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48 No pension and panicking !

20 replies 2.3K views


  • DairyQueenDairyQueen
    1.2K posts
    1,000 Posts Third Anniversary
    The info you give suggests that you are a very decent bloke. You don't want to be a burden on your kids. You want your wife to 'enjoy' her pension. You don't want your part-ownership of parental homes to impact on the care your parents receive in their old age.

    All excellent aims.

    However, your's and spouse's priority for retirement is to ensure that your household income and assets are sufficient for both of your needs throughout the remainder of your lives. That includes the survivor of you two. It means that your wife's pension will be required to support the household. You are a partnership and it sounds as if her retirement income is likely to be higher than yours.

    A couple of things you mentioned were amber signals:

    You have only recently bought a house and have indicated that the mortgage duration is past your retirement age. Paying a mortgage in retirement is perfectly OK if you have sufficient income to sustain it, or plan to switch to a lifetime mortgage (i.e. equity release). Your pension alone (unless dramatically increased above your planned contribution) will not sustain a mortgage or rent in retirement.

    It would be helpful if you could give us info on your wife's pension as it's likely that her retirement income will be important to your joint wellbeing.

    If you part-own parents' property/ies and have now bought your own home then CGT raises its ugly head. Only your main residence is CGT-free.

    Your children are still young? If so, they will become more expensive to support as they hit teens. However, don't be tempted to divert savings for their non-essentials as they grow older. Your pension savings (lack of) are such that providing cars and house deposits. supporting through uni., etc. can be achieved only at the expense of an already minimal retirement income. These are the kind of temptations that you will need to resist to avoid becoming a burden on anyone in your dotage and ensuring that the retirement you want is affordable.

    Please check the link I attached in my earlier post. It provides a good indication of the level of income (net of tax and minus mortgage) required to support types of lifestyles in retirement. It indicates the kind of lifestyle sustainable on different incomes. It looks like you are aiming for somewhere between minimal and comfortable. Whether that's do-able will depend on your wife's pension and how much you are able to save between now and retirement.

    The good news is that you are on course to receive max SP. Is the same true of your wife? If so, then whilst you are both alive, and with wife's pension, your retirement aims look do-able. Having said that, the SP could make-up so much of your joint income that the survivor may struggle on first death.

    Good luck.
  • atushatush
    18.4K posts
    Ninth Anniversary 10,000 Posts
    pkpk wrote: »
    Would the Vanguard VLS60 be a good place to start? It can be bought through HL I think so there are options to choose other funds.

    It is fine, but given you have 0 pension, and are years behind, i'd be looking at the VLS80. More volatility short term, higher growth long term.
  • LHW99LHW99
    2.5K posts
    Seventh Anniversary 1,000 Posts
    To add to the positive - you started your business with debt - you have paid it off. That means you have persistance and organisational skills. Apply those to the next planning stage.
    Since you have children, I guess you will have been a major breadwinner when your wife was on maternity leave / the children were young? In retirement, as said above, think of yourselves as "Sam James plc" - you wouldn't run a business / self-employment without some outside input, even if its only a bank account / accountant. Don't expect to be the sole person in charge of your retirement finances, do it together as far as you can, and if the children are a suitable age, don't be afraid to talk about some aspects with them - may help you with some different viepoints and them in thinking of their own plans.
  • jsincjsinc
    232 posts
    Part of the Furniture 100 Posts
    DairyQueen wrote: »
    ...The Pensions and Lifetime Savings Association have published a very useful guide to retirement living standards and income. Note that the values given are net of income tax and assume no mortgage or rent payable in retirement:
    Thanks for the link. Breakdowns are really handy for mum's retirement planning
  • Anonymous101Anonymous101
    1.5K posts
    Tenth Anniversary 1,000 Posts Combo Breaker
    LHW99 wrote: »
    In retirement, as said above, think of yourselves as "Sam James plc"

    I tend to think this is a good way to approach life in general.
    I think of myself as a company. I have incomings and outgoings and need to cut my cloth accordingly whilst maintaining a level of service to both my customers (employer) and board or directors (family). It just gets me in the habit of thinking logically rather than spending emotionally like lots of people tend to do.

    Back to the OP - its great that you've begun seriously thinking about this now. Don't panic and don't beat yourself for not doing it sooner, you can't change that now but you still do have plenty of time of effect your future.
    As others have said, and back to the business analogy, you need to take stock and plan out what and when you'll have coming in in future and calculate what cash flow you require. Then go about hatching a plan to bridge any gaps.
  • enthusiasticsaverenthusiasticsaver
    10K posts
    Forumite, Board Guide
    Sixth Anniversary 1,000 Posts I've been Money Tipped! Intrepid Forum Explorer
    As others have said you can beat yourself up for not doing something about this earlier but some circumstances obviously made that difficult but make today the day you start to put things in place for the future. You know you are on track for a full state pension but that will only give you a very basic living standard.

    So start a pension. If you are self employed do you have an accountant? There are very tax efficient ways of saving for those who are self employed so exploring that and putting some sort of SIPP in place will maximise tax advantages and you can start to build up a retirement pot. Most invest in SIPPs and stocks and shares isas as a multi faceted way of funding retirement especially if they want to retire before 55 but realistically that is not going to happen for you so I would just focus on a SIPP.

    As others have said concentrate on reducing outgoings as the lower the outgoings the less pension you will need. The priority should be getting rid of the mortgage before you retire. That is for most the biggest expense and being mortgage free means your pension and investments/savings only need to cover living expenses rather than mortgage and or rent. Also don't take on debt and if you have any focus on getting rid of it. That is the biggest way to ensure financial stability whether working or retired. Learn to live within a budget.

    As you have children I would also focus on other means of saving as no doubt at some point you will have to help them with university, driving lessons etc. We could have retired 5 or more years earlier if we did not have children but helping them become financially independent and stable was important to us. We don't regret that but you do need to factor that into your future planning.

    I think someone else mentioned emergency savings account so if you do not have savings I strongly recommend that too.

    So in conclusion

    Live within a budget.
    Don't take on debt and pay off existing debt.
    Start a SIPP
    Save an emergency fund and a pot for the future.
    Overpay the mortgage.

    If you do all those things you will very quickly see the financial future looks a bit brighter for you.
    Early retired in December 2017

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages and Endowments, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to [email protected]
  • DairyQueenDairyQueen
    1.2K posts
    1,000 Posts Third Anniversary
    atush wrote: »
    It is fine, but given you have 0 pension, and are years behind, i'd be looking at the VLS80. More volatility short term, higher growth long term.
    I agree. The percentage of my portfolio aimed at drawdown in 15+ years is invested in VLS100. OH is also 100% equities on his long term portfolio. If OP resists the temptation to jump when the next crash hits then he should benefit proportionately by increasing equity exposure and perhaps moving a higher percentage into less volatile assets within 5 years of retirement.
  • AndyjfletAndyjflet
    205 posts
    Part of the Furniture 100 Posts
    Sam_James wrote: »
    To say I am grateful for these responses would be an understatement I have this lingering concern over me for some time but want to enjoy family life and dont want to find myself drinking the odd glass of wine here and there just to feel upbeat.

    Here is my situation with NI from the website

    24 years of full contributions
    19 years to contribute before 5 April 2038
    8 years when you did not contribute enough

    My goals
    In my retirement I have lots of low cost hobbies and interests to pursue, my main concern is not costing my children money or make them feel I am poor . I am not looking to go traveling or have luxury holidays etc both me and my wife are happy with simple living.

    We will of course have to maintain a car pay mortgage etc, house repairs and birthday christmas presents etc.

    My outgoings
    We got caught up in London on high rents when we had our baby and got stuck in the trap of not making a deposit to buy while paying the cost of living. We had to stay for my wifes job, we gave away £140K on rent in the last 7 years which should have been half way through a house but we are not, we just signed up on 10% deposit on £306K with £5K owed to parents to pay for stamp duty but we will have this back to them before January.
    No child care to pay out as i work from home and have them here.

    Working life
    I can happily taper down my work and be working late in years I guess something like 20K a year at 65 without too much stress health permitting, I wouldn't want to forecast past that but might go further.

    Other info
    My wife has a good pension set up but this is also part of my concern, I dont want to be funded by her or feel I am holding her back from doing what she can afford, but again we both have simple needs in terms of days out and what we see ourselves doing in retirement.

    Both our parents own their own homes split between 3 of us on each side but we always assume we might have to pay for care homes and see them out nicely so dont really add this into our plans.

    Many thanks any more info that would be a help let me know will start on the super advice given here and feedback as I go but in the space of one day I have moved very much forward in my mind..... Thanks every one !

    Nobody has to have a car payment ? save for a runaround when you retire. Or better still, now, then you can target any car payments towards your pension.

    Also you could work to pay off your house before you retire. Aim to retire say 68, 20 years left to pay it off ??
    Baby Step 1 - £125 saved for emergency fund
    M&S Loan £13658.32 inc interest full term
    M&S Credit card 0% £3600.79
  • Triumph13Triumph13
    1.7K posts
    Sixth Anniversary 1,000 Posts Name Dropper I've been Money Tipped!
    Overpay the mortgage.

    A lot of people will disagree with you on that one. 'Have a plan to clear the mortgage before you stop work' might be better. The best plan will probably be to pay extra into your pension then use the TFLS to clear the mortgage.
  • BLB53BLB53
    1.6K posts
    Its never too late. But a bit of catching up to be done.

    If I were in your situation:
    1. Open a SIPP with a low cost broker such as Hargreaves or AJ Bell

    2. Select a low cost multi asset index fund such as HSBC Global Strategy

    3. Settle on your risk profile - cautious, moderate or adventurous and invest accordingly

    Suggest get hold of 'DIY Pensions' by Edwards and work through practical examples.

    If above sounds too complicated then consider one of the Robo Advisers such as Moneyfarm or Nutmeg.

    The main thing is to get going...good luck!
    We have a climate emergency and need to re-think investing strategies to avoid sectors that are part of the problem such as oil & gas and embrace climate-friendly options such as renewable energy.
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