Pension percentage you should put in
Discussion
There’s no hard and fast rule imo.
I think it’s good to start with how much you’ll need and when you want to retire.
Also I think it makes sense to not have all your eggs in the pension basket. Who knows what the gov will do in future.
Maxing out employer contributions makes sense though.
I think it’s good to start with how much you’ll need and when you want to retire.
Also I think it makes sense to not have all your eggs in the pension basket. Who knows what the gov will do in future.
Maxing out employer contributions makes sense though.
Puzzles said:
There’s no hard and fast rule imo.
I think it’s good to start with how much you’ll need and when you want to retire.
Also I think it makes sense to not have all your eggs in the pension basket. Who knows what the gov will do in future.
Maxing out employer contributions makes sense though.
I'd agree, although one of the challenges I see with the "not all your eggs" approach is that lots of people don't actually do anything instead of pension saving. It can be used to excuse/justify not saving enough which might be a mistake... I think it’s good to start with how much you’ll need and when you want to retire.
Also I think it makes sense to not have all your eggs in the pension basket. Who knows what the gov will do in future.
Maxing out employer contributions makes sense though.
i.e. if you have decided to save 1K per month (because you've worked out that is what you need), and you split it between pension and property (or whatever the other basket is) then fair enough, but make sure you actually do this.
A couple of things I've found helpful are:
1) To track my "net worth" monthly. I have a spreadsheet in which I record the sum of all assets / debts (i.e. mortgage) etc., I find it helps focus the mind on the long term goal. It is quite pleasing to see the long term trends.
2) Use a FIRE calculator (not necessarily to plan to retire early), but just to help understand the size of the assets required in order to do so - https://blackandwhitefire.com/ is an example of one to try.
Put current age, savings, percentage rates etc in that calc, and it will probably show that most people need to be saving more than they currently are........
I’m retired now. I was fortunate in later years, to be employed in roles which paid substantial salaries with excellent pension schemes. Retirement is great, but the drop in income does mean making changes to how I spend money and I can no longer just buy things because I want to or go on holidays costing over £10k.
My answer for you, is to put everything you can reasonably afford into your pension, because you will be thankful you did at the point in life where you retire.
My answer for you, is to put everything you can reasonably afford into your pension, because you will be thankful you did at the point in life where you retire.
But also remember some points most do not want to face up to.
You will most likely retire at 67. Most give up on the more expensive things like £10k holidays, flash new cars etc in their early 80's, so think you need the bulk of you pension spending for 13 years. Many will now come here and say their great aunt Joan is still sky diving at 100 years old, but the reality is very different to that for most. Think of the people you know who are over 80 and still wanting to spend like they did at 67.
What I am trying to say is yes invest in your pension but don't scrimp and scrape through your life just in the hope you will be able to dispose a £4m in 13 years. Be realistic as by the time you retire you will have a lot of what you want, no mortgage, the kids will be able to fund themselves etc, ect.
You will most likely retire at 67. Most give up on the more expensive things like £10k holidays, flash new cars etc in their early 80's, so think you need the bulk of you pension spending for 13 years. Many will now come here and say their great aunt Joan is still sky diving at 100 years old, but the reality is very different to that for most. Think of the people you know who are over 80 and still wanting to spend like they did at 67.
What I am trying to say is yes invest in your pension but don't scrimp and scrape through your life just in the hope you will be able to dispose a £4m in 13 years. Be realistic as by the time you retire you will have a lot of what you want, no mortgage, the kids will be able to fund themselves etc, ect.
AllyM said:
Personally I salary sacrifice to get me down to the basic rate of tax only, which is greater than the above ROT.
Same. Once my mortgage is paid off I plan on paying the absolute maximum in I can afford to pay as little tax as possible.ARHarh said:
But also remember some points most do not want to face up to.
You will most likely retire at 67. Most give up on the more expensive things like £10k holidays, flash new cars etc in their early 80's, so think you need the bulk of you pension spending for 13 years. Many will now come here and say their great aunt Joan is still sky diving at 100 years old, but the reality is very different to that for most. Think of the people you know who are over 80 and still wanting to spend like they did at 67.
What I am trying to say is yes invest in your pension but don't scrimp and scrape through your life just in the hope you will be able to dispose a £4m in 13 years. Be realistic as by the time you retire you will have a lot of what you want, no mortgage, the kids will be able to fund themselves etc, ect.
Agreed, my partners dad is 75 and has millions of dollars in his pension fund. He lives in Australia and for tax reasons he has to take 5% of the total value of the fund out in cash each year.You will most likely retire at 67. Most give up on the more expensive things like £10k holidays, flash new cars etc in their early 80's, so think you need the bulk of you pension spending for 13 years. Many will now come here and say their great aunt Joan is still sky diving at 100 years old, but the reality is very different to that for most. Think of the people you know who are over 80 and still wanting to spend like they did at 67.
What I am trying to say is yes invest in your pension but don't scrimp and scrape through your life just in the hope you will be able to dispose a £4m in 13 years. Be realistic as by the time you retire you will have a lot of what you want, no mortgage, the kids will be able to fund themselves etc, ect.
He leads a very modest life, has a nice house but doesn't spend much money. He isn't interested in going on holiday and is happy to drive around in his 13 year old Honda Accord. Basically his life revolves around Golf twice a week and seeing his partner and going out for dinner a few times a week.
By his own admission the stock market is doing so well that by taking the 5% cash alone he has more money than he ever needs to live on.
Edited by anonymous-user on Monday 3rd February 12:13
fat80b said:
I'd agree, although one of the challenges I see with the "not all your eggs" approach is that lots of people don't actually do anything instead of pension saving. It can be used to excuse/justify not saving enough which might be a mistake...
i.e. if you have decided to save 1K per month (because you've worked out that is what you need), and you split it between pension and property (or whatever the other basket is) then fair enough, but make sure you actually do this.
A couple of things I've found helpful are:
1) To track my "net worth" monthly. I have a spreadsheet in which I record the sum of all assets / debts (i.e. mortgage) etc., I find it helps focus the mind on the long term goal. It is quite pleasing to see the long term trends.
2) Use a FIRE calculator (not necessarily to plan to retire early), but just to help understand the size of the assets required in order to do so - https://blackandwhitefire.com/ is an example of one to try.
Put current age, savings, percentage rates etc in that calc, and it will probably show that most people need to be saving more than they currently are........
That ^. Especially tracking net worth on a regular basis. Helps focusing on what's helpful towards aims, what's not and helps decisions on major 'project' spending and dealing with man maths.i.e. if you have decided to save 1K per month (because you've worked out that is what you need), and you split it between pension and property (or whatever the other basket is) then fair enough, but make sure you actually do this.
A couple of things I've found helpful are:
1) To track my "net worth" monthly. I have a spreadsheet in which I record the sum of all assets / debts (i.e. mortgage) etc., I find it helps focus the mind on the long term goal. It is quite pleasing to see the long term trends.
2) Use a FIRE calculator (not necessarily to plan to retire early), but just to help understand the size of the assets required in order to do so - https://blackandwhitefire.com/ is an example of one to try.
Put current age, savings, percentage rates etc in that calc, and it will probably show that most people need to be saving more than they currently are........
There are so many variables, it's an impossible question to answer without knowing a lot of information about the individual.
Personally, I pay in 8% because that's the least I can pay in to get the maximum contribution (12.5%) from my employer.
Once my mortgage is paid off I'll probably contribute a fair chunk more, but I don't have expensive tastes so I'm comfortable planning for a modest income in retirement.
Personally, I pay in 8% because that's the least I can pay in to get the maximum contribution (12.5%) from my employer.
Once my mortgage is paid off I'll probably contribute a fair chunk more, but I don't have expensive tastes so I'm comfortable planning for a modest income in retirement.
Chris Peacock said:
There are so many variables, it's an impossible question to answer without knowing a lot of information about the individual.
Yep, retirement age for one. Ideally, one would wish to dictate their retirement age, but a lot of times, it's outside of your control e.g. physical disabilities/ body failing due to wear and tear, working in a diminishing or dying industry, ageism (yes, it's illegal, but we all know it happens) etc..So many other factors to consider into the overall retirement plan/pension contributions!!!
10% employee 16% myself, every pay rise I have put a bit of it in as a higher percentage.
I don’t want to work until I’m 67 and so if I can get a decent amount at 55 and not stress too much about a proper job at some point after that it seems the most tax efficient way to get there give or take a few variables.
I don’t want to work until I’m 67 and so if I can get a decent amount at 55 and not stress too much about a proper job at some point after that it seems the most tax efficient way to get there give or take a few variables.
I'm 37 and putting in much more. As mentioned above, I don't see the point in missing out on employer matching contributions as it's free money.
My employer pays 10% up to a salary limit then 9% above that as standard but will match up to a further 7%. I therefore pay in 7% and get almost a quarter of my salary saved every month as a result.
Based on my providers projection, I should be on track to be making the same as I do now as a pension when I'm 66 but that's obviously just a guideline and it could be much more or much less. In reality, I'd rather take a lower figure and retire before then if I'm allowed.
My employer pays 10% up to a salary limit then 9% above that as standard but will match up to a further 7%. I therefore pay in 7% and get almost a quarter of my salary saved every month as a result.
Based on my providers projection, I should be on track to be making the same as I do now as a pension when I'm 66 but that's obviously just a guideline and it could be much more or much less. In reality, I'd rather take a lower figure and retire before then if I'm allowed.
Gassing Station | Finance | Top of Page | What's New | My Stuff