What is the correct level of pension contributions? How much is too much?

IamWood

Interesting topic to discuss. I've had similar thoughts recently.

At 50, I have been maxing out my annual pension contributions for several years with the addition of my wife's 2K per month. My Pension + ISA have just reached 1 million before today's market dip. I will continue to do the same as long as I'll still in my current job until hitting 55, then I'll down my tool and say goodbye to my paid job by doing something I'm passionate about as a minister.

Bostonerimus1

IamWood said:

Interesting topic to discuss. I've had similar thoughts recently.

At 50, I have been maxing out my annual pension contributions for several years with the addition of my wife's 2K per month. May Pension + ISA have just reached 1 million before today's market dip. I will continue to do the same as long as I'll still in my current job until hitting 55, then I'll down my tool and say goodbye to my paid job by doing something I'm passionate about as a minister.

Well done, now the next nail to knock on the head is paying off the mortgage...if you have one. Going into retirement entirely debt free means that you can use all your pension income on yourself and family etc. and not paying principal and interest to someone else. With 1 million I imagine that your religious affiliation isn't Jesuit ;-)

IamWood

For the record.

My wife and I are committed Christians 🤣.

Thanks to our Lord. We are debt free. I always want to do a self-funded traveling minister. I hope I can get there if God willing.

Investing wisely and living humbly serve me well.

Bostonerimus1

IamWood said:

For the record.

My wife and I are committed Christians 🤣.

Thanks to our Lord. We are debt free. I always want to do a self-funded traveling minister. I hope I can get there if God willing.

Investing wisely and living humbly serve me well.

Money does not bring happiness, but it does allow you to make choices. I'm a lapsed Methodist with several family members who are Methodist or Evangelical ministers and I worked for many years with scientists from the Jesuit order, hence my little joke. 

Andyjflet

Bostonerimus1 said:

Andyjflet said:

I had a discussion with my pension advisor recently, I asked about increasing my contribution from 9% and he said that I should save elsewhere, specifically Cash ISA £20k per annum, however, usually the advice is 15% of your own income regardless of what match you have from your employer. Dont over focus on the pension solution. 
Quickest way to become wealthy is pay off your mortgage, a study of millionaires below makes interesting reading.

 The National Study of Millionaires - Ramsey (ramseysolutions.com)

I wouldn't post US based articles from the Ramsey Organization on here. Ramsey has some sensible ideas and also some pretty strange ones. He's a guru to be avoided, especially by any all UK residents.

I just did, worked for me, pick the best bits and use them to build knowledge. 

dunstonh

Andyjflet said:

I had a discussion with my pension advisor recently, I asked about increasing my contribution from 9% and he said that I should save elsewhere, specifically Cash ISA £20k per annum, however, usually the advice is 15% of your own income regardless of what match you have from your employer. Dont over focus on the pension solution. 
Quickest way to become wealthy is pay off your mortgage, a study of millionaires below makes interesting reading.

 The National Study of Millionaires - Ramsey (ramseysolutions.com)

Is your "pension advisor" an actual adviser or is that just a title you have given the person you have spoken to?

Pension tax wrapper beats the ISA tax wrapper for the vast majority of people when it comes to retirement planning.   The use of a cash ISA is great for short term money but not for long term money.

So, is this person a real adviser in the regulatory sense or someone with adviser in their title who isn't a regulated adviser?

MEM62

Andyjflet said:

I had a discussion with my pension advisor recently, I asked about increasing my contribution from 9% and he said that I should save elsewhere, specifically Cash ISA £20k per annum, however, usually the advice is 15% of your own income regardless of what match you have from your employer. Dont over focus on the pension solution. 

Then your pension adviser is, in my opinion, a fool.      

Andyjflet said:

Quickest way to become wealthy is pay off your mortgage, 

No, it isn't.  But your case, you will get wealthier faster by ditching your pension adviser.   

Andyjflet said:

a study of millionaires below makes interesting reading.

 The National Study of Millionaires - Ramsey (ramseysolutions.com)

Ramsay is a man on a crusade based on his own history.  That study and many of Ramsay's approaches are not relevant in the UK as finance works differently.  

Bostonerimus1

Andyjflet said:

Bostonerimus1 said:

Andyjflet said:

I had a discussion with my pension advisor recently, I asked about increasing my contribution from 9% and he said that I should save elsewhere, specifically Cash ISA £20k per annum, however, usually the advice is 15% of your own income regardless of what match you have from your employer. Dont over focus on the pension solution. 
Quickest way to become wealthy is pay off your mortgage, a study of millionaires below makes interesting reading.

 The National Study of Millionaires - Ramsey (ramseysolutions.com)

I wouldn't post US based articles from the Ramsey Organization on here. Ramsey has some sensible ideas and also some pretty strange ones. He's a guru to be avoided, especially by any all UK residents.

I just did, worked for me, pick the best bits and use them to build knowledge. 

A lot of that knowledge will be wrong for two reasons. Ramsey says some dumb things and his stuff is for the USA and not the UK. Paying off a mortgage is a good goal, but it is not the quickest way to become wealthy. It's not even the first debt you should pay - that's high interest debt like credit cards and the best way to grow your wealth is to use a tax advantaged pension. So mortgage repayment is 5th or 6th on the financial priority list.

JoeCrystal

There is a concept of a "Living Pension" just like a "Living Wage". The last time I read the report, it was 12% overall throughout working life. Here is a link to few documents about it

* https://www.livingwage.org.uk/sites/default/files/2023-08/Living Pension Methodology (1).pdf
* https://www.resolutionfoundation.org/app/uploads/2022/07/Living-Pensions.pdf
* https://www.resolutionfoundation.org/app/uploads/2021/01/Building-a-living-pension.pdf

in case anyone is interested. 

Bostonerimus1

MEM62 said:

Andyjflet said:

I had a discussion with my pension advisor recently, I asked about increasing my contribution from 9% and he said that I should save elsewhere, specifically Cash ISA £20k per annum, however, usually the advice is 15% of your own income regardless of what match you have from your employer. Dont over focus on the pension solution. 

Then your pension adviser is, in my opinion, a fool.      

Andyjflet said:

Quickest way to become wealthy is pay off your mortgage, 

No, it isn't.  But your case, you will get wealth faster by ditching your pension adviser.   

Andyjflet said:

a study of millionaires below makes interesting reading.

 The National Study of Millionaires - Ramsey (ramseysolutions.com)

Ramsay is a man on a crusade based on his own history.  That study and many of Ramsay's approaches are not relevant in the UK as finance works differently.  

I'm in the US so get quite a lot of Ramsey. He's ok on not borrowing to buy stupidly big trucks and living within your means, but his mortgage fetish is a bit silly and his analysis of investment returns and retirement withdrawal rates is mathematically ignorant. Like all financial guru's he's basically a sales man who is trying to sell you books and online courses.