Personal pensions/retirement planning with no dependants

[413x]

For a while I've had it in back of my mind "what do you do with end of life money if you don't plan on kids"

This thread assumes (maybe incorrectly ) I won't die with nothing!

Obviously the perfect (impossible) situation would be to die as you spend your last penny.
With kids you simply leave what you have. Which for me would be charity. But obviously don't want to die with a load of unused wealth.

Now breaching the higher rate tax band and seeing the tax relief on pension contributions and being behind in pension contributions through life I need to consider personal pensio.

You get the tax relief on it, but I'm not sure how pensions really work at retirement (how much you get for how long with X amount in the pot) and whether the tax relief is worth it vs something more flexible (isa, property, living for the moment)


I understand diversity, (S&S ISA, cash isa, pension, property etc) is best and I do have diversity here. But I do think I should properly think about this now rather than just ambling through.
I certainly dont want to save everything and just live to save and miss out on experiences. Especially if health deteriorates.
Obviously I contribute max to my company matched pension and this would be after that.

I know this is a high earner demographic (Gucci corner sofa for some!) so thought this would be a good place for a starter.



FYI I'm able to save after pension probably 1k a month at least. This excludes savings for luxuries like holidays, home improvements, hobbies which I use regular saver accounts for.

 

[413x]

See an IFA .. but I'd say max out the tax free stuff like ISA's first, then whatever maxes the matching contributions from your employment. Money put into a pension is essentially locked down until you retire so you don't want all your money there even though those matching contributions and tax savings are "free" money.

I'm also highly skeptical the tax benefits will be there long term. Pensions are too tempting a target for the government not to want to raid them.

Yeah this is what I was wondering. Having it locked away means you can't jump on a property crash (let's say) should it be the best option at the time some time in the future.

At least with an isa, even a S&S ISA you can get money out in a few days. If needed.

This will be the first year of maxing out my ISA allowance.

 

[413x]

Just for clarity.

I am already (and obviously) putting in the max with my employer for the matched percentage.

As others have said it would be a no brainer not to.

This is money beyond that.
Maybe mortgage overpay is the best thing really. It's certainly an easy no faff option.

 

[413x]

Papa, is that you?

Son? Son! Why didn't you call!?

 

[413x]

Maybe I'll put a bit into a personal pension. Enough even if it's just a couple of hundred a month. Ignoring inflation and gains/losses over time that would see total pension contributions (including my employer matching and my employee contribution) hitting 750 gbp a month.

Still doesn't sound like enough really

 

[413x]

750 a month for several decades not enough? Just how much money do you think you will need when you retire?

It depends, over 30 years at 5% growth per annum you'd have a pot of about £390k. Doesnt sound like much considering 30 years of inflation will happen. You really need to start compounding from a younger age to benefit from smaller monthly additions.


In a housing crash... buy housebuilder stocks. You can do all that in your SIPP.

As sols said its not much.

Online calcs said its worth a relatively small amount a year. Way under 20k


As to how much you'll need? Who knows. If there's no NHS, then state pension is means tested and who knows how much utilities etc will be.

Its impossible to know but it looks very low on the calculators.

Its well known about the pension time bomb but if I'll be under by such a big amount even putting in what I am.. There's going to be so so many with just scraps. Without the huge house price growth to fall back on like my parents have.

 

[413x]

I've salary sacrificed quite a bit to lower tax threshold but also maximise my pension. Fortunately my work provides a very generous contribution (12%) which I'm also contributing as well. It makes for a reasonable chunk every month. I'm hoping to wind my career chase when I get to my 50s and start to just enjoy a more calm work pattern.

I do have kids so I'm ploughing as much as I can so that I can not only cover the financial support (if needed) for the kids but also be able to enjoy priceless memories of nice holidays and so on in the future but also allow enough unplanned spending to enjoy life without worrying.

There are lots of retirement calculators out there but inflation is often not considered so it's tough.

Clearing things like mortgages in time with retirement can be quite advantageous as your disposable income suddenly doesn't need to be as large.

It depends on lifestyle, some people are ok on 20k per year some need closer to 60k per year to maintain the standard of life they have. Others make sacrifices like down sizing etc...

Mortgage will be cleared. That's for sure.
Don't need a more grand house. To be honest one more room upstairs and one downstairs (if a couple) would be fine. Current house is lovely as a one person.
Clearing mortgage is one of my main big todos.

Mortgage is 200k. But I've managed to save/invest 36k since February 2020 (when I went down to 2k after buying house) so I have no doubt that will be cleared as long as I can still work.

Alongside pension I will hopefully have S&S ISA income too.

If didn't have to pay 900 a month (current mortgage) I could probably live on 20k a year in todays mone. Especially as a big chunk of my income now goes on saving. Which wouldn't be needed.

Inflation is the spanner in the works. Who knows what it will be. Suppose there is equity release too in house of don't have kids to leave it to


Maybe it isn't looking so bad. Pension is low though

 

[413x]

Found all my pensions now.
Some of them are sub 2k after leaving jobs in well under 2 years and having a 3 month wait to subscribe.

Total wasn't quite as bad as I thought due to one that has done fairly well (18 percent rise in 3 years considering recent market.) and I was there years (always maxing out employer contributions) .

Still very much not enough if I was relying on pension alone.


I dread to think what done people will face... Ie work till you drop

 

[413x]

As long as you have your mortgage paid off you could work 2 days a week and still have a comfortable lifestyle.. It will actually be good for you. Not everyone actually hates their job. My Grandad worked till 78 part time refurbishing computers for the Russians till the Soviet Union collapsed. He lived till 93 so still got 15 years of retirement without doing any work.

Yeah that's number one.
Its primary financial goal. Can't imagine what rent would be going forwards. Especially in UK.

Even without overpay mortgage has 20 years left. I reduced the term to keep payment amount the same.

If life goes smoothly (lol) I'd hope to pay it off in 15 years max.