried about inflation more than anything else as that impacts everyone and everything. If 1M was a good retirement pot before it will be 1.1M now...and I expect to hear even more horror stories about the rising costs of care homes.

FIREmenow

I've just had a nice re-read of this thread.

Although my preoccupation with pensions is always rumbling on in the background, my visits to the forum are much more sporadic!

How Zen is everyone feeling about pensions this year? Anyone retired and managed to let go of the reins a bit?

jamesd

I retired five years ago. I'm naturally moderately frugal but have been travelling more so my spending has increased. Not to the point of expensive foreign holidays though cheapish are OK.

Using income drawdown for about twelve years total until state pension age forces a willingness to draw on investments, though peer to peer lending interest and VCT dividends now at £10-15k combined are nice.

My accumulation was done during a bit over ten years at 60+% of gross income.

Bear777

I’m pretty obsessed myself but comfortable with the level of obsession lol. The first part of my working life I enjoyed a non contributory DB pension. Over the 9 years it created a nice wee guaranteed buffer for me when I retire and based on current levels is worth over 11k per annum but will increase with inflation. For the last 15 years I have been paying into a DC pension. 

My life has experienced many twists and turns, from climbing the property ladder.  Taking me to the point of owning a big expensive property with a chunky mortgage, through to divorce , downsizing, downsizing again and now in the situation I am in now living in the smallest property I have lived in for the last 20 years, married again and mortgage free.

So in some ways steps backwards, but in others huge leaps forward. I have learnt that I don’t need a big property and I’d rather have money to do as I want and money to save as I wish.

I am pretty obsessive with putting money aside now, I was brought up in a home where property was king and a status symbol and my parents over stretched there to the point where we couldn’t do all we wanted and other spending was tight. This is a philosophy I was probably following until I changed my mindset, but it was my parents choice at that time and I respect that. 

I struggle to get the balance right and like others here I don’t like to spend on myself. I use cash envelopes, give myself very tight discretionary spend amounts on an average day, week and month.  I constantly monitor things, tweak budgets, see where savings can be made and spend far too much time on here or listening to finance podcasts lol! 

Up until about 5 years ago I only contributed about 5% of my salary into my DC pension but very kindly my company contributed 10%. I have built that up to the point where I am now contributing 25% of my salary into my pension and there is over £23k a year going in between me and my employer. I have been doing that for nearly 3 years. Over the time of my DB pension I monitored the performance of the funds and stepped outside of the generic fund. I monitor the performance weekly (I know I probably shouldn’t) and I make changes and have made changes when I felt it was necessary. This diligence has paid off handsomely, there has been approx £180k contributed to the pension over the 15 years and it’s now worth just shy of £500k. I benefitted from a protection strategy on the onset of Covid and quickly reverted to an aggressive growth strategy when things started to bounce during and immediately after Covid. 2022 was tricky but again I pivoted and whilst I lost money I only lost about 7 or 8%. All of that and more has been gained back over the past 6 months again from further pivoting and investing for growth.  

I have a chunky ISA that has struggled more than my pension but is still nicely ahead of the money I have invested. I have easily accessible savings if I needed to call on them and I aim to save about £15k per annum, but I fairness we are planning on using this over the next 3/4 years to do some significant house improvements every year.

The challenge is that I am forever saving for the future and whilst I do live in the now, I most certainly don’t spend on myself like I live in the now. I am generous with my money and have no problems splurging on my wife and kids but not on myself.  I have recently started a side hustle that has given me an added boost but have fallen into the trap of saving that rather than treating myself to anything, my current mindset just doesn’t allow me to do so.

I’m 47 and my intention is to retire in 10-13 years, 13 is more realistic given I have a 4 year old and a couple of teenagers to provide for. My intention is to retire with over £1m on my DB pension and I am on track to achieve that assuming standard growth and maintenance of my current investment. I have promised myself at that stage I will release the purse strings and enjoy my money given the sacrifices I have made, I just worry whether my mindset will allow me to, I am already planning on how I can do a minimal drawdown in order to leave £1m in my pension for my family when I do kick the bucket!!