Soldato
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- 12 Dec 2002
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- 2,950
I intend to be mortgage free on 4 or 5 houses by the time I'm 50ish then live off rent.
Retirement income
- Thread starter mike66uk
- Start date
That's not what websites suggest, which is 50% of your current salary, which works at about 30% for someone in their 20s. Seems a far more reasonable amount though!
Associate
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..but the alternative is the state pension only @ 67?
That's a pretty rubbish pension calculator 'cos it doesn't account for any growth! 3% growth will hoick up you pot to around £250k
Remember you'll be able to take part of it as a tax-free lump-sum... speaking of which you'll get tax relief on the contributions. If you get relief at 40%, you'd pay in £88k and get £250k (20% = £117k to get £250k) - and that excludes any employer contributions
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Do you know of any good calculators? Why do you say 3%, is that considered average performance? (I know you can invest in millions of different things so defining an average will be impossible!)
I have a SIPP though I'm currently not paying into it as I work for local government now so pay into the LGPS. Started the SIPP middle of last year after it turned out my employer at the time wasn't going to match or contribute into the pension until 2017. Glad I got out of there.
I believe 7% is average for properly managed stock investments over a long time periods.That equates to double your money every 10 years. but this hides the fact you can go long periods with 10-15% returns, period with losses, and longer periods of small growth in 2-3% range. So you only get 7% on average over say 30 years, which is kind of what your pension does.
3% would be relatively low and extremely safe, e.g. using long term bonds and the like. 5% I think is realistic if you spread investments into different risks and you pay an investor to manage your finances.
This is where again you see the tax advantage a pension, that extra 40% you have in the pension pot will also under go all that growth.
Thanks very much for that D.P. That rings a bell as I'm sure I've seen the 3/5/7% split mentioned before. My pension is with Fidelity and the scheme I'm in has 3 levels depending on how close you are to retirement. Being younger I'm in the riskier category for the foreseeable future.
You can probably choose to split your investments into different risk categories, e.g. put 1/3rd in zero risk bonds and cash, 1/3rd in low risk investments and 1/3rd in high risk stock, or whatever ratio you want. By default they will assign ratios based on our age, and yes the younger you are the more risk they will giver you, because the more chance you have to ride out any recessions etc.
I can go online and change the risks, investments, the break down into different categories, or even just go and pick companies to invest in.
For reference I have chosen moderate risk, less than is recommended for my age. I am already happy to see my money get a 100% return from an employer match. This probably is not a wise choice and I should take more risk, but that is always a personal question. I have lost money in the past with higher risk investments.
Associate
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My company pays a 15% contribution to my Super (Aussie for private pension).
By my crude calculation I will have around $1million (AU) if I even make it to retirement age (assuming zero pay increase).
By my crude calculation I will have around $1million (AU) if I even make it to retirement age (assuming zero pay increase).
I work for a Financial Institution, specifically within a Pensions servicing area. I'm amazed at how many people are opting to take all their pensions pot as cash. The tax they are paying is eye watering and a lot of them have openly admitted all they want to do is spend, not save.
trust me, as an IFA I feel your pain..........
It's bonkers and no matter how many times you discuss future income/retirement/tax/state pension etc and all the things they should be considering, people will still just ignore it and pay large amounts of tax, just to access funds today.
They don't care about the fact they will be left with a state pension only etc, people just want to spend it. I've had everything from buying a house in france, a new taxi on the road, treating family to holidays, putting money in their business etc etc etc.
Utter madness but brought on by a government who wanted to pander to the people in the lead up to an election.
The problem is if it's not matched, which most won't be, then it's far less cut and dry, especially if people are trying to save up for a house at the same time. Putting 20% into a pension while paying out 40% of your salary in rent and trying to put a little away for a mortgage is just not feasible for many.
I really don't understand why more people don't take a keen interest in their retirement income earlier on in life. I don't want to keep grafting til I'm 68 for the reward of living on £8,000 per year!
Even if it means working extra hours or even two jobs while you're young to pay for it, it's better than working hard as an old man, do the work while you're young and fit I say.
Even if it means working extra hours or even two jobs while you're young to pay for it, it's better than working hard as an old man, do the work while you're young and fit I say.
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Or enjoy your life when you are young and fit. Those adventure holidays, all nighters partying on the beach and grand tours of Africa are going to be far more interesting and fun to do than driving around Yorkshire with your caravan at 70...
That's the perpetual problem, the youth have health and fitness on their side, but no time or money and the old have time (and possibly money) but little health and fitness.
You could always do a combination of both (which is probably the best option) but wasting your youth working all hours will almost certainly come to haunt you when you get old.
One of the best things I ever did was start pensions for all my kids when they were born. I have put on average between 25 and 100 per month into them. My two eldest well let's say allowing for conservative growth they will never have to contribute in their adult life to reap a good pension when they are older. My youngest at 4 already has 7k in their pension pot. I would recommend everyone do this even 10 quid a month at 65 years of growth will help them immensely.
For myself I am not that bothered I aint expecting to live that long tbh.
For myself I am not that bothered I aint expecting to live that long tbh.
I think this is something I will look into.
I don't expect to live to retirement age and if I do I strangely would rather keep working till I do pass.
By matched I mean up to a certain threshold set by the employer - 20% is quite extreme, I'm thinking more of people putting in say 5% and employer puts in 5% meaning they double their money (pending fund performance/fees etc) regardless of what the actual threshold is. Or to phrase it another way I would look to contribute whatever level is required to get the maximum match from the employer as otherwise one is effectively turning down 'free money' (albeit money that has to be invested in a particular way). Of course, if that really isn't affordable in terms of the here and now then exceptions will need to be made - little point ploughing into the pension if one is racking up expensive debt at the same time.