Pension Pot

Crescent1980

Hi all,

I'm 46 years old and, if all goes to plan, would ideally like to retire around age 65. My wife is six years younger than me, which is also a consideration in our longer-term planning.

Over the years I've accumulated five different pension pots through a combination of job changes and company mergers. Since the age of 20, I've consistently contributed 10% of my salary into workplace pension schemes and I'm currently contributing through a salary sacrifice arrangement. Across my pensions, the total value is now around £190,000, with approximately 19 years until my target retirement age.

My mortgage should be fully repaid in 2032, and my intention at that point is to increase my overall pension contribution to around 15% for the remaining 13 years of my working life to help boost my retirement savings.

For those who are retired or have been through similar retirement planning exercises, does this sound like I'm on a reasonable path towards a comfortable retirement, or would you be looking to increase contributions earlier if you were in my position?

Any thoughts, experiences, or observations would be greatly appreciated. Thanks in advance, and please be gentle as pensions aren't my strongest subject!

eskbanker

The key thing is to plan how much you'll need to be bringing in from all sources post-retirement and then work back from that to establish how much you need to be contributing to pensions before then…

daveyjp

An approach to consider is turning the calculation around. What is your ideal annual pension?

Once you know that you can then calculate how much you need to save to achieve a pot large enough to generate that income. £190k at your age is a healthy start to be at £500k plus by retirement.

MallyGirl

are you overpaying the mortgage or just paying the mandatory amount? If overpaying then I would switch the focus to the pension to give it longer to grow.

Crescent1980

@MallyGirl We aren't overpaying the mortgage and haven't since my children started primary school as we wanted to use the extra money for holidays and experiences for our boys

kempiejon

Recording itemised spending for 3 years was my starting point for how big a pot is needed. One can look at today's spend, see what might be reduced and what indulgences one mught hanker after. I classed my spending as esential, wanted and extravagant. I'd prefer more extravagant in retirement and was prepared to sacrifice some spend to defer gratification.

10% was a good start in your 20s, but with age and watching pot growth increasing contributions for the decades leads to more post work fundings. For those in their 40s one of the rules of thumbs is half your age as %age of your gross salary so 10% might be a bit short. There would have been employer contributions too? Of course without a forecast budget hard to say how much more exactly might be needed.

I'm 46 years old and, if all goes to plan, would ideally like to retire around age 65.

When I was 35 I wanted to have ideally already retired. Would you really think it ideal to work for another 20 years. It gives you plenty more time to build a pot. Crack on, a pal of mine is defined by their job and would often rather be working than with the family unit. If that matches your personality then working until around 65 so 20 more years at work a tidy retirement can be planned for.

GunJack

One thing to consider is that you've got far more already than the majority of people will have at retirement so good on you 🙂

The other thing it may be orth doing is looking at all your various pensions and see if there's a gain to be had from consolidating some or all of them into one place, might be for lower fees, better investment choices, etc. It'll take a bit of work but could end up helping at least by cutting the admin burden…

Crescent1980

@kempiejon

Thank you, that's really helpful. I'll start tracking my spending so I can get a better understanding of what my retirement income needs might look like, including what expenses could reduce over time and which little indulgences I'd still like to enjoy.

The rule of thumb you mentioned is particularly useful. For me, it's about finding the right balance between paying down the mortgage, increasing pension contributions, and making the most of the years I have with my family. I didn't have much of a childhood myself, so it's important to me that my sons have opportunities to enjoy theirs. I appreciate that creating memories isn't always about spending money, but I do value the experiences and adventures we can share together, whether that's in the UK or travelling abroad.

I'm only using 65 as a rough guide for retirement planning at this stage. My wife is six years younger than me, so if I were to retire at 60, she would be 54 and would likely still be working full-time. That would inevitably limit some of the things we could enjoy together, which is an important consideration when thinking about my target retirement age.

Veloflyer

If it were me…….If you are a higher rate taxpayer, then I'd be sticking as much as I can in the pension and claiming back the higher rate tax relief. I believe you can also backdate.

If not, then I'd echo other posters' advice.

Get rid of the mortgage asap….

Crescent1980

@GunJack Thanks, i am currently working my way through the differing plans and checking their performance, benefits, charges/fees, flexibility etc. I've just finished registering with all my providers apps bar one due to its age is paper records only.

Brie

And how is the planning of your wife's pension going? Is she following the same system as you? And presumably you've both checked that you are on track for your state pensions too??