Pension Planning age 57

13Kent

I currently have a pension worth just over 10k a year, plus a full state pension. I am self employed and the last few years I've been regularly contributing £100 a month to an Aviva pension. It's currently worth about £2500 a year. In the last year my income has increased and I am in a position to pay more into my Aviva pension, but at 57 I am wondering if it's worth doing so? My husband has a good pension. We are not in a position to retire yet still having a mortgage to pay for 9 years  (currently on 1.75% but will increase next year) and also having two dependent children one of whom may be looking at University in a couple of years. We also have a couple of loans, one with 2 years left to pay, one with 3 years left to pay. Not sure if it's best to pay those of first, or to pay some towards those and top up the pension,  Just trying to work out how to make the most of my increased income. Any advice gratefully received. 

Mark_d

Your mortgage is at a low rate so I wouldn't advise making overpayments.  If your loans are costing a significant interest rate than paying those off should be a priority.  After that I would put the money into pension.

I think the children need to make a careful decision about going to university.  Is it worth investing £20,000 in an education, if that education means you get a salary of £30,000?  Depending on the chosen area of work, maybe an apprenticeship would be a better way to go.  Either way, my view is that the children should become self-sufficient soon after they leave school/college.

dunstonh

I currently have a pension worth just over 10k a year, plus a full state pension. I am self employed and the last few years I've been regularly contributing £100 a month to an Aviva pension. It's currently worth about £2500 a year

You references to £xxx a year is not how you would normally refer to pensions unless it is a defined benefit scheme.

With defined contribution schemes, the income amount is subjective.  e.g. are you using drawdown, are you using level annuities, indexed annuities (and what indexation), what death benefits are you including etc.  The range is so big that referring to an annual amount is pointless.   Especially if you are using statement projections, the whole thing is based on assumptions that are pessimistic and shown in today's spending power.

 In the last year my income has increased and I am in a position to pay more into my Aviva pension, but at 57 I am wondering if it's worth doing so?

Of all the "savings" options, the pension is the best.   

The mortgage rate is so low that its not worth paying that off early.
The other debts may or may not have higher rates (you don't say) but they are very short term.   

As it stands, there is not enough info to go on.

13Kent

Thanks for your reply I just used the info provided on my yearly statement. I've no idea what the rest means, sorry! 

MeteredOut

13Kent said:

Thanks for your reply I just used the info provided on my yearly statement. I've no idea what the rest means, sorry! 

Assuming these are defined contribution pensions, your yearly statement should also have a current fund value and a projected fund value at whatever your retirement age is set to on your profile (probably 65). 

Bostonerimus1

13Kent said:

Thanks for your reply I just used the info provided on my yearly statement. I've no idea what the rest means, sorry! 

There are many people in a similar situation to you and, whatever their pension balances, they are not really in a good situation to retire because they lack understanding about their pensions. Your first step should be to do a detailed budget to see how much you spend. Then learn about your pensions. Are they Defined Benefit or Defined Contribution. Most pensions are now DC and if this is your case find the current balance and understand the investment funds inside it. Then you will be in a position to estimate how much you might be able to withdraw in retirement and see how that matches with your income needs. Don't forget to include any State Pension you will get. If you have a DB pension than you'll get regular payments and don't need to do anything else. So do some research and get back to us.

I don't like that you have outstanding loans, what is the interest. If it is high you should pay them off asap.

MetaPhysical

Absolutely it is worth paying more into your Aviva pension, assuming you have the spare funds and earnings to do so.  Where else will you get 25% added to the amount you pay in for free?  It's worth even more if you are a higher rate tax payer.  It is a no brainer.