Worried sick about low pension balance

thriftytracey

I had a simple plan.  Pay off the mortgage as soon as possible which I did aged 50.  Then I threw all our spare money into my pension and my employer also offered salary sacrifice so I took advantage of that too.  We stopped going on expensive holidays to do this (bought an old caravan!).  I have always been frugal - never bought new cars.  Pretty old cars.  One car is 15 years old and the other is 16 years old!  Still going OK.  Also saved into Cash ISA's and made sure we had a decent emergency fund.

Also, during the last few years before I retired aged 59 I started living as if I was drawing a modest pension so I got used to it.

I did benefit from a long period of growth before I retired so I was lucky in that respect.

But ... It hasn't all been plain sailing during drawdown - the pandemic and Trussonomics.  

And now we have a Middle East war brewing and recently a hiccup with the Far East markets and rumours about the US economy going downhill ...

mark_cycling00

I'll keep this example concise and missing some details to avoid TLDR

you start contributing to a pension at 21
5% your contribution 
5% employer contribution 
You invest in shares.
At retirement you'll have a pot of about £1million. 

But if you also add a single payment of £50,000 when you're 21 in addition to the 10% a year how much better off are you in retirement??

The answer is you get an extra £50,000 every single year of your retirement. 

But it's all about starting early, the really big gains (relative to annual income) only happen after 25years

michaels

mark_cycling00 said:

I'll keep this example concise and missing some details to avoid TLDR

you start contributing to a pension at 21
5% your contribution 
5% employer contribution 
You invest in shares.
At retirement you'll have a pot of about £1million. 

But if you also add a single payment of £50,000 when you're 21 in addition to the 10% a year how much better off are you in retirement??

The answer is you get an extra £50,000 every single year of your retirement. 

But it's all about starting early, the really big gains (relative to annual income) only happen after 25years

If your investments average 2% pa real growth then invested 50k for 47 years will pay a SWR of about 4.4k pa.

Nebulous2

Simon11 said:

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?

There's an exercise managers sometimes do - to work out what makes the people in their  team tick - what are their motivators? It can be quite good fun as a team exercise, to recognise our differences. 

People in the type of roles the OP is describing are often not motivated by money, or not very highly motivated by money. 

I've a similar background, and while paid quite a bit more than most people working in care, it was less than the same level of responsibility would have brought almost anywhere else. A big driver was a sense of purpose, that what I was doing had some value. Retiring has been more complicated than I expected it to be, with losing that sense of purpose contributing to that. 

I was lucky in that the charities I worked for were in the LGPS, so I built up a DB pension. Many charities have now withdrawn from that, as they can't afford the contributions. 

This is a finance group, with a lot of successful, wealthy people, but the tune we dance to is not always the same....... 

Cus

The OP is worried sick about their low pension balance, enough to start a thread wanting help, yet will not return to a thread with vasts amount of help and thoughts due to a perception of being slighted. Shame. No helping some people.

eskbanker

Myrtle77 said:

Worried sick 

[...]

I'm terrified

[...]

getting seriously concerned. Any advice on conquering the anxiety?

Unfortunately this isn't really the place for seeking emotional support (there are other forums more suited to that) but instead focuses on financial matters in a rather more dispassionate way, so it was always more likely that posters would offer thoughts on how to improve your finances rather than advising about how to cope without doing so.

saucer

Cus said:

The OP is worried sick about their low pension balance, enough to start a thread wanting help, yet will not return to a thread with vasts amount of help and thoughts due to a perception of being slighted. Shame. No helping some people.

I hope they read this. I’m not sure people appreciate the expertise and quality of suggestions they can get on this forum. Not many places on the internet like it, as far as I can see. I do see how some comments can come across as patronising but I think this is often, but perhaps not always, unintentional.  You are right in saying they are clearly worried yet have time to vastly improve their situation. 

theoretica

Simon11 said:

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?

I wonder - are there actually a higher proportion of rewarding career jobs in the US, or is there just more talk and jostling to get them, with about the same percentage of people having rewarding careers in the end?  A higher minimum wage of course removes some of the tail of really bad jobs for people to struggle out of. 

ILoveSkaMusic

Just thinking about it, as i'm a similar age. There's a very strong chance that much of OP's working life has been spent without paying into any workplace pension simply because they weren't a legal requirement until the tail end of 2012.  

I know that I have to make increased contributions to make up for lost time.

Marcon

ILoveSkaMusic said:

Just thinking about it, as i'm a similar age. There's a very strong chance that much of OP's working life has been spent without paying into any workplace pension simply because they weren't a legal requirement until the tail end of 2012.  

I know that I have to make increased contributions to make up for lost time.

That's already been suggested - as you say, there's a strong chance OP may not have been in as many schemes as she believes. Pity @Myrtle77 doesn't seem to have come back to take advantage of the helpful comments on this thread, especially the post of 7 August from @universidad which is both informative and should make her feel better.