Gloomy pension prospects on average salary?
Discussion
WelshRich said:
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…
Hope this true because it is utterly depressing looking at these 'shortfall' figures described for a moderate lifestyle. I am very privileged to be on a very good salary and £1000 goes into the pot every month and my forecast says I will have 30k a year at 67 (which is quite far away for me just hope to be alive by then!)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…
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?
Honestly I'd jack up your personal contribution to a minimum of 15%, maybe even 20%, especially if it is a salary sacrifice scheme. 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?
You will barely notice the drop in take home. But it will drastically transform your later life, especially if you never marry and just have a series of attractive girlfriends who you never let move in.
You may or may not be earning a fortune in the latter part of your career. You might be earning £100k+, or you might have been replaced by AI or a robot. Nobody really knows. I think you will do alright on that income if you knuckle down now. It is about double the average salary after all.
Most of your generation is completely screwed though, unless they get into at least the top 20% of earners.
Op I was in your boat albeit only dawned upon me in my mid-30's that my pensions were woefully low so as I see it there are two key aspects that need to be reviewed and adjusted accordingly:
1. Increase your contributions and
2. Review the fund(s) selected in your pension to ensure you are taking enough risk i.e: global equity funds of some flavour rather than the steady eddie default funds.
I am early 40's and 100% Equities....that comes with the risks of course but I'm less concerned at this point...maybe il need to dial down the Equities when closer to retirement...hopefully will make it that far to worry about it then!
1. Increase your contributions and
2. Review the fund(s) selected in your pension to ensure you are taking enough risk i.e: global equity funds of some flavour rather than the steady eddie default funds.
I am early 40's and 100% Equities....that comes with the risks of course but I'm less concerned at this point...maybe il need to dial down the Equities when closer to retirement...hopefully will make it that far to worry about it then!
WayOutWest said:
...especially if you never marry and just have a series of attractive girlfriends who you never let move in.
I'd suggest finding and marrying a bird with a reasonably senior public sector job so she has nice "gold pated" final salary pension to keep you both in your old age.
Don't stress.
Might die before then.
But your personal contributions are too low.
I do 10% my employer does 10%
I chuck some a month in S&S ISA and overpay the mortgage when I don't want to buy anything.
Pointless saving every penny to retire when you could die before or be too ill and infirm to do anything when you retire.
Might die before then.
But your personal contributions are too low.
I do 10% my employer does 10%
I chuck some a month in S&S ISA and overpay the mortgage when I don't want to buy anything.
Pointless saving every penny to retire when you could die before or be too ill and infirm to do anything when you retire.
b
hstewie said:
hstewie said: Earning > £60K in your early 30's = Gloomy pension prospects on average salary.
Christ this place sometimes
OP could be working in London. £60k isn’t much here, in fact for early 30s is on the lower end of professional salary in most industries. Most i know are in excess of 80 by this age, the more successful 120s. Christ this place sometimes
The issue with pensions is two fold for young people I think (I’m 35 so not that young but hear me out).
When you’re in your 20’s you believe it’s so far away it isn’t worth worrying about. And you need every penny for things that need buying, ironically those pounds even if they are meagre mean so much more at 22 than they do 32 due to compounding.
When you finally realise it is important and maybe you’ve paid for the wedding, bought a house, whatever else, and perhaps you can afford to put a chunk in, it’s mostly going to be too late to get anywhere near the sort of life you’re accustomed to, save for having a public worker scheme or earning lots of money.
It’s a tough spot. And then you probably also end up fuming like me that you only made the most of your ISA allowances in your 30’s vs 20’s too.
When you’re in your 20’s you believe it’s so far away it isn’t worth worrying about. And you need every penny for things that need buying, ironically those pounds even if they are meagre mean so much more at 22 than they do 32 due to compounding.
When you finally realise it is important and maybe you’ve paid for the wedding, bought a house, whatever else, and perhaps you can afford to put a chunk in, it’s mostly going to be too late to get anywhere near the sort of life you’re accustomed to, save for having a public worker scheme or earning lots of money.
It’s a tough spot. And then you probably also end up fuming like me that you only made the most of your ISA allowances in your 30’s vs 20’s too.
Even more frustrating was once I was earning big money and could put lots into a pension (2010 onwards) I was earning above the taper level so I could not contribute more than 10k or recently even less a year.
So have now 13 years of great earning but hardly any pension savings because of the weird rules on tapering.
Now I’m nearer my intended semi retirement age I won’t be earning any where near as much so will not be saving anything significant. The whole model is wrong and seems to be designed to max the govt take and appeal to the socialists who want the rich to pay more.
So have now 13 years of great earning but hardly any pension savings because of the weird rules on tapering.
Now I’m nearer my intended semi retirement age I won’t be earning any where near as much so will not be saving anything significant. The whole model is wrong and seems to be designed to max the govt take and appeal to the socialists who want the rich to pay more.
Zaichik said:
Even more frustrating was once I was earning big money and could put lots into a pension (2010 onwards) I was earning above the taper level so I could not contribute more than 10k or recently even less a year.
So have now 13 years of great earning but hardly any pension savings because of the weird rules on tapering.
Now I’m nearer my intended semi retirement age I won’t be earning any where near as much so will not be saving anything significant. The whole model is wrong and seems to be designed to max the govt take and appeal to the socialists who want the rich to pay more.
Most people won’t even know the taper exists. So have now 13 years of great earning but hardly any pension savings because of the weird rules on tapering.
Now I’m nearer my intended semi retirement age I won’t be earning any where near as much so will not be saving anything significant. The whole model is wrong and seems to be designed to max the govt take and appeal to the socialists who want the rich to pay more.
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!
£85k. Going in to debt. Struggling to make ends meet. 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!
PH never fails to deliver.
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!
Glad I'm not the only one letting the tax tail wag the dog :-)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!
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