Too Much info and getting confused

J.J.W.

Hi. A little about me. I am 28 and started my stakeholder (with Virgin) at 25.

With the recent news reports and coverage about pensions it made me look for info. I came accross this site.

I am not good with this type of thing and find it difficult to make sense of all the info and different reports that are about.

I was reading on another thread about the amount that should be put into a pension, this being between 10and 20% of my Gross income.

I simply cant afford this amount.

I have to rent as i cannot afford to buy a house. my history of earnings is as follows

currently on 28350 (as of this month)

in the last three years i have gone up from 12k to this.

What if anything can i do i really need it in simple terms. Thanks JJW

Pal

Remember that you need to contribute 10-20% of GROSS income, which means you actually only contribute 10-20% of your net (take home) pay, with the rest of the contribution being made up of tax relief.

Could you afford to contribute 10% of your take home pay to a pension? Doing so now would make a large difference to your eventual pension.

The problem is that most people wait until "they have some spare money", something that never actually happens, because as their earnings increase they simply increase their outgoings (housing, holidays, cars, nice clothes etc). I know a few paper millionairres who claim that they don't have any spare money because they spend it as fast as they earn it!

Part of the problem for the average person is obviously housing costs. Low interest rates (a reaction to the dot.com crash and Sept 11) have simply created a housing bubble instead. Eventually this will correct itself, but in the meantime almost everyone except those who already own a home are unlikely to have "spare" money. In the end we all have a choice, buy a house or save, but many people cannot do both until house prices go down.

Given that you are earning more than the national average wage, it is a sign that something is very wrong with the economy that you cannot afford to save for a pension. If you can't then no-one can.

A final alternative, have you thought about looking for a new job with a decent pension scheme to which the employer contributes?

J.J.W.

Sorry i had to rush out for a meeting. I must add

My rent is 650pcm, i rent and support (partially her parents give a small amount) my girlfreind at uni.

With runnning cost of a car (no pets or children or debts) and the rent, then food and a small amount for lesure i still seem to be left short.

I think as i have had the need to investigate the pension situation and where i stand and what i need to do I really ned to sit down and go over my last few months of bank statments and see whats going wrong.

Thank you for your time

JJW

Milarky

Use a bit of 'hind sight' on the problem!

By paying a regular premium - whatever the amount - you soon don't notice where that goes. Similarly, treating your pension contributions as 'just another bill' means you will pay it, grumble, and live on a bit less than before...

So what is to stop you indexing the contributions you already make to increase in them steadily 'in real terms' [eg +10%pa] ? Many items on a budget will go up more than the average, and over time take up more of that budget. Because you have had time to adjust you will get used to it.

But this applies to any savings that you make REGULARLY - not just pensions - of course...