size of final pension pot

I'm not sure what my exact question is to be honest, but I was reviewing my pension and wondered if my final aim of pension pot was realistic and actually the right way to look at things.

I earn about £55k a year. I am 42. My pension contributions are to my workplace pension and in total I pay in £800 per month. My pot sits at £113k ish. I always thought I would retire at 60 but it isn't fixed. So have been assuming 30 years in retirement.

I am not on track to meet 2/3 of my current salary in retirement because then I would need a pot £1.1m (36*30) obviously SP kicks in at 68 reducing my pot size requirement by 183k over 22 years but I am still well short.

At 18 years to go to retirement, assuming I don't pay in any more and 0% growth i can only pay in 173k taking my pot to 286k and giving me 9k a year until SP kicks in. If I split it equally over the 30yrs.

There isn't a lot I can do about it I suppose. But get concerned that the number is so much less than my salary and yet feel I put quite a lot away.

Matt
«13

Comments

  • Is that £800 per month including any employers contributions?

    Assuming 0% growth is unduly pessimistic. Even with a relatively low growth assumption of 3% per annum on average, that would give you a pot of more like £410k at 60.

    Depending on your situation, you may not need 2/3 of your salary anyway. For example you may have already paid off the mortgage, kids may have left home etc.
  • Comparing to your current salary and lifestyle isn't reasonable though...you will almost certainly need a lot less when you're older. And, why would you work on the assumption that you're not going to contribute anything else? You won't know how you feel about retiring at 60 until you're 59 so I wouldn't be so hard and fast about it now.
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  • kidmugsy
    kidmugsy Posts: 12,709
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    Contribute enough so that you (i) maximise employer contribution, and (ii) avoid higher rate income tax. You'll then be in a good position. Don't worry about your sums: they are rubbish.
    Free the dunston one next time too.
  • Tom99
    Tom99 Posts: 5,371
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    If £800pm is the gross pension payment out of £55k pa then you are very nearly using all your 40% tax relief so much of an increase will only get you 20% relief.
  • Alexland
    Alexland Posts: 9,653
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    edited 12 November 2017 at 9:27AM
    Echo the comments about factoring in modest growth say 2% above inflation and fees. But yes your private pension will still be a low proportion of your current salary. The good thing is that you have realised it now before it is too late.

    Have you done a plan of your routine and exceptional spending in retirement. Don't forget to include replacing cars, carpets, kitchens, bathrooms, drives, boilers, etc.

    We are younger with bigger pots (on average) and still contributing a lot more (on average) each month. Our employer does salary sacrifice so we also save the NI.

    30 years retirement is 360 missing paydays!

    How annoying would it be to miss just 3 paydays?

    Alex.
  • thanks all for the advice. yes i guess i was being overly cautious with my sums. whether this is because of all the negativity surrounding saving for retirement i don't know. your posts are certainly much more positive and i will re-look at my sums and what my plan of outgoings might be in the future.

    yes the £800 includes my employer contributions and taken out before i get paid.
  • crv1963
    crv1963 Posts: 1,372
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    matty2767 wrote: »
    thanks all for the advice. yes i guess i was being overly cautious with my sums. whether this is because of all the negativity surrounding saving for retirement i don't know. your posts are certainly much more positive and i will re-look at my sums and what my plan of outgoings might be in the future.

    yes the £800 includes my employer contributions and taken out before i get paid.



    At least you're looking at it now so can then do something about it now. If you need half to two thirds of your salary as a retirement income (and everyone is different in their spending) then if possible try to save a bit more.


    I put 2% of my salary additionally away for a few years in an avc, then had to stop contributing but even so it's grown! Have a look at your options- i) if you pay extra to your pension will your employer match these? ii) can you buy additional pension in your scheme? iii) is an avc worthwhile? iv) is a SIPP or PP worth thinking about? v) are ISAs an option. In our circumstances pension contributions are our option because of the govt. tax rebate into them but everyone has different ideas of what is best for them.


    Have a look at the thread "What's the Number" I found it a good starting point in our planning and we took an hour or so working ours out, although we have discussed our ideas/ wants and dreams for a long time about our retirement.


    Think of a few ideas/ options and post into this forum for some advice- I did and the very knowledgeable and helpful contributors here helped me formulate our plans a few months ago and we're 12 years older than you!


    Good Luck
    CRV1963- Light bulb moment Sept 15- Planning the great escape- aka retirement!
  • Alexland
    Alexland Posts: 9,653
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    edited 12 November 2017 at 1:18PM
    I agree £800 combined contribution sounds a lot but it's only 17.5% of your salary and possibly an even lower proportion if you get a bonus, car, overtime, etc. Even after your employee deduction you are still on around double the national average wage so surely it must be possible to contribute more?

    This year between the two of us we are contributing around £60k into our pensions, £8k into our long term LISAs, £4,128 into our son's JISA and leftovers into our ISAs.

    My basic is not much higher than yours, my wife works part time at a lower rate, we somehow cover 24x7 childcare ourselves (really not easy, not started school yet) and are repaying a mortgage so it is possible if you really want the outcome and are willing to work very hard for it.

    Alex
  • Matty2767

    I think we are in a similar boat savings-wise.

    I earn £42K per year. I'm 43, contributing a total of £750 a month into a pension pot which has a value of around £137000.

    My plan is to retire at 60 at the latest on around £20,000 a year in today's money

    I know this is a stretch but I'm hoping I will be able to increase my saving rate once I have the mortgage paid off in 5/6 years.

    Just to echo what other posters are saying:

    - I'm hoping for a growth rate of 2% - 3% above inflation on my pension fund.
    - I'm expecting my expenses to drop dramatically one the mortgage is paid off and the kids start to move out.
    - Do look in the 'Whats your number' and Early Retirement threads. There are some great thought provoking posts in there.
  • MallyGirl
    MallyGirl Posts: 6,564
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    LAPORTS1 wrote:
    I know this is a stretch but I'm hoping I will be able to increase my saving rate once I have the mortgage paid off in 5/6 years.

    Just to echo what other posters are saying:

    - I'm hoping for a growth rate of 2% - 3% above inflation on my pension fund.
    - I'm expecting my expenses to drop dramatically one the mortgage is paid off and the kids start to move out.
    .

    If you are overpaying the mortgage to pay it off early you would be better off pausing that, paying extra into the pension for a while and letting its growth benefit from compounding, and then resume paying off the mortgage.
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