What age is too late

[dieseluser07]

To start a workplace pension.

I have just found out my new employer only has the one contribution option available which is 10% of my salary.

Im already taking a cut to come to this role and if i take that 10% off aswell i cant afford it. However in a few years (5 at most) my wage will be higher and i will be able to afford it.

My question is, if i start a pension at 35, is that too late? I know they say its best to start early, but at my age i want to enjoy myself a bit before i do get older.

[flight147z]

Have you taken tax and NI into consideration? If you are a 20% taxpayer, paying 12% NI, the 10% becomes 6.8% in essence as if you took the 10% as cash you would have to pay PAYE and NI on it.

[dieseluser07]

flight147z said:

Have you taken tax and NI into consideration? If you are a 20% taxpayer, paying 12% NI, the 10% becomes 6.8% in essence as if you took the 10% as cash you would have to pay PAYE and NI on it.

I did it on a salary calculator online, i put the percentage in the 'pension contributions' box

[2 sMoKiN bArReLs]

It's never too late to save up for the future. (and, unless you have a time machine starting now is the only option )

[dieseluser07]

Either way its still a good 200 pound less a month

[flight147z]

dieseluser07 said:

Either way its still a good 200 pound less a month

What does your employer put in? I maximised mine when I got to 24 - couldn't say no to the "free money". I increased mine at the same time as a promotion so I didn't miss the cash - could you do the same in the future?

[dieseluser07]

flight147z said:

What does your employer put in? I maximised mine when I got to 24 - couldn't say no to the "free money". I increased mine at the same time as a promotion so I didn't miss the cash - could you do the same in the future?

15%

That was my plan eventually (5-10 years max) so i will be 35-40 years old, just right now it would mean i have to budget too much and i want to enjoy my cash a bit while im young if that makes sense.

[flight147z]

dieseluser07 said:

15%

That was my plan eventually (5-10 years max) so i will be 35-40 years old, just right now it would mean i have to budget too much and i want to enjoy my cash a bit while im young if that makes sense.

Depends what you do with it really. I'm pretty sensible/boring - if I wasn't putting cash into a pension I would be pumping more into my house. I'd like to have an easy life of travelling when I'm old!

ETA 15% is good - I get 12% from 8%

[dieseluser07]

flight147z said:

Depends what you do with it really. I'm pretty sensible/boring - if I wasn't putting cash into a pension I would be pumping more into my house. I'd like to have an easy life of travelling when I'm old!

ETA 15% is good - I get 12% from 8%

I want to have a nice car and holidays for a few years before family etc gets in the way, 200 a month is like 2400 a year, thats a holiday and a lot of car maintenance/fuel, i just dont want to get to retirement age and have no money.

[otherman]

dieseluser07 said:

15%

That was my plan eventually (5-10 years max) so i will be 35-40 years old, just right now it would mean i have to budget too much and i want to enjoy my cash a bit while im young if that makes sense.

So the total going into the plan would be 25% of salary. And you give that up to save 6.8% of salary in your pocket today. The 70 year old you will be well impressed.

[dieseluser07]

otherman said:

So the total going into the plan would be 25% of salary. And you give that up to save 6.8% of salary in your pocket today. The 70 year old you will be well impressed.

To me i would get an extra 200 a month currently, i wouldent see this 25% for a good 40 odd years, its hard to be down that much money each month when retiring is so far away, im thinking 5-10 years time and it will be grand, i will make more and as a result i will be able to opt in to the scheme.

[edc]

The idea is that you will get the best returns when you are young. If you can get 25% in to your pot then that will continue to grow and is at least more than twice as much as average. You also get tax relief. Assuming you weren't going to spend all your salary I would pay into the pension but perhaps pinch it from your surplus or cash savings.

[rog007]

edc said:

The idea is that you will get the best returns when you are young. If you can get 25% in to your pot then that will continue to grow and is at least more than twice as much as average. You also get tax relief. Assuming you weren't going to spend all your salary I would pay into the pension but perhaps pinch it from your surplus or cash savings.

In principle, I'd agree with this. Very few people say they wished they hadn't paid so much in to their pensions come the day they access them!

As ever though, our own individual circumstances may dictate another approach, which is why professional advice is worth taking on occasion.

[elanfan]

anonymous said:

[redacted]

Be better off in a SIPP wouldn't it?

[Gareth1974]

dieseluser07 said:

otherman said:

So the total going into the plan would be 25% of salary. And you give that up to save 6.8% of salary in your pocket today. The 70 year old you will be well impressed.

To me i would get an extra 200 a month currently, i wouldent see this 25% for a good 40 odd years, its hard to be down that much money each month when retiring is so far away, im thinking 5-10 years time and it will be grand, i will make more and as a result i will be able to opt in to the scheme.

My guesstimate suggests if you took the pension option, and your fund increased by a modest 2% each year, it would be worth around £110k after 10 years. I've not factored any annual pay rise into this - if I did, the fund would be worth more. If you take the money in your pocket, you'd trouser £24000 in this period.

[edc]

A pension is only as good as the funds you select. If you stick a few quid in during your 20s and leave it alone and then stop paying after a couple of years of course it won't turn into multiples. A 15% contribution from an employer is not to be sniffed at. You'll possibly never get the chance to get that level of contribution in the future.

[TwigtheWonderkid]

otherman said:

So the total going into the plan would be 25% of salary. And you give that up to save 6.8% of salary in your pocket today. The 70 year old you will be well impressed.

+1.

You need to trim your expenses somewhere to take up the offer. It's free money from the govt and your employer!

[BoRED S2upid]

Starting from nothing at the age of 35? Or starting with this particular employer at 35? What do you have so far?