Pension advice please

amyfairweather

Hello, I have three pensions accumulated over the years.  One around £90k, one £25k and one £15k.

Is this good/bad/average for age 43?

Also, can you please advise what sort of yearly payment this would produce at age 60 or 68?

Thank you.

Exodi

It's all relative as peoples required expected standard of living in retirement differs. Someone that wants to go on cruises a few times a year will need more than someone who doesn't.

With that said, it's a decent sized pot.

Hard to answer what sort of yearly payment this would produce at retirement as we don't know what additional contributions you might make before then.

If we just focused on the £130k you have now, below you can see the HL annuity rates (this is per £100k so times all by £1.3k).

If you stayed invested and did a 3-4% drawdown, you could skim £3.9k - £5.2k off the top while (theoretically) preserving the capital.

And add state pension on top of this £10.6k. So not bad going but still far to go.

I would however encourage using a pension calculator, inputting your future contributions and having it take account of things like inflation, investment returns, etc.

dunstonh

Is this good/bad/average for age 43?

Depends on where you live and what your living standards are like and if you are single or a couple.  
if you are earning £15k per annum, then its nicely on track.  (state pension plus that giving you a similar income).
If you are earning £50k per annum then you are in for a lifestyle shock in retirement as its not enough.

Marcon

amyfairweather said:

Hello, I have three pensions accumulated over the years.  One around £90k, one £25k and one £15k.

Is this good/bad/average for age 43?

Also, can you please advise what sort of yearly payment this would produce at age 60 or 68?

Thank you.

Depends if you're an average 43 year old earning an average salary with average outgoings...in other words, averages are pretty meaningless! 

You've not said where your funds are invested (it's the underlying funds which drive the performance - the pension itself is just a tax-efficient 'wrapper'), so it's impossible to give any sort of prediction of the annual payment your pensions might generate in a quarter of a century or so. Much depends on how the funds perform (?have you reviewed them lately to check they are compatible with your attitude to risk, etc?) and how you plan to access them - ie annuity or drawdown.

The old adage of 'save as much as you can, as early as you can' might be a better focus for your attention. In particular, look at your contribution rate (and that of your employer) - if the total is only in single digits, that might not produce the outcome you hope for.

af1963

Lots of variables, but as a rough guide - assume you've built this up over 20 years and will continue to pay in at the same rate over the next 20 years.  You'd then have a pot worth about double what you have now, about £260k.  You could reasonably expect some growth too, so ( again as a very rough guide) let's round that up to £300k.  (Could be higher if the investments do well, or if you can contribute more over the next 20 years because you're now on a higher salary etc.  But assuming 300k will give you an idea of what is possible with modest investment returns if your contributions carry on as they are now.)

A £300k pot would currently buy you about £12k annual income  (a bit less if you draw it at 60, a bit more if you wait till 65 or 68) , to add to a state pension (from age 68+) which could provide another £11k.  (You'd pay about £2k of this in income tax once the state pension begins.)

Albermarle

You'd then have a pot worth about double what you have now, about £260k.  You could reasonably expect some growth too, so ( again as a very rough guide) let's round that up to £300k. 

Due to inflation a pension pot has to grow as much as inflation, just to stand still in terms of spending power.

So to go from £260K to £300K in real terms, it would have to grow by more than inflation. That is quite possible but not fully understood by everybody.

amyfairweather

Thanks everyone, definately food for thought.  

I think I will focus first on Marcon's advice of save as much as you can, as early as you can and move forward from there.