How big should my pension pot be?

[croyde]

Salterns said:

croyde said:

That pension calculator on the first page is depressing. Even making major increases on what I currently pay monthly, and have done for 30 years, makes very little difference to my pension in 14 years time.

Basically I'm fooked.

I'm in the same boat, the calculator says I need to increase my monthly payments from £450 to £2500 for a pension 40% less than I'm earning now. I could afford to do that if I wanted but I think theres a good chance I will a. die before I retire or B. find government move the goal posts possibly means testing pensions to stop anyone claiming the state pension who's saved. So I'm leaving things as they are.

I am so sure that the day I turn 66, I will ring my pension provider to find they claim that they have never heard of me or I get the disconnected tone. So I need to make sure that I own a home in a cheap part of the country, thus no rent or mortgage to worry about and hunt for food.

[Salterns]

croyde said:

Salterns said:

croyde said:

That pension calculator on the first page is depressing. Even making major increases on what I currently pay monthly, and have done for 30 years, makes very little difference to my pension in 14 years time.

Basically I'm fooked.

I'm in the same boat, the calculator says I need to increase my monthly payments from £450 to £2500 for a pension 40% less than I'm earning now. I could afford to do that if I wanted but I think theres a good chance I will a. die before I retire or B. find government move the goal posts possibly means testing pensions to stop anyone claiming the state pension who's saved. So I'm leaving things as they are.

I am so sure that the day I turn 66, I will ring my pension provider to find they claim that they have never heard of me or I get the disconnected tone. So I need to make sure that I own a home in a cheap part of the country, thus no rent or mortgage to worry about and hunt for food.

I'll probably meet you in 20 years, we'll both be picking berry's from the hedgerow to go with the road kill. lol

Edited by Salterns on Sunday 1st February 12:47

[croyde]

Salterns said:

I'll probably meet you in 20 years, we'll both be picking berry's from the hedgerow or picking up road kill. lol

Fancy going halves on this

http://www.rightmove.co.uk/property-for-sale/prope...

[Salterns]

croyde said:

Salterns said:

I'll probably meet you in 20 years, we'll both be picking berry's from the hedgerow or picking up road kill. lol

Fancy going halves on this

http://www.rightmove.co.uk/property-for-sale/prope...

It looks charming. Baggsy have the end with the bow window.

[croyde]

If you are happy to bunk in the lounge we'll make a bit on the side and rent out the other bedroom. Quids in already

[Welshbeef]

Those calculators have state pension at the wrong value. When I retire in today money state pension is £145pw so £7.5k - a couple of £k extra per year not to be ignored.

As I've a few final salary pensions locked away and some career average banked + assumed £7.5k pension with 30 years to go I'm currently on UK average salary as a pension. So the remaining years all being well should make a reasonable amount.
However wife isn't working nor will she ever Full time again (kids) plus who knows what might happen in the future rules. One thing though defined contribution is drastically less than Defined benefit. I'm paying in a combined 16% into the pension which has 6% chipped in from the company.


With hindsight I should have stayed at my first employer for 3-4 more years as that was 3% employee contribution for 1/60th starting at 60 but could commence from 55 at a reduced rate.
The wife somehow managed 10 years into a final salary which the rules kept changing but I made sure she kept to the highest "gold" option even if it meant paying in more.



Hardest thing is how much do you need to live a lifestyle for retirement - once you have dependants assume you'll live very very long time and that the mrs is well looked after if you pop yer cloggs sooner.
By retirement mortgage will be zero, but you have ongoing costs of tuning repairs - a sensible plan which I'm intending on doing come that time is brand new car brand new kitchen and bathrooms totally redecorated sofas tvs friges washing machines etc all paid for while working then come retirement really the unexpected costs really will be unexpected - that list could last you 20 years/see you out while giving you enjoyment in retirement.

[Welshbeef]

One thing I think is missing its kids education on finances - it should be a compulsory GCSE. All the basics current account a loan a mortgage savings PCP HP contract hire unit truss ISAs pensions credit score cashflow.

Frankly too many don't have a clue about the above or get "advice" down the pub or from naive parents/relatives.

Might sound boring but its paramount to real life and you need it from day 1.

[Salterns]

croyde said:

If you are happy to bunk in the lounge we'll make a bit on the side and rent out the other bedroom. Quids in already

Happy to top and tail if it saves some cash. Do you think it would be possible to relocate it though? I'd like it parked outside the house I had to sell to pay for the miserable pension (so that I can annoy the new owners) or put it somewhere with a better view. In one of the Royal parks would be nice.

[croyde]

Richmond Park is nice and plenty of venison.

[HenryJM]

You have choices.

You can pay no tax on input into a pension, but pay it on income coming out of a pension.

Your invest money you've earned post tax but it's growth and performance is then outside tax (ISA). That is up to £15k a year per person, with is enough for most to be able to afford.

Or you can pay for tax on money earned and pay it again on what you earn with it.

In my own experience they all have their merit but personally I have a relatively modest pension amount - £170k ish over 30 years, a less modest amount of ISA and the remainder as taxable investments.

Personally I don't feel that property investment is the best route, the purchase is after tax and the revenue is also taxable, the hassle is too much and as is the lack of flexibility - but each to their own.

[anonymous-user]

HenryJM said:

You have choices.

Not if you're a PAYE monkey who will only get a contribution from your employer by joining their scheme. It's free money and beats the interest earned in an ISA '000 times over.

[nct001]

Welshbeef said:

However 13 years on and likely 50% through paying off the mortgage paid for by the tennants. Often overlooked when doing the above review.
Of course if you've been just spending the cash so be it (you should be paying off you're residential mortgage with the tenants rent

At 4 per cent on £40k mortgagee would be owing £20k on this property. But its value has fallen by £10k and maintenance required at initial purchase would have been nearly £10k then factor in agents costs and void periods and gas cert every year and wear and tear and its a thumping loss let alone the opportunity cost... then multiply it by 10 and you could go broke.

[HenryJM]

RaymondVanDerDon said:

HenryJM said:

You have choices.

Not if you're a PAYE monkey who will only get a contribution from your employer by joining their scheme. It's free money and beats the interest earned in an ISA '000 times over.

The PAYE element is fixed but that is not the only investment that could be made unless you think PAYE will be all you can afford to invest in.

As for PAYE earning more interest, that's crazy. It is in the process of being changed, but right now the amount quoted is derisory. They pay out at a few percent, you pay tax on it and you often need to be getting on towards 90 before the revenue from the pension matches the capital in the fund.

[Riff Raff]

Ultraviolet said:

Riff Raff said:

And transfers between husband and wife don't have nasty tax consequences in the main.

Any thoughts on how this can happen in practice? There's a possibility I might breach the LTA but was advised that the wife would have to make an equal contribution to the fund in order for half to be transferred to her.. In other words, she would have to 'buy' half my fund in order for it to be transferred without having a tax implication. Is this your understanding also?

Sorry, that's right outside any competence I have. I wasn't actually thinking (when I mentioned the tax aspect) of trying to transfer part of the pension pots themselves between spouses. I just assumed that that was a no-no.

[Phooey]

out of interest how much would you hope the 'pot' to be worth if say for example you put the maximum (currently £15k/yr) into a stocks and shares ISA for the next 20 years? No withdrawals and assuming the £15k is split into 12 monthly payments. Is there a calculator where you can see the effect of growth at 2,3,4,5%etc growth per year?

[HenryJM]

Phooey said:

out of interest how much would you hope the 'pot' to be worth if say for example you put the maximum (currently £15k/yr) into a stocks and shares ISA for the next 20 years? No withdrawals and assuming the £15k is split into 12 monthly payments. Is there a calculator where you can see the effect of growth at 2,3,4,5%etc growth per year?

Roughly between £364k and £495k depending on the rate between 2 & 5%.

[Riff Raff]

HenryJM said:

Phooey said:

out of interest how much would you hope the 'pot' to be worth if say for example you put the maximum (currently £15k/yr) into a stocks and shares ISA for the next 20 years? No withdrawals and assuming the £15k is split into 12 monthly payments. Is there a calculator where you can see the effect of growth at 2,3,4,5%etc growth per year?

Roughly between £364k and £495k depending on the rate between 2 & 5%.

I'd have thought that 2% is extremely conservative. I haven't calculated the numbers for a while, but last time I did, the dividend yield alone on my portfolio was just under 2%, never mind capital growth.

[HenryJM]

Riff Raff said:

HenryJM said:

Phooey said:

out of interest how much would you hope the 'pot' to be worth if say for example you put the maximum (currently £15k/yr) into a stocks and shares ISA for the next 20 years? No withdrawals and assuming the £15k is split into 12 monthly payments. Is there a calculator where you can see the effect of growth at 2,3,4,5%etc growth per year?

Roughly between £364k and £495k depending on the rate between 2 & 5%.

I'd have thought that 2% is extremely conservative. I haven't calculated the numbers for a while, but last time I did, the dividend yield alone on my portfolio was just under 2%, never mind capital growth.

Well, yes. I was up around 1.4% in January this year, but then I have months when I fall. Much depends on the way you invest, the level of risk you take. But the question was between 2 and 5%.

[GT03ROB]

HenryJM said:

Riff Raff said:

HenryJM said:

Phooey said:

out of interest how much would you hope the 'pot' to be worth if say for example you put the maximum (currently £15k/yr) into a stocks and shares ISA for the next 20 years? No withdrawals and assuming the £15k is split into 12 monthly payments. Is there a calculator where you can see the effect of growth at 2,3,4,5%etc growth per year?

Roughly between £364k and £495k depending on the rate between 2 & 5%.

I'd have thought that 2% is extremely conservative. I haven't calculated the numbers for a while, but last time I did, the dividend yield alone on my portfolio was just under 2%, never mind capital growth.

Well, yes. I was up around 1.4% in January this year, but then I have months when I fall. Much depends on the way you invest, the level of risk you take. But the question was between 2 and 5%.

Performance can be up & down like a wes draws...take my last 10 years (all annual % Increments) .

2006 -0.2%
2007 10.2%
2008 -32.0%
2009 29.7%
2010 17.7%
2011 -17.6%
2012 15.0%
2013 24.7%
2014 10.5%
YTD 4.8%

[GT03ROB]

HenryJM said:

GT03ROB said:

Performance can be up & down like a wes draws...take my last 10 years (all annual % Increments) .

2006 -0.2%
2007 10.2%
2008 -32.0%
2009 29.7%
2010 17.7%
2011 -17.6%
2012 15.0%
2013 24.7%
2014 10.5%
YTD 4.8%

Yes except in that the means of investment differs depending on what you go in for. There is high risk and low risk and everything in between, all a matter of approach/nerves/etc.

Agreed, however the larger spread of equities you head for the more you follow the overall trend of markets. What I mean is you are, irrespective of your style of equity investment, unlikley to make gains in a falling market or losses in a rising market. Less risky dealing will damp the ups & downs not eliminate them. More risk means more volatility & make timing far more important.