Pension Pot - How much?
Discussion
I think you also need to consider inflation. That would give you 20k in today's money. Inflated 30 years into the future, a 300k pot and 20k pa may not be very much at all.
Over the last 30 years, inflation would have reduced the pot by an effective two thirds.
In which case, assuming inflation remains in place, I would have thought you should be aiming for a pot 3 times bigger than you need it to be if you have 30 years left until you collect.
Bob
Over the last 30 years, inflation would have reduced the pot by an effective two thirds.
In which case, assuming inflation remains in place, I would have thought you should be aiming for a pot 3 times bigger than you need it to be if you have 30 years left until you collect.
Bob
fat80b said:
I think you also need to consider inflation. That would give you 20k in today's money. Inflated 30 years into the future, a 300k pot and 20k pa may not be very much at all.
Over the last 30 years, inflation would have reduced the pot by an effective two thirds.
In which case, assuming inflation remains in place, I would have thought you should be aiming for a pot 3 times bigger than you need it to be if you have 30 years left until you collect.
Bob
This. I put a large chunk of my salary into a private pension during the 80's. Rather than grow each year, its pretty much just eroded with inflation to the point where its now worth about as much as I could save in a few months Over the last 30 years, inflation would have reduced the pot by an effective two thirds.
In which case, assuming inflation remains in place, I would have thought you should be aiming for a pot 3 times bigger than you need it to be if you have 30 years left until you collect.
Bob
A few years ago I started buying propery, and aim to have about 5-600k worth of property (as well as my own house paid off) in about 7 years.
5 years ago an adviser told me I'd need £1m total to live comfortably. At the time I thought this was rubbish. I'm now 30 and can see where he was coming from.
The problem is that there nothing to really tell you what to put away. The online calculators are still all basing everything on the assumption that I'll be paying the same contributions and on the same salary.
Realistically I think I'll also end up going down the property route.
The problem is that there nothing to really tell you what to put away. The online calculators are still all basing everything on the assumption that I'll be paying the same contributions and on the same salary.
Realistically I think I'll also end up going down the property route.
CRB14 said:
5 years ago an adviser told me I'd need £1m total to live comfortably. At the time I thought this was rubbish. I'm now 30 and can see where he was coming from.
The problem is that there nothing to really tell you what to put away. The online calculators are still all basing everything on the assumption that I'll be paying the same contributions and on the same salary.
Realistically I think I'll also end up going down the property route.
It really does not matter how you do it, via property, shares, pensions, just build the biggest pot you comfortably can.The problem is that there nothing to really tell you what to put away. The online calculators are still all basing everything on the assumption that I'll be paying the same contributions and on the same salary.
Realistically I think I'll also end up going down the property route.
I have some clients that have retired with huge pension pots, but not one has ever said it's too much.
There are plenty that have said it's not enough.
The danger is, these days, the younger you are the more time there is to be exposed to regulatory risk. In the days of yore, the younger you were, the more time you had to save and grow wealth.
Accumulating wealth is one thing, but HOW you draw from it is going to be more and more important. Get the strategy right, the vision.. and the tactics will flow naturally.
Equally vital is the means that you use to grow it. Keep needless costs down to the bare minimum when starting to grow your wealth. Be ruthless on costing and research, don't be afraid to interrogate your chosen provider on costs to the Nth degree.
Accumulating wealth is one thing, but HOW you draw from it is going to be more and more important. Get the strategy right, the vision.. and the tactics will flow naturally.
Equally vital is the means that you use to grow it. Keep needless costs down to the bare minimum when starting to grow your wealth. Be ruthless on costing and research, don't be afraid to interrogate your chosen provider on costs to the Nth degree.
Ginge R said:
The danger is, these days, the younger you are the more time there is to be exposed to regulatory risk. In the days of yore, the younger you were, the more time you had to save and grow wealth.
Accumulating wealth is one thing, but HOW you draw from it is going to be more and more important. Get the strategy right, the vision.. and the tactics will flow naturally.
Equally vital is the means that you use to grow it. Keep needless costs down to the bare minimum when starting to grow your wealth. Be ruthless on costing and research, don't be afraid to interrogate your chosen provider on costs to the Nth degree.
Couldn't agree anymore than the above.Accumulating wealth is one thing, but HOW you draw from it is going to be more and more important. Get the strategy right, the vision.. and the tactics will flow naturally.
Equally vital is the means that you use to grow it. Keep needless costs down to the bare minimum when starting to grow your wealth. Be ruthless on costing and research, don't be afraid to interrogate your chosen provider on costs to the Nth degree.
At the fine age of 23 (26 now) I've made sure I pay into my pension per month, as does the company to.
98elise said:
This. I put a large chunk of my salary into a private pension during the 80's. Rather than grow each year, its pretty much just eroded with inflation to the point where its now worth about as much as I could save in a few months
A few years ago I started buying propery, and aim to have about 5-600k worth of property (as well as my own house paid off) in about 7 years.
Well that isn't normal, I have various pensions, one from a job from 1985 to 1988 is now worth £43k and another from 1988 to 1990 is worth £26k, so both a lot more than the amounts put into them. My wife has one from a job between 1992 and 1993 worth £178k.A few years ago I started buying propery, and aim to have about 5-600k worth of property (as well as my own house paid off) in about 7 years.
We have others as well but I have focused on building wealth outside pensions though, I hate the lack of control over a pension, that having to use much of it to buy an annuity is crap, particularly when you see how little you get.
Ian,
The amount that you can save within the pension wrapper is reducing to £1.25m. The Lib Dems have stated they'd like to reduce that to £1m. That brings someone finishing on a final salary scheme and earning a respectable and honest £60-65k+ or so, well within their sights.
https://www.gov.uk/government/uploads/system/uploa...
The amount that you can save within the pension wrapper is reducing to £1.25m. The Lib Dems have stated they'd like to reduce that to £1m. That brings someone finishing on a final salary scheme and earning a respectable and honest £60-65k+ or so, well within their sights.
https://www.gov.uk/government/uploads/system/uploa...
Siscar said:
Well that isn't normal, I have various pensions, one from a job from 1985 to 1988 is now worth £43k and another from 1988 to 1990 is worth £26k, so both a lot more than the amounts put into them. My wife has one from a job between 1992 and 1993 worth £178k.
We have others as well but I have focused on building wealth outside pensions though, I hate the lack of control over a pension, that having to use much of it to buy an annuity is crap, particularly when you see how little you get.
In a year she had a pension pot of 178k ? Blimey!We have others as well but I have focused on building wealth outside pensions though, I hate the lack of control over a pension, that having to use much of it to buy an annuity is crap, particularly when you see how little you get.
northandy said:
Siscar said:
Well that isn't normal, I have various pensions, one from a job from 1985 to 1988 is now worth £43k and another from 1988 to 1990 is worth £26k, so both a lot more than the amounts put into them. My wife has one from a job between 1992 and 1993 worth £178k.
We have others as well but I have focused on building wealth outside pensions though, I hate the lack of control over a pension, that having to use much of it to buy an annuity is crap, particularly when you see how little you get.
In a year she had a pension pot of 178k ? Blimey!We have others as well but I have focused on building wealth outside pensions though, I hate the lack of control over a pension, that having to use much of it to buy an annuity is crap, particularly when you see how little you get.
A typo I would think
.Re an earlier question about how to find out how much you need to stash to get where you want to be.
Look for something called a "Monte Carlo simulator"
If it's a good one it will enable you to adjust almost every variable.
The results can be scarey, it may even suggest buying a four pot car.
jeff m2 said:
northandy said:
Siscar said:
Well that isn't normal, I have various pensions, one from a job from 1985 to 1988 is now worth £43k and another from 1988 to 1990 is worth £26k, so both a lot more than the amounts put into them. My wife has one from a job between 1992 and 1993 worth £178k.
We have others as well but I have focused on building wealth outside pensions though, I hate the lack of control over a pension, that having to use much of it to buy an annuity is crap, particularly when you see how little you get.
In a year she had a pension pot of 178k ? Blimey!We have others as well but I have focused on building wealth outside pensions though, I hate the lack of control over a pension, that having to use much of it to buy an annuity is crap, particularly when you see how little you get.
A typo I would think
.Re an earlier question about how to find out how much you need to stash to get where you want to be.
Look for something called a "Monte Carlo simulator"
If it's a good one it will enable you to adjust almost every variable.
The results can be scarey, it may even suggest buying a four pot car.
Using RPI as a spurious proxy for investment growth (should be doing better?!)
Put into the pot over two (bloody good) years at £50k pa, ie give up on net income of c£30k
Good going, but hardly impossible?! Not sure why it attracted the "must be a typo" and a caveman sexist overtone?
Ginge R said:
Siscar said:
.. I hate the lack of control over a pension, that having to use much of it to buy an annuity is crap, particularly when you see how little you get.
You don't need to buy an annuity anymore, it isn't compulsory any longer.Siscar said:
Well yes and no, you don't have to if you can demonstrate £20k a year income essentially from other pensions and if you can't do that you have a bunch of other hurdles. Whereas all the money we have built up elsewhere we can do whatever we like with. Pensions always feel like you can bundle money into them and get tax breaks but at a big price of having to give it away for meagre returns to allow a company to make a fat profit out of it.
You still don't need to buy an annuity, if you like, you can go into drawdown. Companies will profit from you and in principle, there's nothing wrong with that - we all work for something, why should they be any different? The returns issue is more nebulous. That might be a reflection of your particular set of investments rather than the principle. And with the principle in mind, pensions are just one component in a retirement financial strategy; a vital one, but still just one nonetheless. I go back to my earlier point about clarity, nailing the costs and keeping the product overhead down, especially at outset. I studied a niche product provider's costs yesterday and it was only when I repeatadly questioned the rep, did the true extent become clear. I could never recommend something like that to a client.
Hargreaves Landsdown is coming clean about its prices now and investors are waking up to the fact it might be a seductive and stylish sales proposition, but at the end of the day, it's simply a financial filing cabinet. You might not even need, want or be able to justify a platform, especially one with csts like that - jst because it works for a mate you might know, does it work for you?
Don't obsess about the AMC or the TER cost, the cost of your investment which is promulgated in the sales brochures.. persist with finding out the true cost, the cost which might include dealing or performance fees. Consider tracker or passive funds, especially at outset. If you just want to grow wealth, your pot stands a better chance of achieving critical mass from a standing start even if it performs only 85% as well as another fund which might be sexier and actively managed, but has only 55% of the costs shackling it.
But there are some complete munters of passive funds out there too, insanely expensive, so choose wisely. Take advice that you trust.
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