I'm 30 with no pension...
Discussion
Hi All,
Usual thread whereby i could do with your advice.
I've just turned 30, and apart from a recently introduced company pension scheme, have yet to whack money away for my retirement.
I have a salary just shy of £40k, and recently moved from our first time house, into something more sizable. I have ed equity made in the previous house, and currently mid refurb, in attempt to add value- currently spending c. £30-40k.
Now, the other half has a teacher pension, so i believe shes sorted on that front. Given all my cash up until now has gone into the house, i can currently save £800 a month as things stand.
We don't have kids (yet), and getting married in May.
I have £800 to play with (and currently going into an ISA), but unsure how much of this i should be putting into a pension?
Thought?
Usual thread whereby i could do with your advice.
I've just turned 30, and apart from a recently introduced company pension scheme, have yet to whack money away for my retirement.
I have a salary just shy of £40k, and recently moved from our first time house, into something more sizable. I have ed equity made in the previous house, and currently mid refurb, in attempt to add value- currently spending c. £30-40k.
Now, the other half has a teacher pension, so i believe shes sorted on that front. Given all my cash up until now has gone into the house, i can currently save £800 a month as things stand.
We don't have kids (yet), and getting married in May.
I have £800 to play with (and currently going into an ISA), but unsure how much of this i should be putting into a pension?
Thought?
Depends on whether you want to spank all your cash and let the state pick up the tab for free for social care when you hit >75.
Or whether you want to spend 40 years building a big pension pot and then have the government spend it for you on social care when you hit >75.
If it is the latter, then you need to be saving (for comfortable retirement) at least £750 a month for >400 months and increase the amount by at least the rate of inflation every year (3% is a typical rule of thumb).
This is a great resource:
https://www.moneyadviceservice.org.uk/en/tools/pen...
Or whether you want to spend 40 years building a big pension pot and then have the government spend it for you on social care when you hit >75.
If it is the latter, then you need to be saving (for comfortable retirement) at least £750 a month for >400 months and increase the amount by at least the rate of inflation every year (3% is a typical rule of thumb).
This is a great resource:
https://www.moneyadviceservice.org.uk/en/tools/pen...
If it were me I think I would be chucking extra cash in to the mortgage. If you are only just moved in and about to be married you may find that putting that £800/month in to a pension isn't going to be possible for long. If you can pay a chunk off your mortgage it will help you later in life. You could also use your ISA allowance to invest in a fund or shares tax free - it may go up and you have access to the cash if you need it.
I think with pensions the money really does need to be extra and definitely not required. It also makes more sense with an employer support.
I'm not an IFA or anything, just my view.
I think with pensions the money really does need to be extra and definitely not required. It also makes more sense with an employer support.
I'm not an IFA or anything, just my view.
Too Late said:
This has got me thinking.
Are you better to over pay your mortgage or put into a pension?
I'm going with the overpay my mortgage option so I'll at least have a roof over my head when I'm old. Then once I've got that paid off in 7 years, currently 29, I'll hammer lots of money into ISAsAre you better to over pay your mortgage or put into a pension?
I think pensions are great if you are a high bracket tax payer, but for normal people not on more than 30K, I think paying off a mortgage early and saving thousands on compound interest is the way to go
The whole tax relief thing is a load of crap too as you are just deferring the tax until you receive the pension then you will be taxed probably at a higher rate than now too
Pension companies just want to make themselves lots of money using your contributions as capital, then they "may" pay you it back when it comes to retirement. It's all a big scam
Edited by rossmc88 on Tuesday 31st January 10:07
rossmc88 said:
I'm going with the overpay my mortgage option so I'll at least have a roof over my head when I'm old. Then once I've got that paid off in 7 years, currently 29, I'll hammer lots of money into ISAs
I think pensions are great if you are a high bracket tax payer, but for normal people not on more than 30K, I think paying off a mortgage early and saving thousands on compound interest is the way to go
The whole tax relief thing is a load of crap too as you are just deferring the tax until you receive the pension then you will be taxed probably at a higher rate than now too
Most people would be expected to be in the same or lower tax band in retirement compared to now, so your concern doesn't really apply in practice. Indeed, picking your example individual earning £30k per annum, they're unlikely to be getting a pension of more than £15k p.a. and hence much of the pension won't be taxed!I think pensions are great if you are a high bracket tax payer, but for normal people not on more than 30K, I think paying off a mortgage early and saving thousands on compound interest is the way to go
The whole tax relief thing is a load of crap too as you are just deferring the tax until you receive the pension then you will be taxed probably at a higher rate than now too
Plus of course investment growth is also excluded from tax.
With tax relief and tax free growth, you should be able to outperform the cost of a mortgage over the long term, although of course not guaranteed.
rossmc88 said:
Pension companies just want to make themselves lots of money using your contributions as capital, then they "may" pay you it back when it comes to retirement. It's all a big scam
Investing your money on your behalf in assets you choose, then providing you with the value of the fund at retirement is not a scam. HTH.If you don't understand what you are talking about, why bother replying to the thread??
Edited by sidicks on Tuesday 31st January 10:20
sidicks said:
If you don't understand what you are talking about, why bother replying to the thread??
It never fails to surprise me how little understanding people have about pensions. For some reason, many people choose to believe (blindly) that pensions are evil and some kind of scam - I don't get why people can understand a savings account or buying shares in a company but can't comprehend doing it within a tax free wrapper.
Bob
fat80b said:
It never fails to surprise me how little understanding people have about pensions.
For some reason, many people choose to believe (blindly) that pensions are evil and some kind of scam - I don't get why people can understand a savings account or buying shares in a company but can't comprehend doing it within a tax free wrapper.
Bob
Agreed. What's even more astounding is that they then seek to highlight their ignorance by responding to threads on the topic within a specialist forum!!For some reason, many people choose to believe (blindly) that pensions are evil and some kind of scam - I don't get why people can understand a savings account or buying shares in a company but can't comprehend doing it within a tax free wrapper.
Bob
Too Late said:
This has got me thinking.
Are you better to over pay your mortgage or put into a pension?
It is never straightforward but I would have thought you'd be "better off" putting it into a pension (assuming you are going to pay of your mortgage at the agreed rate anyway).Are you better to over pay your mortgage or put into a pension?
Not paying a mortgage rate at 1.5% vs contributing to a pension with a +20% or +40% uplift on day 1 followed by n years of investment growth.
Your house may go up in value either way and all you will have saved is the 1.5% interest on the loan which you will probably never notice.
If mortgage rates were 6% it might be a different story.
Bob
fat80b said:
It is never straightforward but I would have thought you'd be "better off" putting it into a pension (assuming you are going to pay of your mortgage at the agreed rate anyway).
Not paying a mortgage rate at 1.5% vs contributing to a pension with a +20% or +40% uplift on day 1 followed by n years of investment growth.
Your house may go up in value either way and all you will have saved is the 1.5% interest on the loan which you will probably never notice.
If mortgage rates were 6% it might be a different story.
Bob
Not paying a mortgage rate at 1.5% vs contributing to a pension with a +20% or +40% uplift on day 1 followed by n years of investment growth.
Your house may go up in value either way and all you will have saved is the 1.5% interest on the loan which you will probably never notice.
If mortgage rates were 6% it might be a different story.
Bob
sidicks said:
fat80b said:
It never fails to surprise me how little understanding people have about pensions.
For some reason, many people choose to believe (blindly) that pensions are evil and some kind of scam - I don't get why people can understand a savings account or buying shares in a company but can't comprehend doing it within a tax free wrapper.
Bob
Agreed. What's even more astounding is that they then seek to highlight their ignorance by responding to threads on the topic within a specialist forum!!For some reason, many people choose to believe (blindly) that pensions are evil and some kind of scam - I don't get why people can understand a savings account or buying shares in a company but can't comprehend doing it within a tax free wrapper.
Bob
crap way to build up funds for themselves.
How can that be, you may ask?
Well, Bob, sometimes it's because of their experience of pension plans, and tales they've heard of others' experiences. And sometimes it's a perception that 'the way it works' including their involvement in it, isn't for them. And sometimes it's because they believe (rightly or wrongly) that they can do far better with their money in other ways. And sometimes they just don't like 'the way it works' - the annuity system being a common example of that one. There are other reasons - many other reasons - why people don't like pension plans.
So don't be so surprised when you hear people pooh-poohing pension plan saving. It's often enough because they DO understand how they work, not because they don't.
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