Discussion
Afternoon all,
Looking for advice or pointers. Not overly great with money and some recent life events have made me sit up and take note.
Quick summary, mid 30’s - reasonable job, been paying into pension since 18 or 19.
Standard company pension, now administered by Aviva. Pot is currently at £37k, contributing totals just under £400 a month.
Looking at the ‘what your fund could be worth’ based on assumptions that payments are made until retirement, wage stays the same etc… it says the following;
Low - £104k / annual income @ £3370
Med - £182k / annual income @ £7830
High - £334k / annual income @ £18300
Now I’m looking at the Medium growth as the more likely scenario… and that is really isn’t a great deal of money, even with pay rises and promotions aside - it doesn’t seem enough to live comfortable in retirement (my aim based is around £2.5k / £30PA - so even on High growth I’m short already)
I already have a heavy mortgage that won’t be repaid until early 60’s so topping up isn’t really an option right now and with young kids, I can’t see me having that much spare change either!
I’m happy to learn but a quick Google soon becomes a headache with a plethora of advice / strategies.
Would anyone have any starting pointers on how I can maximise the above pot and maybe push it to achieving a bit more?
Looking for advice or pointers. Not overly great with money and some recent life events have made me sit up and take note.
Quick summary, mid 30’s - reasonable job, been paying into pension since 18 or 19.
Standard company pension, now administered by Aviva. Pot is currently at £37k, contributing totals just under £400 a month.
Looking at the ‘what your fund could be worth’ based on assumptions that payments are made until retirement, wage stays the same etc… it says the following;
Low - £104k / annual income @ £3370
Med - £182k / annual income @ £7830
High - £334k / annual income @ £18300
Now I’m looking at the Medium growth as the more likely scenario… and that is really isn’t a great deal of money, even with pay rises and promotions aside - it doesn’t seem enough to live comfortable in retirement (my aim based is around £2.5k / £30PA - so even on High growth I’m short already)
I already have a heavy mortgage that won’t be repaid until early 60’s so topping up isn’t really an option right now and with young kids, I can’t see me having that much spare change either!
I’m happy to learn but a quick Google soon becomes a headache with a plethora of advice / strategies.
Would anyone have any starting pointers on how I can maximise the above pot and maybe push it to achieving a bit more?
St Ives said:
Afternoon all,
Looking for advice or pointers. Not overly great with money and some recent life events have made me sit up and take note.
Quick summary, mid 30’s - reasonable job, been paying into pension since 18 or 19.
Standard company pension, now administered by Aviva. Pot is currently at £37k, contributing totals just under £400 a month.
Looking at the ‘what your fund could be worth’ based on assumptions that payments are made until retirement, wage stays the same etc… it says the following;
Low - £104k / annual income @ £3370
Med - £182k / annual income @ £7830
High - £334k / annual income @ £18300
Now I’m looking at the Medium growth as the more likely scenario… and that is really isn’t a great deal of money, even with pay rises and promotions aside - it doesn’t seem enough to live comfortable in retirement (my aim based is around £2.5k / £30PA - so even on High growth I’m short already)
I already have a heavy mortgage that won’t be repaid until early 60’s so topping up isn’t really an option right now and with young kids, I can’t see me having that much spare change either!
I’m happy to learn but a quick Google soon becomes a headache with a plethora of advice / strategies.
Would anyone have any starting pointers on how I can maximise the above pot and maybe push it to achieving a bit more?
Most pension funds will default to a "life styling" approach where they put you in an investment considered suitable for your age and as you approach retirement the investment will change to (usually) reduce risk.Looking for advice or pointers. Not overly great with money and some recent life events have made me sit up and take note.
Quick summary, mid 30’s - reasonable job, been paying into pension since 18 or 19.
Standard company pension, now administered by Aviva. Pot is currently at £37k, contributing totals just under £400 a month.
Looking at the ‘what your fund could be worth’ based on assumptions that payments are made until retirement, wage stays the same etc… it says the following;
Low - £104k / annual income @ £3370
Med - £182k / annual income @ £7830
High - £334k / annual income @ £18300
Now I’m looking at the Medium growth as the more likely scenario… and that is really isn’t a great deal of money, even with pay rises and promotions aside - it doesn’t seem enough to live comfortable in retirement (my aim based is around £2.5k / £30PA - so even on High growth I’m short already)
I already have a heavy mortgage that won’t be repaid until early 60’s so topping up isn’t really an option right now and with young kids, I can’t see me having that much spare change either!
I’m happy to learn but a quick Google soon becomes a headache with a plethora of advice / strategies.
Would anyone have any starting pointers on how I can maximise the above pot and maybe push it to achieving a bit more?
If I play around in a compound interest calculator and assume an average of 5% a year return (total not real) for 30 years it comes out at around £500K so I think the numbers they're working off even for "medium" might be quite cautious?
Are you maxing out contributions to at least get the maximum employer match as that's basically free money?
There isn't really a magic solution to investing.
Either you put in more money or you leave it compounding for longer or you take on more risk (which has more downside).
Don’t forget the State pension will be a nice little top up to those pots. It’s the best part of £10,000 a year now. As much as people whinge about it, it’s a decent income and one that is unlikely to really fall too much in value over the years as it’s too much of a hot potato politically. They’ll just shove you along a little so you get it later in life.
Obviously, things change over time as others have mentioned.
The mortgage is big now, but it diminishes as wage growth/ inflation bites in.
The kids will leave home eventually, freeing up more cash.
Morbidly, but inheritance may be influential.
Basically, as time goes on, financial matters become easier, so additional pension contributions/ savings become more affordable. Don't kill yourself and kids saving for retirement now, but it's great you have an eye on it and aware.....
The mortgage is big now, but it diminishes as wage growth/ inflation bites in.
The kids will leave home eventually, freeing up more cash.
Morbidly, but inheritance may be influential.
Basically, as time goes on, financial matters become easier, so additional pension contributions/ savings become more affordable. Don't kill yourself and kids saving for retirement now, but it's great you have an eye on it and aware.....
St Ives said:
Afternoon all,
Looking for advice or pointers. Not overly great with money and some recent life events have made me sit up and take note.
Quick summary, mid 30’s - reasonable job, been paying into pension since 18 or 19.
Standard company pension, now administered by Aviva. Pot is currently at £37k, contributing totals just under £400 a month.
Looking at the ‘what your fund could be worth’ based on assumptions that payments are made until retirement, wage stays the same etc… it says the following;
Low - £104k / annual income @ £3370
Med - £182k / annual income @ £7830
High - £334k / annual income @ £18300
Now I’m looking at the Medium growth as the more likely scenario… and that is really isn’t a great deal of money, even with pay rises and promotions aside - it doesn’t seem enough to live comfortable in retirement (my aim based is around £2.5k / £30PA - so even on High growth I’m short already)
I already have a heavy mortgage that won’t be repaid until early 60’s so topping up isn’t really an option right now and with young kids, I can’t see me having that much spare change either!
I’m happy to learn but a quick Google soon becomes a headache with a plethora of advice / strategies.
Would anyone have any starting pointers on how I can maximise the above pot and maybe push it to achieving a bit more?
The starting point is to find out exactly what your pension is invested in. If it’s the default scheme it could be a poor choice for a person iof your age. You might want to look at a growth fund given your age. Most default funds, in my experience are far too conservative. Looking for advice or pointers. Not overly great with money and some recent life events have made me sit up and take note.
Quick summary, mid 30’s - reasonable job, been paying into pension since 18 or 19.
Standard company pension, now administered by Aviva. Pot is currently at £37k, contributing totals just under £400 a month.
Looking at the ‘what your fund could be worth’ based on assumptions that payments are made until retirement, wage stays the same etc… it says the following;
Low - £104k / annual income @ £3370
Med - £182k / annual income @ £7830
High - £334k / annual income @ £18300
Now I’m looking at the Medium growth as the more likely scenario… and that is really isn’t a great deal of money, even with pay rises and promotions aside - it doesn’t seem enough to live comfortable in retirement (my aim based is around £2.5k / £30PA - so even on High growth I’m short already)
I already have a heavy mortgage that won’t be repaid until early 60’s so topping up isn’t really an option right now and with young kids, I can’t see me having that much spare change either!
I’m happy to learn but a quick Google soon becomes a headache with a plethora of advice / strategies.
Would anyone have any starting pointers on how I can maximise the above pot and maybe push it to achieving a bit more?
Are you making salary sacrifice contributions which are more tax efficient and if a higher rate earner, are you filing a tax return to claim back the additional relief(if not sacrifice scheme).
Edited-Percy above is 100% on the money.
Some good points above.
You should get an annual statement, also worth checking what the annual fees (usually expressed as %) are on the pension(s), those management fees if excessive, can eat into gains and it might be worth moving some or all of the pot. If you can find that info am sure someone will be able to comment if they are good/reasonable/excessive.
You should get an annual statement, also worth checking what the annual fees (usually expressed as %) are on the pension(s), those management fees if excessive, can eat into gains and it might be worth moving some or all of the pot. If you can find that info am sure someone will be able to comment if they are good/reasonable/excessive.
Paft Dunk said:
Some good points above.
You should get an annual statement, also worth checking what the annual fees (usually expressed as %) are on the pension(s), those management fees if excessive, can eat into gains and it might be worth moving some or all of the pot. If you can find that info am sure someone will be able to comment if they are good/reasonable/excessive.
Firstly fees is the last thing to check as you can't move it. The employer sets the provider for any current contributions. If you leave that provider, different story. I doubt any default WPP is that high on fees.You should get an annual statement, also worth checking what the annual fees (usually expressed as %) are on the pension(s), those management fees if excessive, can eat into gains and it might be worth moving some or all of the pot. If you can find that info am sure someone will be able to comment if they are good/reasonable/excessive.
Check what the investment is in. It could be Bonds-absolutely terrible if so. You want a Global Growth fund at least in part.
OP a poor choice can make the end value of your Pot vary by £1M using your exact contributions. Does > £1m sound better than £200K.
Start today and get informed.
All the best.
mike9009 said:
Obviously, things change over time as others have mentioned.
The mortgage is big now, but it diminishes as wage growth/ inflation bites in.
The kids will leave home eventually, freeing up more cash.
Morbidly, but inheritance may be influential.
Basically, as time goes on, financial matters become easier, so additional pension contributions/ savings become more affordable. Don't kill yourself and kids saving for retirement now, but it's great you have an eye on it and aware.....
I agree with this and also with the comments that you should find out what your pension is invested in because making the wrong choice at the start can make a massive difference to returns over the long term.The mortgage is big now, but it diminishes as wage growth/ inflation bites in.
The kids will leave home eventually, freeing up more cash.
Morbidly, but inheritance may be influential.
Basically, as time goes on, financial matters become easier, so additional pension contributions/ savings become more affordable. Don't kill yourself and kids saving for retirement now, but it's great you have an eye on it and aware.....
Educate yourself now and it will pay dividends later in life.
However I will state a few simple rules for you to consider
- Use salary sacrifice to make pension contributions if this is available to you
- If paying higher rate tax on your salary, consider paying extra into your pension to get higher rate tax relief
- Unless you want to spend a lot of time researching investments (or pay and IFA), invest in a low cost 100% global equity index tracker fund and stick with it
- Don't try and time the market by selling and buying at different times. Just keep making regular contributions and stick with the plan
- Embrace stock market crashes and world crises because they means your monthly contributions will buy shares at a cheaper price. Your age means you have decades for it to recover and historically, it always has over long time period
- If switching jobs, pay attention to the employer's % of pension contributions. It is part of your pay, just deferred until retirement.
- Don't keep looking at your pension value. Once a year should be enough to review progress.
- If you want to go more in-depth create a savings plan on excel and measure your progress against it
Your 'medium' range figure is about what your total contributions will be so its either a really cautious estimate or what it is invested in isn't the best for your age.
Saying the low figure could be around £80k less than you have paid in would ring alarm bells for me.
Well worth investigating how its invested and what the fees are.
Saying the low figure could be around £80k less than you have paid in would ring alarm bells for me.
Well worth investigating how its invested and what the fees are.
trickywoo said:
Your 'medium' range figure is about what your total contributions will be so its either a really cautious estimate or what it is invested in isn't the best for your age.
Saying the low figure could be around £80k less than you have paid in would ring alarm bells for me.
Well worth investigating how its invested and what the fees are.
Yes I just worked it out. Low is -3%, Medium is 0% and High is 3%Saying the low figure could be around £80k less than you have paid in would ring alarm bells for me.
Well worth investigating how its invested and what the fees are.
I would hazard a guess that this is treasury bond deposits. It could be a default fund so employees are expected to go into their fund and make a selection for themselves. This is what happens with my employer scheme.
You would definitely want to be fully investing in equity global growth funds at this stage.
Look up a list of the various funds available in your scheme and seek out the ones which are equity global growth. There maybe a few so you would need to look into the detail to find the one or two that suit you.
My workplace pensions are with Fidelity. They do the lifestyle investing thing where the fund allocations change as you get older. I sacked that off, they were wanting to have a wedge in bonds by my mid thirties, I’m happy to take more risk than that and be 100% equities.
Like others have said, best to take some time to understand exactly what you are invested in, then do some reading to decide if that’s what you want. I haven’t seen him about in a bit but Derek Chevalier on here has usually got some good recommendations of books on investing.
Like others have said, best to take some time to understand exactly what you are invested in, then do some reading to decide if that’s what you want. I haven’t seen him about in a bit but Derek Chevalier on here has usually got some good recommendations of books on investing.
OP, even if you can't increase pension contributions, as a minimum follow the suggestions given by others to read up about investments and once you are comfortable, review the the underlying investments in your pension. I did exactly that around the same age as you and then tweaked the investments in my workplace pension and SIPP.
Its a personal choice of course and dependent on risk tolerance but at your age I wouldn't just do what the majority do and stay within a default fund. I would think at minimum 80% equities overall would be fine as you have the timeframe to ride out the peaks and troughs of the market. But do the reading first as I am not a pro and this is just an internet forum
Its a personal choice of course and dependent on risk tolerance but at your age I wouldn't just do what the majority do and stay within a default fund. I would think at minimum 80% equities overall would be fine as you have the timeframe to ride out the peaks and troughs of the market. But do the reading first as I am not a pro and this is just an internet forum
Many thanks for the replies.
Here’s what I can see from the Fund management - I can make adjustments here and switch funds (lots available!)
35.8% Global equity
21% Bonds
19.9% UK Equities
10.7% Cash reserves
9.2% Other (trusts, alternative trading strategies & exchange-traded funds)
3.4% Property
Since the replies I have been looking at the bond situation, lots of difference advice online but general consensus seems it’s worth having some.
Property (from my experience) has always had a good growth, especially over long term.
I think I will look to increase the Global equities and reduce bonds by say 10% - would you say that’s sensible or could / should I risk more - given the 30 odd years it has to recover? (I know it’s an unknown but I feel happy to take more of a risk now then later - and probably too late!)
Here’s what I can see from the Fund management - I can make adjustments here and switch funds (lots available!)
35.8% Global equity
21% Bonds
19.9% UK Equities
10.7% Cash reserves
9.2% Other (trusts, alternative trading strategies & exchange-traded funds)
3.4% Property
Since the replies I have been looking at the bond situation, lots of difference advice online but general consensus seems it’s worth having some.
Property (from my experience) has always had a good growth, especially over long term.
I think I will look to increase the Global equities and reduce bonds by say 10% - would you say that’s sensible or could / should I risk more - given the 30 odd years it has to recover? (I know it’s an unknown but I feel happy to take more of a risk now then later - and probably too late!)
St Ives said:
35.8% Global equity
21% Bonds
19.9% UK Equities
10.7% Cash reserves
9.2% Other (trusts, alternative trading strategies & exchange-traded funds)
3.4% Property
With your time horizon, I would go 100% global equities and only look to start adjusting that when you get to within 10 years of retirement.21% Bonds
19.9% UK Equities
10.7% Cash reserves
9.2% Other (trusts, alternative trading strategies & exchange-traded funds)
3.4% Property
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