Is it worth me starting a pension?

edited 30 November -1 at 1:00AM in Pensions, Annuities & Retirement Planning
8 replies 1.2K views
MMO_3MMO_3 Forumite
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Hi all. I better start off with saying I know nothing about pensions!

I'm 32 with no pension (I think I paid into one at work for a year maybe, I did cash one in once at another job). I have no savings or property or assets but have a credit card debt which we hope to pay off in 1-2 years.

I'm not working at the moment so its a bit of a moot point but I'm starting to get worried about not having a pension and want to find out about them.

Is it worth me starting one now or is it too late? Should I think of other ways to save/invest for the future?

What sort of contributions do you have to make and how much would you get when you retire? I.e. put in £500 a month now and get £2000 per month when I retire. Or does it not work like that?

Any help much appreciated!

Thank you.

Replies

  • ShimrodShimrod Forumite
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    The starting point for your question is what income do you need in retirement to live on? Have a look at this thread http://forums.moneysavingexpert.com/showthread.php?t=2146737&highlight=the+number for some ideas of what costs other people have considered need to be covered in retirement.

    Once you know what sort of income you want, have play with a pension calculator such as this one http://www.hl.co.uk/pensions/interactive-calculators/pension-calculator which will give you an indication of how much you will need to save each month.

    It's never too late to start a pension. You might need to adjust your ideas of what sort of lifestyle you will have in retirement the longer you leave it before starting the pension.
  • R_P_WR_P_W Forumite
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    well you probably have 30-40 years of your working life left so certainly not too late too start.
  • What a silly question, some people such as academics do not enter paid employment until their late 20s and you are barely older than this. Of course is it not too late to start! You have another 30+ working years ahead of you.
    Thinking critically since 1996....
  • atushatush Forumite
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    yes you should have and need a pension.

    But.

    You are unemployed and in debt. So these two need immediate attention.

    After you get work, start paying off debt and at the same time join your work place pension (as your employer will pay in along side you so this is known here are 'free money' you don't get if not int he pension).
  • MMO_3MMO_3 Forumite
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    Eighth Anniversary Combo Breaker
    Thanks for the links and replies. I will check them out.
  • dtsazzadtsazza Forumite
    6.3K Posts
    MMO wrote: »
    Is it worth me starting one now or is it too late?
    Well, it's not going to get any better the longer you wait. Even starting a pension a couple of years before you retire would give you more in retirement than not doing so!

    The main issue is about putting money aside for retirement. Arguably it's less important whether you do that in a pension or an ISA (or even a "bare" account, though you'd have to contribute more to make up for the extra tax you'd pay compared to the others).

    A pension is likely to be the best option, though - you get your tax back on any contributions in exchange for paying tax on your (likely lower) income in retirement. And there's no tax on capital growth (i.e. the amount your contributions increase), which over 30 years is probably going to be significant. If your employer contributes as well - and they will soon have to if they don't already - this is just free money on top.

    As others have said, play around with the pension calculators to get an idea of what you might get for various contribution amounts when it comes to retirement.
  • atushatush Forumite
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    Arguably it's less important whether you do that in a pension or an ISA (or even a "bare" account, though you'd have to contribute more to make up for the extra tax you'd pay compared to the others).

    Arguably, it is important- as in this case the OP is currently out of work. So any ISAs built up for retirement will/would have been (unlike pensions) taken into acct and made means tested benefits reduced/unavailable.
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