Gloomy pension prospects on average salary?

[DickP]

Hi,

Early thirties and earning low 60s but have only really been earning in this region very recent, was mid 20s just over five years ago and was a student until 25.

The web based pension forecast tools I have used paint a very gloomy pension income picture even with 5% employer and 6% employee contribution. Employer is capped at 50k though which seems to be HMRC thing?

It looks like I would need to put away almost half of my monthly income into a pension to make it near the guidance value? Which doesn’t make sense??

Is my generation going to be (very for some) poor pensioner generation?

[Countdown]

If you're early 30's and earning low 60's you've got loads of time to accrue for a decent pension. it looks like your Employer is paying the minimum required under Stakeholder rules but there's nothing to stop you paying into a SIPP and getting a 66% top up from HMRC.

[Sheepshanks]

You're really not putting much in - everyone goes on about public sector pensions but many of them are 10%+ from the employee, especially those at your salary level.

[InitialDave]

You're not putting much into your pension, and you're earning significantly more than average salary.

Up your contributions to your pension.

[bigandclever]

DickP said:

It looks like I would need to put away almost half of my monthly income into a pension to make it near the guidance value? Which doesn’t make sense??

If you want to retire at 40, it's probably not enough. If you want to retire at 87, it's probably too much.

[SturdyHSV]

DickP said:

Hi,

Early thirties and earning low 60s but have only really been earning in this region very recent, was mid 20s just over five years ago and was a student until 25.

The web based pension forecast tools I have used paint a very gloomy pension income picture even with 5% employer and 6% employee contribution. Employer is capped at 50k though which seems to be HMRC thing?

It looks like I would need to put away almost half of my monthly income into a pension to make it near the guidance value? Which doesn’t make sense??

Is my generation going to be (very for some) poor pensioner generation?

We'll just be working until we're 80 and then dropping dead soon after retirement. It'll be fiiiiiine.

[alock]

Up your contributions so you stop paying 40% tax

[alscar]

Iirc I think you should be looking to pay in / employer contribution a total of 50% of your age is if say 32 then look to pay in 16%.

[geeks]

alock said:

Up your contributions so you stop paying 40% tax

I keep seeing this but I will be significantly worse off (in the here and now) in this scenario, I still don't understand what it means.

[alock]

geeks said:

alock said:

Up your contributions so you stop paying 40% tax

I keep seeing this but I will be significantly worse off (in the here and now) in this scenario, I still don't understand what it means.

Between 50k and 60k you get taxed 40% so see £6k of this, or £500/month take home.

Or you can put £10k into your pension.

[Defcon5]

Of the 16k you are earning above 50k, you are only actually receiving 9k or so.

If you send it to a pension rather than into your pocket, you will receive 16k.

You still get the money, you are just choosing to receive it after you have retired.

[rossub]

DickP said:

Hi,

The web based pension forecast tools I have used paint a very gloomy pension income picture even with 5% employer and 6% employee contribution. Employer is capped at 50k though which seems to be HMRC thing?

6% is too low IMO.

Ok I’m public sector, but my contribution is set at 12.7% and I add a further voluntary 3%. It stings, but the higher rate tax relief helps soften the blow.

I’m just over £70k.

[PositronicRay]

It's all about accruing a pot, I started too late but caught up. Regular contributions, increased as appropriate, bonuses were split into 3rds savings/mortgage/ treat. Once rid of mortgage I could really ramp things up.

Don't fret, just chuck in what you can when you can.

[Terminator X]

DickP said:

Hi,

Early thirties and earning low 60s but have only really been earning in this region very recent, was mid 20s just over five years ago and was a student until 25.

The web based pension forecast tools I have used paint a very gloomy pension income picture even with 5% employer and 6% employee contribution. Employer is capped at 50k though which seems to be HMRC thing?

It looks like I would need to put away almost half of my monthly income into a pension to make it near the guidance value? Which doesn’t make sense??

Is my generation going to be (very for some) poor pensioner generation?

Live fast die young?

TX.

[WhiskyDisco]

I would be sacrificing every penny over £50k if I were you. A few years ago, earning about £85k I did this and while I was netting just a little over £3k a month I was seeing roughly £4.5k going into my pension. I calculated at the time that I was only "losing" about £100 a month in deductions.

I took a pleasure in filling out the self assesment and putting £49,999 in the box.

But boy was it hard going. I went into more and more debt as I struggled to make ends meet - but I'd rather stick it to the man, than give it to the man!

[u-boat]

geeks said:

alock said:

Up your contributions so you stop paying 40% tax

I keep seeing this but I will be significantly worse off (in the here and now) in this scenario, I still don't understand what it means.

Just ignore it and enjoy yourself, I expect you’ll be earning loads in your 50s and 60s and that’s when you’ll be making the big savings after your kids have left home etc.

Judging by the PH retired lot, when you’re really old you’ll likely just be in the NPandE complaining about immigration and wokeness or whatever so being well off will be the least of your worries.

[rossub]

WhiskyDisco said:

I would be sacrificing every penny over £50k if I were you. A few years ago, earning about £85k I did this and while I was netting just a little over £3k a month I was seeing roughly £4.5k going into my pension. I calculated at the time that I was only "losing" about £100 a month in deductions.

I took a pleasure in filling out the self assesment and putting £49,999 in the box.

But boy was it hard going. I went into more and more debt as I struggled to make ends meet - but I'd rather stick it to the man, than give it to the man!

Well that’s the most bizarre thing I’ve heard in a while. Going into debt due to paying too much into a pension - wtf?

[Mr Pointy]

Defcon5 said:

You still get the money, you are just choosing to receive it after you have retired.

Plus the 10/20/30 years compounded increase in value of course, although the last couple of years have been a bit rubbish.

[jgrewal]

rossub said:

Well that’s the most bizarre thing I’ve heard in a while. Going into debt due to paying too much into a pension - wtf?

I am not sure this this a serious post either!

[WelshRich]

DickP said:

Hi,

The web based pension forecast tools I have used paint a very gloomy pension income picture…

Many online tools assume that you’re going to use your fund to buy an annuity - Things may look a bit better if you take the forecast value when you hope to retire and plug it into a pension drawdown calculator instead…

P.S. I’m also a little wary of the tools sponsored by/hosted on pension company websites. They can be biased towards making your glass look half empty because they make more money if you pay more into your pension…