Worried sick about low pension balance

xylophone

Have you obtained a state pension forecast?

https://www.gov.uk/check-state-pension

theoretica

A while back I looked at my life going forward and realised that quite bluntly each year of working needed to pay for more than one year of living.  State pension etc will help of course, but if I want about equal spending in work and retirement I need to live on considerably less than I earn.

k6chris

dunstonh said:

I'm 47 and worked almost non-stop since graduating. I've been paying into the pensions of of the various places I've worked over the years, and looking at the combined balance of these pensions I'm terrified. All those years, and it all adds up to less than £30k

The simple fact is that if you pay in peanuts, you get back peanuts.    No matter what you do, the single biggest thing when it comes to saving money is the amount you save.

I have known people that started £30pm in 1988, which was a very good contribution back then but failed to increase it each year with inflation and are still paying £30pm today.   They completely blew their good start.

Or others that start a pension with a minimum contribution just to tick the box to say "pension: done" without any thought on the amount being totally unsuitable.

I had someone yesterday as me what the minimum contribution they could pay.  I lied and said £100pm  and then pointed out that £100pm is completely pointless for them.   They were paying more per month on their Sky subscription then they wanted to pay into the pension.   

If you don't take saving seriously, then it will catch up with you and you are looking at a retirement of 25-30 years with low income.  That comedown can be a massive shock if you live a consumer lifestyle in your working life.

A recent guide I read said I should have about £200k in there by now in order to afford a reasonable retirement. I'm in a single income household, just gone self-employed, moderate debt, no property to my name, no kids to care for me when I'm older, and getting seriously concerned. Any advice on conquering the anxiety?

For context, having around £35k by age 35 is another often-mentioned benchmark.   

As it stands, your £30k is good for just over £1000 pa income in today's terms.  Hopefully, it will be a bit better than that unless you have selected a deposit fund or bonds fund for your pension investments.  But its a quick and dirty guide to your current position.   With a state pension of around £11.5k (assuming you get full qualification), you are looking at a retirement income of around £12.5k per annum in today's spending power.

If you earn £15k a year, you may not think that is too bad.  If you earn £50k a year, then you are in for a horrible change in living standards.

You have around 20 years to do something about increasing that.  Its not too late but you need to take it seriously before it is.

Sometimes, people misread their figures on pensions.  So, double check what you have in case you have misread.

OP, it's never too late.  You have clearly reaslised the issue, now you have 15-20 years to address them.  Good luck.

Linton

:Myrtle77 said:

I've spent my whole life working in the charity sector where pay and pensions are notoriously poor. I've also spent most of my adult life caring for my mother. Even though I achieved Senior Management roles, money was always tight. Judgements about not 'prioritising' savings? Well that's a privilege some have, but others don't, so please keep such nonsense to yourself.

No, I won't 'start looking' for someone to have children with at 47 - what a disgusting response! You've no idea why I don't have them.

There's some useful advice in here, but sadly a hell of a lot of judgement, belittling and one-upmanship. Thanks to those that took the time with the former, but I'm stepping away from the thread because of the latter. I came for help, not to give nitwits and excuse to make themselves feel good by being unpleasant. Perhaps those individuals should question what they're on MSE Forums for . . .

I don’t believe there has been much judgement but rather a suspicion that you may have misunderstood your pension details. The £30k lump sum seems remarkably low if you have been a member  of an employers pension scheme for 25 years. One possibility is that you have been a member of a defined benefit pension scheme for at least part of your working life where an £nK figure would represent an annual retirement income rather than a lump sum.

Marcon

Myrtle77 said:

I've spent my whole life working in the charity sector where pay and pensions are notoriously poor. I've also spent most of my adult life caring for my mother. Even though I achieved Senior Management roles, money was always tight. Judgements about not 'prioritising' savings? Well that's a privilege some have, but others don't, so please keep such nonsense to yourself.

No, I won't 'start looking' for someone to have children with at 47 - what a disgusting response! You've no idea why I don't have them.

There's some useful advice in here, but sadly a hell of a lot of judgement, belittling and one-upmanship. Thanks to those that took the time with the former, but I'm stepping away from the thread because of the latter. I came for help, not to give nitwits and excuse to make themselves feel good by being unpleasant. Perhaps those individuals should question what they're on MSE Forums for . . .

If you post minimal info on a public forum, you're going to get responses based purely on that info (plus the occasional remark which would have been better left unsaid).

Your opening post said that you're 47, a graduate, and have worked 'almost non-stop' since graduating, and that you've been paying into the pension schemes of all the places you've worked. It isn't unreasonable for those looking at your post to wonder how a quarter of a century of paying in to various schemes has only given you a 'pot' of £30K - hence my query (and that raised by others) of whether you are actually correctly reading and understanding the pensions history you have. 

Rather than answering that question you've thrown your toys out of the pram and announced you are stomping off, which means nobody can give any sort of informed answer.

Universidad

OP, there has been a lot less judgement in this thread than you think. Responses like "I find it difficult to see how you can only have £30k in your pension" are not criticisms because folks think you have done badly or planned badly. They are because it seems almost impossible that the figure could be that low, so people are really suspecting that you've misunderstood something, rather than that you've made poor choices. The truth is that we really don't know.

I'm going to give you the benefit of the doubt and assume that your snippy response was because you're as stressed about this as you say. So let me give you a bit of a worked example.

For example, let's assume pension contributions of the current legal minimum (8% overall) contributions, and we assume that your salary has been only £15,000 per year since you started on average ( a figure that would have been a low salary 20 years ago, and would be well below minimum wage for a full time worker today). Let's assume you have been working for 25 years, since you were 22 years old.

8% of that salary is 1200 pounds per year. Multiply that by 25, and the figure is 30,000.

So on the current legal minimum pension contribution and with a wage that seems unrealistically low, that's already at 30K - and that's before we account for the fact that the money in your pension will have been invested and has presumably performed better than cash with zero interest applied over that time.

Now it is possible your contributions were lower than 8% overall in the past, but even if they were, you'd probably expect to be above 30K at this point based on investment performance alone.

So that's why people are surprised at the figure. They're assuming something has been missed. Here are some possible examples:

1) You may have switched to a different pension fund at some point (for example, if/when you switched employers). If so, there may be another pension fund out there with your name on it. You can have more than one pension! Is it possible you're only looking at part of your overall pension savings?

2) If any of your pensions are of the Defined Benefit rather than Defined Contribution type, then you may actually find that the figure on those "pots" is actually what you'll recieve each and every year from retirement, rather than an amount that you need to use over your whole retirement. It's certainly not likely that this is the case today, but it could have been at the start of your career when DB schemes were more common.

3) Have you worked part time rather than full time?

4) Is is true that you have always contributed to a pension scheme?

At the end of the day most responses were from people assuming that you have more than 30K in your pensions simply because that is the most likely situation for anyone who has worked full time for 25 years and always paid in to their workplace scheme. However, if it is only 30,000 then although that is low, it is still a good start with plenty of time to get back on track. We regularly hear from people on these forums who have nothing and have always opted out, and are just starting to think about it in their 40s.

The good news is that if you are used to living on a very low amount, then a smaller than usual pension fund will keep you going for a lot longer than many people. So, as ever really, what you need for retirement will be an answer personal to you, and you shouldn't worry too much about comparing with others. 

As others have said, please do check your state pension forecast, and ensure you're in line for the maximum state pension that you can get. 

If you want further specific help, please try to answer the questions people are asking, rather than assuming that you know why they are being asked.

Marcon

Universidad said:

OP, there has been a lot less judgement in this thread than you think. Responses like "I find it difficult to see how you can only have £30k in your pension" are not criticisms because folks think you have done badly or planned badly. They are because it seems almost impossible that the figure could be that low, so people are really suspecting that you've misunderstood something, rather than that you've made poor choices. The truth is that we really don't know.

I'm going to give you the benefit of the doubt and assume that your snippy response was because you're as stressed about this as you say. So let me give you a bit of a worked example.

For example, let's assume pension contributions of the current legal minimum (8% overall) contributions, and we assume that your salary has been only £15,000 per year since you started on average ( a figure that would have been a low salary 20 years ago, and would be well below minimum wage for a full time worker today). Let's assume you have been working for 25 years, since you were 22 years old.

8% of that salary is 1200 pounds per year. Multiply that by 25, and the figure is 30,000.

So on the current legal minimum pension contribution and with a wage that seems unrealistically low, that's already at 30K - and that's before we account for the fact that the money in your pension will have been invested and has presumably performed better than cash with zero interest applied over that time.

Now it is possible your contributions were lower than 8% overall in the past, but even if they were, you'd probably expect to be above 30K at this point based on investment performance alone.

So that's why people are surprised at the figure. They're assuming something has been missed. Here are some possible examples:

1) You may have switched to a different pension fund at some point (for example, if/when you switched employers). If so, there may be another pension fund out there with your name on it. You can have more than one pension! Is it possible you're only looking at part of your overall pension savings?

2) If any of your pensions are of the Defined Benefit rather than Defined Contribution type, then you may actually find that the figure on those "pots" is actually what you'll recieve each and every year from retirement, rather than an amount that you need to use over your whole retirement. It's certainly not likely that this is the case today, but it could have been at the start of your career when DB schemes were more common.

3) Have you worked part time rather than full time?

4) Is is true that you have always contributed to a pension scheme?

At the end of the day most responses were from people assuming that you have more than 30K in your pensions simply because that is the most likely situation for anyone who has worked full time for 25 years and always paid in to their workplace scheme. However, if it is only 30,000 then although that is low, it is still a good start with plenty of time to get back on track. We regularly hear from people on these forums who have nothing and have always opted out, and are just starting to think about it in their 40s.

The good news is that if you are used to living on a very low amount, then a smaller than usual pension fund will keep you going for a lot longer than many people. So, as ever really, what you need for retirement will be an answer personal to you, and you shouldn't worry too much about comparing with others. 

As others have said, please do check your state pension forecast, and ensure you're in line for the maximum state pension that you can get. 

If you want further specific help, please try to answer the questions people are asking, rather than assuming that you know why they are being asked.

What a cracking good answer. I hope OP comes back (if only out of curiosity!) and reads it.

nicknameless

Marcon said:

Universidad said:

OP, there has been a lot less judgement in this thread than you think. Responses like "I find it difficult to see how you can only have £30k in your pension" are not criticisms because folks think you have done badly or planned badly. They are because it seems almost impossible that the figure could be that low, so people are really suspecting that you've misunderstood something, rather than that you've made poor choices. The truth is that we really don't know.

I'm going to give you the benefit of the doubt and assume that your snippy response was because you're as stressed about this as you say. So let me give you a bit of a worked example.

For example, let's assume pension contributions of the current legal minimum (8% overall) contributions, and we assume that your salary has been only £15,000 per year since you started on average ( a figure that would have been a low salary 20 years ago, and would be well below minimum wage for a full time worker today). Let's assume you have been working for 25 years, since you were 22 years old.

8% of that salary is 1200 pounds per year. Multiply that by 25, and the figure is 30,000.

So on the current legal minimum pension contribution and with a wage that seems unrealistically low, that's already at 30K - and that's before we account for the fact that the money in your pension will have been invested and has presumably performed better than cash with zero interest applied over that time.

Now it is possible your contributions were lower than 8% overall in the past, but even if they were, you'd probably expect to be above 30K at this point based on investment performance alone.

So that's why people are surprised at the figure. They're assuming something has been missed. Here are some possible examples:

1) You may have switched to a different pension fund at some point (for example, if/when you switched employers). If so, there may be another pension fund out there with your name on it. You can have more than one pension! Is it possible you're only looking at part of your overall pension savings?

2) If any of your pensions are of the Defined Benefit rather than Defined Contribution type, then you may actually find that the figure on those "pots" is actually what you'll recieve each and every year from retirement, rather than an amount that you need to use over your whole retirement. It's certainly not likely that this is the case today, but it could have been at the start of your career when DB schemes were more common.

3) Have you worked part time rather than full time?

4) Is is true that you have always contributed to a pension scheme?

At the end of the day most responses were from people assuming that you have more than 30K in your pensions simply because that is the most likely situation for anyone who has worked full time for 25 years and always paid in to their workplace scheme. However, if it is only 30,000 then although that is low, it is still a good start with plenty of time to get back on track. We regularly hear from people on these forums who have nothing and have always opted out, and are just starting to think about it in their 40s.

The good news is that if you are used to living on a very low amount, then a smaller than usual pension fund will keep you going for a lot longer than many people. So, as ever really, what you need for retirement will be an answer personal to you, and you shouldn't worry too much about comparing with others. 

As others have said, please do check your state pension forecast, and ensure you're in line for the maximum state pension that you can get. 

If you want further specific help, please try to answer the questions people are asking, rather than assuming that you know why they are being asked.

What a cracking good answer. I hope OP comes back (if only out of curiosity!) and reads it.

Marcon said:

Universidad said:

OP, there has been a lot less judgement in this thread than you think. Responses like "I find it difficult to see how you can only have £30k in your pension" are not criticisms because folks think you have done badly or planned badly. They are because it seems almost impossible that the figure could be that low, so people are really suspecting that you've misunderstood something, rather than that you've made poor choices. The truth is that we really don't know.

I'm going to give you the benefit of the doubt and assume that your snippy response was because you're as stressed about this as you say. So let me give you a bit of a worked example.

For example, let's assume pension contributions of the current legal minimum (8% overall) contributions, and we assume that your salary has been only £15,000 per year since you started on average ( a figure that would have been a low salary 20 years ago, and would be well below minimum wage for a full time worker today). Let's assume you have been working for 25 years, since you were 22 years old.

8% of that salary is 1200 pounds per year. Multiply that by 25, and the figure is 30,000.

So on the current legal minimum pension contribution and with a wage that seems unrealistically low, that's already at 30K - and that's before we account for the fact that the money in your pension will have been invested and has presumably performed better than cash with zero interest applied over that time.

Now it is possible your contributions were lower than 8% overall in the past, but even if they were, you'd probably expect to be above 30K at this point based on investment performance alone.

So that's why people are surprised at the figure. They're assuming something has been missed. Here are some possible examples:

1) You may have switched to a different pension fund at some point (for example, if/when you switched employers). If so, there may be another pension fund out there with your name on it. You can have more than one pension! Is it possible you're only looking at part of your overall pension savings?

2) If any of your pensions are of the Defined Benefit rather than Defined Contribution type, then you may actually find that the figure on those "pots" is actually what you'll recieve each and every year from retirement, rather than an amount that you need to use over your whole retirement. It's certainly not likely that this is the case today, but it could have been at the start of your career when DB schemes were more common.

3) Have you worked part time rather than full time?

4) Is is true that you have always contributed to a pension scheme?

At the end of the day most responses were from people assuming that you have more than 30K in your pensions simply because that is the most likely situation for anyone who has worked full time for 25 years and always paid in to their workplace scheme. However, if it is only 30,000 then although that is low, it is still a good start with plenty of time to get back on track. We regularly hear from people on these forums who have nothing and have always opted out, and are just starting to think about it in their 40s.

The good news is that if you are used to living on a very low amount, then a smaller than usual pension fund will keep you going for a lot longer than many people. So, as ever really, what you need for retirement will be an answer personal to you, and you shouldn't worry too much about comparing with others. 

As others have said, please do check your state pension forecast, and ensure you're in line for the maximum state pension that you can get. 

If you want further specific help, please try to answer the questions people are asking, rather than assuming that you know why they are being asked.

What a cracking good answer. I hope OP comes back (if only out of curiosity!) and reads it.

Here, here.

Also some regular posters do need to read back what they write before they post, especially a particular regular poster and IFA whose posts IMHO, and as politely as I can say, whilst often very informative, can be equally condescending.

kimwp

nicknameless said:

Marcon said:

Universidad said:

OP, there has been a lot less judgement in this thread than you think. Responses like "I find it difficult to see how you can only have £30k in your pension" are not criticisms because folks think you have done badly or planned badly. They are because it seems almost impossible that the figure could be that low, so people are really suspecting that you've misunderstood something, rather than that you've made poor choices. The truth is that we really don't know.

I'm going to give you the benefit of the doubt and assume that your snippy response was because you're as stressed about this as you say. So let me give you a bit of a worked example.

For example, let's assume pension contributions of the current legal minimum (8% overall) contributions, and we assume that your salary has been only £15,000 per year since you started on average ( a figure that would have been a low salary 20 years ago, and would be well below minimum wage for a full time worker today). Let's assume you have been working for 25 years, since you were 22 years old.

8% of that salary is 1200 pounds per year. Multiply that by 25, and the figure is 30,000.

So on the current legal minimum pension contribution and with a wage that seems unrealistically low, that's already at 30K - and that's before we account for the fact that the money in your pension will have been invested and has presumably performed better than cash with zero interest applied over that time.

Now it is possible your contributions were lower than 8% overall in the past, but even if they were, you'd probably expect to be above 30K at this point based on investment performance alone.

So that's why people are surprised at the figure. They're assuming something has been missed. Here are some possible examples:

1) You may have switched to a different pension fund at some point (for example, if/when you switched employers). If so, there may be another pension fund out there with your name on it. You can have more than one pension! Is it possible you're only looking at part of your overall pension savings?

2) If any of your pensions are of the Defined Benefit rather than Defined Contribution type, then you may actually find that the figure on those "pots" is actually what you'll recieve each and every year from retirement, rather than an amount that you need to use over your whole retirement. It's certainly not likely that this is the case today, but it could have been at the start of your career when DB schemes were more common.

3) Have you worked part time rather than full time?

4) Is is true that you have always contributed to a pension scheme?

At the end of the day most responses were from people assuming that you have more than 30K in your pensions simply because that is the most likely situation for anyone who has worked full time for 25 years and always paid in to their workplace scheme. However, if it is only 30,000 then although that is low, it is still a good start with plenty of time to get back on track. We regularly hear from people on these forums who have nothing and have always opted out, and are just starting to think about it in their 40s.

The good news is that if you are used to living on a very low amount, then a smaller than usual pension fund will keep you going for a lot longer than many people. So, as ever really, what you need for retirement will be an answer personal to you, and you shouldn't worry too much about comparing with others. 

As others have said, please do check your state pension forecast, and ensure you're in line for the maximum state pension that you can get. 

If you want further specific help, please try to answer the questions people are asking, rather than assuming that you know why they are being asked.

What a cracking good answer. I hope OP comes back (if only out of curiosity!) and reads it.

Marcon said:

Universidad said:

OP, there has been a lot less judgement in this thread than you think. Responses like "I find it difficult to see how you can only have £30k in your pension" are not criticisms because folks think you have done badly or planned badly. They are because it seems almost impossible that the figure could be that low, so people are really suspecting that you've misunderstood something, rather than that you've made poor choices. The truth is that we really don't know.

I'm going to give you the benefit of the doubt and assume that your snippy response was because you're as stressed about this as you say. So let me give you a bit of a worked example.

For example, let's assume pension contributions of the current legal minimum (8% overall) contributions, and we assume that your salary has been only £15,000 per year since you started on average ( a figure that would have been a low salary 20 years ago, and would be well below minimum wage for a full time worker today). Let's assume you have been working for 25 years, since you were 22 years old.

8% of that salary is 1200 pounds per year. Multiply that by 25, and the figure is 30,000.

So on the current legal minimum pension contribution and with a wage that seems unrealistically low, that's already at 30K - and that's before we account for the fact that the money in your pension will have been invested and has presumably performed better than cash with zero interest applied over that time.

Now it is possible your contributions were lower than 8% overall in the past, but even if they were, you'd probably expect to be above 30K at this point based on investment performance alone.

So that's why people are surprised at the figure. They're assuming something has been missed. Here are some possible examples:

1) You may have switched to a different pension fund at some point (for example, if/when you switched employers). If so, there may be another pension fund out there with your name on it. You can have more than one pension! Is it possible you're only looking at part of your overall pension savings?

2) If any of your pensions are of the Defined Benefit rather than Defined Contribution type, then you may actually find that the figure on those "pots" is actually what you'll recieve each and every year from retirement, rather than an amount that you need to use over your whole retirement. It's certainly not likely that this is the case today, but it could have been at the start of your career when DB schemes were more common.

3) Have you worked part time rather than full time?

4) Is is true that you have always contributed to a pension scheme?

At the end of the day most responses were from people assuming that you have more than 30K in your pensions simply because that is the most likely situation for anyone who has worked full time for 25 years and always paid in to their workplace scheme. However, if it is only 30,000 then although that is low, it is still a good start with plenty of time to get back on track. We regularly hear from people on these forums who have nothing and have always opted out, and are just starting to think about it in their 40s.

The good news is that if you are used to living on a very low amount, then a smaller than usual pension fund will keep you going for a lot longer than many people. So, as ever really, what you need for retirement will be an answer personal to you, and you shouldn't worry too much about comparing with others. 

As others have said, please do check your state pension forecast, and ensure you're in line for the maximum state pension that you can get. 

If you want further specific help, please try to answer the questions people are asking, rather than assuming that you know why they are being asked.

What a cracking good answer. I hope OP comes back (if only out of curiosity!) and reads it.

Here, here.

Also some regular posters do need to read back what they write before they post, especially a particular regular poster and IFA whose posts IMHO, and as politely as I can say, whilst often very informative, can be equally condescending.

I haven't noticed that last point, but they have constantly provided information to very similar questions for years - I think the volume of information provided would count more than finessing the delivery, most of which becomes easily misinterpretable over the internet.

Simon11

Myrtle77 said:

I've spent my whole life working in the charity sector where pay and pensions are notoriously poor. I've also spent most of my adult life caring for my mother. Even though I achieved Senior Management roles, money was always tight. 

After living in the USA, while I don't agree with their ways of working and very weak labour laws, I did however see the benefits of a system which encourages people to work hard and find new opportunity to increase their benefits/ job security. In the UK, I don't find a huge amount of people are really focused on bettering themselves and developing a rewarding career.

I often see this with my friends, they have stuck with a job they have been in a while. If they had made the extra effort, networked and taken a few risks to jump through a few more hoops they could have doubled/ triple their package along with seen lots of non-financial benefits such as more flexible work, less working hours and better working conditions. Now after 15 years into their careers, the penny still hasn't quite dropped and for every year I personally work, they are needing to work several years to match the equivalent plus having to put in significantly more effort/ stress/ time into their career.

Now there is a lot of other bits to consider, personal interests/ goals and we all have a range of personal circumstance to reflect upon, however for the OP, I would seriously consider looking at other sectors/ career paths which will offer better pay and conditions.  There are lots of skills and experience which you have and it may be time for you to focus on a new career which puts your first otherwise you will may struggle later in life/ during retirement.

Time to take a risk, be confident, make a jump and put yourself first?