The other side of a flippant and immature mindset. First steps. Could be long.

BrotherUuurgh

Apologies if this is the wrong forum, but this is mostly pension related so felt it the best fit... I'm feeling more and more stressed so need to get this off my chest at the very least.

My teens twenties were an overall terrible time for me. I can honestly say that. Without a life story, I got sucked into the darker side of the big boy's world. Smoking, alcohol, gambling, payday loans, the law and all those joyful things were in some way a significant part of my life, and really helped shape what this period in my life became.

After an ultimatum delivered to me by the universe itself, I found a rock bottom but some stability as well. These years left me with a real hateful, selfish, ignorant outlook on life, as well as a five figure debt. I'd been in and out of work, paid small amounts into various workplace pensions but eventually opted out of them because I'd need the cash more. I won't make it to retirement age. Even if I do, the Government will HAVE to keep me. I'll have paid all my taxes, it'll be time for them to pay for me. Blah blah blah. I'm currently 32 with an effectively zero pension pot and five figure debt again. 

Up to today, I've gradually shifted this parasitic mindset and I'm now seriously thinking about things. How to play the big boy's world game properly. My personal finances are now dominating most aspects of my every day life. I'm actively clearing my debt, making overpayments, refinancing to better rates, my reckless spending is hugely reducing. I'm starting/learning to form good saving habits, and thinking about my financial future. The first few points are a relative walk in the park compared to preparing for the future. This is why I'm posting here to start to draw on different points of view, advice, experiences to try and get a better understanding of where I am now, where I want to be, what it'll take to get there. So, I believe I could commit to one or the other here - a property or a pension. I am doubtful of being able to achieve both, but to do one or the other to a good standard would be enough for me. I struggle with articulating my thoughts properly and critical thinking as it rapidly turns into stress and anxiety so please bear with me.

Questions, thoughts, in no particular order:
1) I'm trying to start to figure out what sort of final pot value I need to aim for. Let's say I'd like today's standard of living when I retire. When I use calculators to forecast a pension pot, and I input that I'd like £30k/yr, is this number the same as £30k in today's value of £30k? eg, £100k 100 years ago was only £100 or whatever..? Will I actually need to aim for a higher annual amount than that to account for inflation? Whichever one this is obviously makes a huge difference to the overall approach required, and how realistic this number might be.

2) I'm currently enroled in my workplace pension (WP). I salary sacrifice (I think, I'll have to check) 5% and my employer contributes 3%. According to PensionBee's calculator, with compounding interest and State Pension, the pot would be around £154,000. It won't even last 10 years. Sweet. I could double my contribution, sure, I could even triple it, but even then, at £360,000 it'll only last 20 years. That level of contribution would start to have an impact on everyday life, with the cost of living and all. This is even without a 25% TFLS. I'm not convinced that the SP will be a thing by the time I reach retirement, so that figure will be even lower still. I could 5x my contribution and end up with a half a million pot that lasts past my 100th birthday, but then I won't have a great quality of life in the mean time, and probably not even at retirement with the state my body will be in. It just seems bleak. Is the workplace pension worth hitting hard? Then there's the "how do I buy a house" thing...

3) At 32, I feel like it could be too late to purchase a property. I'm not sure how I could get a good enough deposit together to buy a house. Rates are high, prices are even higher, but I could make it happen for the right house. Thing is, with the deposit, mortgage and other ongoing costs, it'd probably have to be my sole focus financially. A proper pension would probably suffer. With a tiny pension as a result of the costs of owning a property, I'd have to use the property itself as a pension - sell it, cash in and live off that money. Is this an option? That makes me think, what's the point in it all in the first place? I could probably suffer it though, if I could build a sizeable pension on the side, but I really do doubt it's doable.

4) I honestly believe I'm going to have to retire early due to health. My back is already causing significant issues in life and I don't think it'll ever get better. I don't like the idea of having to live off benefits if that time comes, so I'd like to have something on the side that's accessible immediately - something like a cash ISA. Top of my head, I could pour spare money into a S&S ISA to try and force some growth, then nearer the time transfer it to a normal cash ISA to protect it from losses. As I understand it, it's a savings account, the money that's been paid into it has already been taxed, and anything and everything that is withdrawn from that account would be tax free. I could draw on that essentially at any age. I feel like this might be the most suitable contingency for forced early retirement?

Sorry if this is a little hard to read and understand, I just wanted to get my thoughts out and get a dialogue going. To start to actively plan and do something about my retirement before it's too late. My thoughts come out best when I'm in conversation and others are asking me questions. I just need some help. I've always needed help.

Just a last note, I've signed up to PensionBee to trace those small WP pensions from previous employers and put them into one place. I'm hoping this small pot will be a useful tool to help me learn a bit more about pensions as a whole, investing the money in the right way etc. Thank you so much for taking the time to suffer reading this.

MiserlyMartin

It's late but and I should sleep really but I'll do a quick reply, especially as I have been a little bit down your road in the past. I went through a period when I got very annoyed about people who have never worked and will end up with the same state pension as I will have, yet when I go into care I will have to sell my house to pay for the care, and they will get it all for free as they have always done. SO started to think about how I could give up work and do nothing, be employed like they are (most of the people on my street), and not be means tested on savings because I would have spent it all. I don't think that way anymore and now concentrate on maximizing my private pension (growth and contributions) and planning for what hopefully will be my early retirement and getting out of the UK which is going down the pan rapidly now.

First thing you need to do is get rid of the debts before anything else. Well done for doing what you have already achieved!

However! You can only max out a private pension while you are working, so put a sizeable chunk in there together with getting out of debt (in case you stop working) When you are out of debt you can increase your contributions. If you are later unable to work they cannot touch your pension unless you draw it early. Don't have more savings than the means tested level for any benefits if you did need to stop working due to illness. (6K?) Assuming you wipe out the debt. Put it in your pension if you have any spare or buy essentials that you needed anyway, car?

All the best,  I'm sure others will come up with other ideas for you, but this gets the ball rolling,

BrotherUuurgh

It is indeed late, I start work in 4 hours but at times I get these periods of deep thought and just can't get settled. We did share a similar mindset - worrying about others' circumstances, issues, tactics does us no good in the end. Much better to focus on looking after number one. 

My debt will be gone by Christmas '25, earlier if I can keep the OT coming in. It's not such a long time away so I would like to have at least a rough idea of what to do when DF date comes - I've already wasted 14 years. 

I had been on welfare for around a year and it was awful. I never want to be in that position again so want to try to do everything I can to build a pot so that I don't have to claim - I'd rather use my own money. Don't need to worry about what I do or don't have to prove to the government that way. I want to be fully self sufficient when the time comes. 

Thank you for stopping by, I appreciate it. 

powerspowers

I think a property can give stability but also has its own costs such as maintenance. Where you live and the affordability of a property will make a huge difference. One step could be opening a lifetime ISA which can either go towards retirement (from 60) or a property.l with a nice government bonus.  You can draw it out for other reasons, but will pay a penalty on it. 

You mention your back and worry that you won’t be able to work to retirement age. Could you retrain? My other half went from a manual job to health& safety, or there’s options such as college lecturing if you’ve got a trade. Much gentler on the body! Lifestyle changes such as losing weight, stop smoking if you do and doing strength based exercise will all help as well if they are areas of concern!  

Good luck, maybe think of a few small steps to work on rather than trying to do everything at once.  You’re doing great with paying off your debt and tracking down the pension pots. Keep us updated. 

BrotherUuurgh

The overall cost of owning a property is what I imagine would shortchange my pension. I could definitely keep a house going, but I wouldn't be building a pot large enough to retire on. The value of the house would likely increase, but then to retire I'd need money so would have to sell, so might as well skip the owning a home altogether? At the same time, the thought of renting all my life in social housing isn't so inspiring either.

I think a LISA could be a good option. With the government 25% it could build quite quickly. It would give me the option of a mortgage deposit if things improved financially, and if not then it's not wasted, it's still a requirement fund.

As for looking after my back, I aim to be off the tools by the time I'm 40 as I think that's all my body will realistically be able to take. I could go into more managerial roles in my current trade for sure, but that will take some time. It might also restrict my earning potential as I doubt I could pull the same sort of overtime hours as being an engineer. I am planning around the devil I know - I may be stuck on the tools forever, who knows. Also as far as lifestyle, I am cutting back significantly on the snacks and poor food in an effort to lose weight, cutting down on the vaping, but am very nervous about getting back in the gym. At my prime I was looking good, feeling great. I'd love to get back on the weights but maybe that's just something I have to leave behind. My mental state is really holding me back regarding this, I'm still battling.

Indeed small steps needed, which is why I'm here to staye to get a dialogue going and to learn some things. Thanks for stopping by. 

Marcon

BrotherUuurgh said:

Also as far as lifestyle, I am cutting back significantly on the snacks and poor food in an effort to lose weight, cutting down on the vaping, but am very nervous about getting back in the gym. At my prime I was looking good, feeling great. I'd love to get back on the weights but maybe that's just something I have to leave behind. My mental state is really holding me back regarding this, I'm still battling.

You don't have to leave it behind (unless you really want to), but that doesn't mean you have to do it 'now'. What are you nervous about - how you look? That fact you can't currently match your previous superman performance in the gym? Worry that everyone else is going to look great and be superfit? 

The link between increasing physical activity and increased mental wellbeing, and weight loss, is too well proven to ignore. Exercise doesn't have to be done in a gym... if you google on 'exercise without going to the gym' you'll get masses of links and something might appeal, if only a brisk walk in the local park. Your local authority might run guided walks or similar, often free or for a genuinely small charge.

Also plenty of stuff online which can be done at home. Yoga, pilates or similar can be particularly helpful in boosting mental wellbeing, if you can just bring yourself to actually get on and give it a go.

LHW99

Don't forget that you will get state pension at some level at 68 or so. In todays money that £11k+.

You pension fund will also increase as you get pay increases, and as what they are invested in go up in value. Many calculators are very conservative these days, so you could well have a bigger fund at the end than is predicted.

Do you know what the work pension is invested in? If you don't make a choice, you will have the "default fund" which will not be the worst, but won't necessarily be the best. With time till you retire, you could look at what other funds are available. People here could probably comment about them - but that will be opinion, not "advice".

BrotherUuurgh

I'm not as nervous about how I look versus potentially aggravating my back injury. I couldn't care less about actual numbers that I could lift either. I think deep down I'm terrified of proper nerve damage so steering clear of factors that would be likely to contribute to that. At least, while I'm focused on one thing, something else has to give. I just haven't got it in me to properly focus on more than one thing, and it tends to be that one thing will be tunnel visioned, laser sharp focus. While that is finances, my fitness and health suffers a bit. Overall, once my finances are on track and semi-automated, I can then pay proper attention to these other things. I agree entirely that physical activity is the best antidepressant. 

Marcon

BrotherUuurgh said:

I'm not as nervous about how I look versus potentially aggravating my back injury. I couldn't care less about actual numbers that I could lift either. I think deep down I'm terrified of proper nerve damage so steering clear of factors that would be likely to contribute to that. At least, while I'm focused on one thing, something else has to give. I just haven't got it in me to properly focus on more than one thing, and it tends to be that one thing will be tunnel visioned, laser sharp focus. While that is finances, my fitness and health suffers a bit. Overall, once my finances are on track and semi-automated, I can then pay proper attention to these other things. I agree entirely that physical activity is the best antidepressant. 

That's an excuse, not a reason - and yes, we all do it!

Find out from a medical professional the types of exercise which are likely to exacerbate your back problems, and those which are 'safe'. Having that knowledge isn't going to distract you from your laser focus on your finances - but it could clear the way for things which are actually likely to be beneficial for your back.

BrotherUuurgh

@LHW99 - State pension would be a good addition to overall retirement but I can't shake the feeling that it won't be a thing in 36yrs time. I feel the same way about the state pension as I feel about never wanting to be on benefits and to have contingency. I'd rather plan assuming worst case as I know I'm covered. Don't get me wrong here, I'm not being argumentative - I have been told I can come across that way - by asking questions back and explaining a bit of my POV is how I will learn. I appreciate your input. Would it be a better idea to take it for granted that SP will still be a thing?

@Marcon - you sound like my dad! I understand your phrase very well, heard it a lot. What happens when I go to the gym (after not going for a while, falling off the wagon as it were) is that it starts to become another laser focus. I can't seem to help or control or allocate my levels of focus properly. It's all or nothing with me, and so introducing the gym will hurt my current financial goals. I need to get this debt gone and can't lose that focus, not yet. When money is in a better place, I can start to think about physio or chiropractors, not just constantly taking pain relief.

Back to pensions - how would a LISA compare to a personal pension like Pensionbee? Could I choose a S&S LISA and select the level of risk on investments like I could with PensionBee? 

Storcko14

Re exercise - as Marcon says there will likely be something you can do that could potentially help or at least not hamper your back.  You could think about something low impact like cycling. I volunteer with a social ent that refurbs old bikes and organises led rides, training etc. and, through this, I've met several people with horrendous back stories (from refugees escaping the most horrific circumstances to addicts re-building their lives) for whom cycling has been transformational (mental & physical health, social, transport, financial).  It might not be cycling for you but there will be something.

As for your finances - you're young still and you sound smart so think about investing in You.  As others have said maybe further education or re-training is worth consideration.  Have a hard think about your skill-set and experience to date too.  It's quite likely you have more in the way of transferrable skills than you think so if you can, seek out someone who is qualified to help you with this.  I can tell you from personal experience that re-training for a growth industry or a career where job supply/demand works in your favour can make a massive difference financially.  For me it was moving into an emerging IT field at 30.

The key thing is you're facing into things so I feel positive for you.