I'm addicted to pension saving and it's leaving me short.

Workerdrone

barnstar2077 said:

Is it possible that the real issue is not being able to see your gains recently as things have been a bit stagnant of late?

It is difficult, because you could put less away and then regret it later and wish you had stayed the course!

That's a big part of the issue, sacrifice with no perceived gains vs losing out if I don't. What doesn't help is the fact I've spent around 8 years being pretty insular, working from home and lost interest in most things other than saving. I've fallen into a trap of my own design with no real idea of how to get out of it. Go back to working in an office for the craik, yes but think of the commuting costs, go out and do more interesting stuff, yes but think of the cost. Its a blimp infuriating mindset to be in and fixing it isn't as easy as I'd hoped. A bit like telling an agorophobic to go for a walk

frugalandsave

I dont think I can add to much value like others have, but here are my 2 Cents.

1. I came to the same conclusion when my company last year gave me a 3 % pay rise and made it look like they were very generous. (They made record revenue that year), so I looked for a different Job and managed to increase my income a lot more than what i earned before. That way I now pay in more to my Pension + manage to safe more Cash into my ISAs. Also it provides enough cash for the family to have fun.

2. You could look at how you can get things extra, to help you have more fun. I.e. Look at how you can earn Airmiles to reduce costs for some great holidays to cheap destinations... think Asia, Africa, etc. We use airmiles to reduce the amount we spent on flights and try to fly to cheap countries, where our money goes further. I also use Google Flights a lot to see good options to travel to other cheap destinations. 

3. If you are not doing this already, try to do some stuff like Bank switching and other little things. For us that adds to our Fun money.  

Emmia

Workerdrone said:

Emmia said:

Workerdrone said:

Emmia said:

Do you have another payrise coming up?

Perhaps this time, and next time, don't adjust the additional contribution, but let the rise flow into your bank account.

You're still piling money away with nearly £1,500 a month going in but perhaps it's time to have a little more disposable income & to enjoy the payrises.

I believe the next pay review will be June 2024. I think the freezing of personal tax thresholds along with higher than usual inflation is what's made my usual parsimony a little more uncomfortable. Although the now baked in inflationary hikes have made saving more for the future a bigger priority.

The financial "difficulty" you're in though is of your own making - you've chosen to put additional monies into your pension, leaving you with the effect of frozen take home pay - inflation has eroded the value of that money, and so you face difficulties. 

Fixing it is simple, reduce your pension over payments, or don't increase your contribution level when your next pay rise happens so you get an uplift in your income. 

Im aware its not really difficulty in the sense that many people have difficulty. I have multiple levels of resilience to fall back on, savings pots, other investments, assets etc. It's a one of mindset and perhaps a cautionary tale to this who frequent forums like this. Perhaps some unfortunate event is required to shake me from the current path. Im trying hard to be cognoscent of the problem but making a change is difficult.

This is why I asked about your next payrise... 

The payrise (when/if it happens) will put more money in your pocket - all you have to do is not adjust the amounts flowing into pensions /ISAs /Savings to leave you with a higher amount in your account each month.  This route relies on inertia - you don't adjust the payment you make, so you save as you do now, but because your pay has risen, you have more in your pocket.

Plenty of money is flowing into your pension right now - but there is always the possibility that you may never benefit from the savings, either through poor health or following an untimely departure.

Sea_Shell

Aren't workplace contributions done as a percentage?  I know mine used to be.   I had it set at 20%*, including their bit.  So any payrise would result in higher contributions automatically?



* I would have gone higher but they can't take you below minimum wage.  I made additional manual payments up to 100% 😇

michaels

Workerdrone said:

Hi, I can't remember if I've posted something similar but here goes. I'm 47 and like a lot of people I became more serious about retirement planning as I approached 40. I don't earn a massive amount and its unlikely due to circumstance I ever will. After the September inflationary pay rise I will be on £39,970. My wife is a band 7 nurse and earns around 45k. We have an 80k mortgage and keep around 30k in the offset in various pots to pay for things (car maintenance, new car, holiday, Christmas etc)

About 10 years ago my wife and I agreed it was going to be increasingly difficult for her to do night shifts at 60 so we put in place a plan to both finish work at that point. As she won't be able to pull her 2016 section until 67 she will have around 11k from her 95 section available plus 33k lump sum. I started a small sipp for her which should have around 50k in by retirement which we plan to draw down over the 7/8 year until the 2016 and SP kick in. We also agreed I would put as much as possible into my work pension which will help our income when she leaves work.

The way our finances work is, she pays the mortgage, her phone, car insurance, denplan, contact lenses etc and I pay the rest of the bills, then between us we put an amount of £911 into the offset (For the past year we've usually spend the same amount from the offset as we put in every month, just due to things needing replacement, holidays etc). We balance the savings so it leaves us with £350 fun money each per month.

Other than the 80k mortgage we have no debt (and the mortgage is fixed at 2.75% until 2026)

So for the past 10 years every time I've had an inflationary pay rise or made a saving on a bill ive followed the mantra of not letting my lifestyle grow to my income and instead saving the difference into pension. In effect i've not given myself a pay rise in a decade.

In doing so I am now via salary sacrifice putting £1472 into my pension every month. My only real indulgence is my daily coffee run ( a habit from covid), I work from home so this little treat gets me out of the house once a day. But with inflation being what it is my daily budget of £11.29 doesn't go far.

My fund seems to have stagnated at around £240k (Im not concerned, Im just buying more units at a cheaper price month on month), but the lack of northward direction does make all this saving for no obvious gain seem a bit demoralising.

I feel having another £200 a month disposable cash for myself would ease matters. I suppose I look around and see people splashing the cash and wonder if I am making the wrong decision.

The thing is I could do it in a heartbeat, just reduce my monthly contributions, but having put so much blood sweat and tears into getting to the £1472 a month number I just can't bring myself to scale it back. Plus I'm a bit of a security freak and the only way I see of getting a decent retirement lifestyle is to make the sacrifices now.

So a lot to unpack here, not really sure why I wrote this, I just needed to get it off my chest. Does anyone have any similar experiences of oversaving or anything to add?

P.S Im aware retirement is not guaranteed. I might pop my clogs before 60, but I have made peace with the fact at least my family will be provided for.

Have you checked the maths, how does the current income you are living off compare to what you will have post retirement (taking into account any expenses you have now that may not apply then (mortgage? work expenses)?

If they are similar then you probably have the balance about right between spend now and spend then and should probably split any pa y increases about 50 50 into pension and more spend now to keep that balance.  Alternatively keep expenditure at current level and see the extra pension following pay rises as buying an earlier retirement

Off topic:
If you have an offset mortgage at 2.75% and can trust yourself probably draw out as much as you can and put it into a high interest account as you will make money on the turn.

Bimbly

Rather than put in the max and hope for the best, I would instead sit down and do some budgeting. When do you want to retire? How much will you need to live on? How big a pot would you need to achieve that?

Then calculate if you are on track. Would you still be on track if you contributed £1,000 per month? Then I would adjust contributions to that amount rather than over pay. Being super wealthy in retirement is no good if you're scrimping in the rest of your life. 

Then think about something you would like to do. How about a meal out once a week? Or a nice holiday every year? Then decide that you are worth it and just spend the money. You are allowed to enjoy yourself a little.

Bluebell1000

I was wondering, what would you actually do with an extra £200 a month now, if you had it? How would you spend that? 

Incidentally we have £30 each for our monthly fun money so yours seems really generous! 

Workerdrone

Sea_Shell said:

Aren't workplace contributions done as a percentage?  I know mine used to be.   I had it set at 20%*, including their bit.  So any payrise would result in higher contributions automatically?



* I would have gone higher but they can't take you below minimum wage.  I made additional manual payments up to 100% 😇

Yes mine are, but the mistake ive been making is putting all the new take home into pension as well

Workerdrone

Bluebell1000 said:

I was wondering, what would you actually do with an extra £200 a month now, if you had it? How would you spend that? 

Incidentally we have £30 each for our monthly fun money so yours seems really generous! 

Wow. That puts things into perspective, £1 a day.  So aside from the coffee habit. if I'm being totally honest, I spend too much on alcohol, a bit of a crutch and a negative habit I need to lose. But your point is well made. Would £200 make a difference without a plan. No, you are right. Without a plan it wouldn't. The answers on this thread are making me reflect on missing out on life, having lost the joy de vive, Im saving for a future which isn't guaranteed and making myself a bit miserable in the process. I think I need a trial period of living it up to spark me up. So please, posters, tell me if this is a terrible idea.

I will have a word with the Mrs once she's off nights, but what I propose is to lower my contributions to 6% (employer matches 10%), for the next 3 months. That should give me somewhere around £900 extra. So what will I do with that, well, go to the cinema more, go out for coffee more, buy myself the odd nice thing I have denied, some family meals out, maybe an escape room, or a weekend at centre parcs, have my car valeted, take the Mrs shopping. Buy a few bits from Amazon. Just live a little. Find out what I'm missing and hopefully recapture some of life's fun.

Its a hard choice but time limiting it means it won't drift (not that it would knowing me). 

I know this goes totally against the grain, reducing pension savings I mean, but ive done 10 years of penury, perhaps a quarter of enjoyment is overdue?

Bimbly

Workerdrone said:
Just live a little. Find out what I'm missing and hopefully recapture some of life's fun.

Sounds a plan. Although I wouldn't do it all at once, you'll be overwhelmed and want to curl up in a dark corner somewhere.