Thinking about retirement...

SpeckledJim

... And panicking!

Hey folks. Long story short, I'm 34 in February and thinking about the future.

I'm married, two secondary school-age kids, renting, in full time employment.

Looked at my Peoples' Pension pot and it looks dire to say the least. 

I don't mind being completely transparent with current costs of living and salary details if it helps you give me more accurate advice.

I would really love a pension that pays about the same as my salary, given that I likely won't be able to afford to buy a house until my parents die and my Mum's only 65. If she lives to 90, the mortgage payments will be astronomical because I'll be that much older.

I'm really in a bind here. I already feel like my kids have had less than half the childhood I had, all due to my financial circumstances (nothing complicated but it seems like a constant battle of kicking can Z down the road far enough until I can pay X and Y).

I just don't know where to start with it all. Honestly, any help with prioritising my thoughts here would be awesome. 

hugheskevi

There is an inescapable truth, that you will either actively or passively select a balance between the following:

• Saving more
• Working longer
• Being poorer in retirement

Looking to increase income will help a lot with being able to save more, and using existing resources more efficiently (ie optimising investments) can provide a one-off gain. After that, you end up choosing between working longer and being poorer in retirement, and in many cases ill-health eventually takes that choice away.

Another uncomfortable truth is that if you put peanuts into a pension, you will get peanuts out of it. But to put decent amounts into a pension you need to be in a position where income is comfortably above expenditure. So that is either going to require increasing income, or reducing expenditure, or a combination of both.

Putting all, or at least decent proportions of future pay increases into savings/pensions will help over time. 

So consider how to reduce expenditure, optimise existing assets, consider if there is any way to increase income (new job, second job, some form of side hustle, stoozing, matched betting, and so on) and in the longer-term keep increasing pension contributions with each income increase. That will grow the gap between income and expenditure, enabling greater saving, enabling greater pension, LISA, or SSISA contributions (whichever is most efficient depending on personal circumstances).

There is a Reddit Finance Flowchart which is very helpful in going through all the steps required.

Albermarle

Your pension worries are understandable, but in your position I would probably thinking  about buying a house as more of a priority.

One obvious way out of the issues you face is to get a better paying job. Is there any possibility of that?

crv1963

I agree with the posts from hugheskive and Albermarle. However on the plus side you are relatively young and it is good that you're looking at the pension provision now. You say you're married so I suggest that you view it as a joint effort- even if your other half isn't really interested in the detail.

When I looked at our provision I looked at both of our "pots", worked out our needs- essential, desirable and wished for, they can be considered as minimum, middle of the road and luxury pots. Once you know your target income level you will have a sum to aim for, start planning so that you minimise joint tax bill on retirement, no point one of you being higher rate tax payer and the other paying no tax.

Do take into account the State Pension in your calculations. Don't consider/ rely on an inheritance, there are too many things that can swallow that up before you get it. 

Don't compare your childrens childhood with your own- you were brought up in a different era/ circumstances, simply do the best you can. I'm considerably older than you and in my childhood everyone was playing out until dark and calculators were banned from school exams and computers were not a part of education! So you can only bring them up in the era they live in.

SpeckledJim

Thanks folks. It really is the cold, hard truth of it in that where-ever there's a push, there must also be a pull.

Feel like we've been on near-bread-line levels of money since COVID! That said, my wife is a student midwife and just looking at the black and white of it, it would seem that in our 5 year outlook, our household income will rise again at least!

I work in a pretty niche field regarding construction regulation and energy performance and while my base salary (28k) is so-so, over time and out of hours opportunities adds up to maybe another 5k annually. This is another area I feel completely behind the curve. I work far too much for too little! Though, I'm sure most would agree with this sentiment so I can't be alone on that one.

I've been caught unprepared (financially speaking) my entire life, but I have responsibilities these days. I don't owe it to my future self, my wife, nor my children, to be unprepared again.

Thanks all for hearing out my disjointed ramblings, anyway. I'll sit down later with a cuppa and read through your replies in more detail when I've got a little longer to contemplate.

SouthCoastBoy

If your wife has a relatively long career in the NHS she will be the beneficiary of a very good pension which could go some way to alleviating your pension concerns. 

Rich1976

How much percentage wise are you paying into your workplace pension?
is there any scope based on affordability to increase this without overstretching yourselves each month?
what fund is it in? Does it have a decent amount in equity? Some work place pensions are far too cautious, so the bigger the equity percentage the bigger the growth should be over the very long term but there will be big falls along the way.

you are not alone in your fears of the future. Most of us are in the same boat and pretty much need the state pension to be able to retire comfortably, which means working until 67 or 68. I earn less than you and had no access to an employer pension until employers were forced to pay into one about 10 years ago. So most of my career has meant I’ve had to pay mostly my own contributions into a pension.

At 34 you have potentially 30 years to make good so don’t let it overshadow the rest of your life. 

As others have said, I would try and get on the housing ladder as quickly as possible as you don’t really want a mortgage remaining when you do come to retire. And if you are still renting in your 60s then that will be a big percentage of your retirement income swallowed up.

Albermarle

I work in a pretty niche field regarding construction regulation and energy performance and while my base salary (28k) is so-so, over time and out of hours opportunities adds up to maybe another 5k annually. This is another area I feel completely behind the curve. I work far too much for too little! Though, I'm sure most would agree with this sentiment so I can't be alone on that one
£33K is about the average salary, which is probably why you are struggling financially, as your wife is presumably not on a decent salary yet. Plus two teenagers of course !
If you work in a niche area, is there a shortage of people in the field, so vacancies elsewhere? Or any chance of any training courses to make you and your skills more niche, and therefore more valuable?

SarahB16

Albermarle said:

Your pension worries are understandable, but in your position I would probably thinking  about buying a house as more of a priority.

One obvious way out of the issues you face is to get a better paying job. Is there any possibility of that?

+1   Yes, I agree. 

SarahB16

SpeckledJim said:

Thanks folks. It really is the cold, hard truth of it in that where-ever there's a push, there must also be a pull.

Feel like we've been on near-bread-line levels of money since COVID! That said, my wife is a student midwife and just looking at the black and white of it, it would seem that in our 5 year outlook, our household income will rise again at least!

I work in a pretty niche field regarding construction regulation and energy performance and while my base salary (28k) is so-so, over time and out of hours opportunities adds up to maybe another 5k annually. This is another area I feel completely behind the curve. I work far too much for too little! Though, I'm sure most would agree with this sentiment so I can't be alone on that one.

I've been caught unprepared (financially speaking) my entire life, but I have responsibilities these days. I don't owe it to my future self, my wife, nor my children, to be unprepared again.

Thanks all for hearing out my disjointed ramblings, anyway. I'll sit down later with a cuppa and read through your replies in more detail when I've got a little longer to contemplate.

Home ownership needs to be your priority ahead of your pension. 

Firstly, the good news in my opinion the housing sector/construction is going to boom over the next 10 years (this is a non-political comment and I'm not going to engage in a debate on it).  

If I were you I would undertake the MRICS qualification (it's not that difficult) and in a few years with MRICS I think you could easily make £40-£50k however when people realise you also have the construction regulation and energy performance skills this will help.  I see numerous MRICS or (FRICS roles, i.e. 5 years post qualifying) offering c.£60k per annum and £70k is not unheard of. 

I think you need to become less specialised and be prepared to move around (different companies) because as I said the housing sector is going to boom as you only have to listen to what Angela Rayner says but you are missing the MRICS qualification.  

LHW99

Just keep plugging away. Life goes through stages, so does the ability to pay into a pension. You've made a start, and are thinking about things which many don't bother to do until much later when they've less time.

Every time you get a pay rise, see if you can increase your pension payments a bit - even if it's only a pound or two it helps. If you could save half your pay rise (split between savings for a house / pension), you will do well.