Other Pension Pots

A slightly left-field post, inspired by ElThomsono's post showing pension pot growth, but I was curious what size of pension pot people have accumulated - in particular as I assume we're all of a broadly similar age range (being on a forum!).

Without doxing yourself, how are you getting on?

Age (to nearest decade): 40's
Age when pension started (to nearest decade): 20's
Pension contributions (% of gross salary inc employer): 16%
Pension pot (relative to current gross salary): ~2.0x (would have been more but recent promotions increased my salary ).

Thought it would be interesting to compare notes and maybe inspire some to start saving!

 

I'm in a fortunate position, I've been paying in for sixteen years and the company is matching it, so:

Age (to nearest decade): just on the right side of 40
Age when pension started (to nearest decade): 20s
Pension contributions (% of gross salary inc employer): 20%
Pension pot (relative to current gross salary): ~4x

On paper it's excellent, I can down tools at 57 having paid off the mortgage and live off the funds until the state pension kicks in. The reality is something will go wrong with the state pension (means tested?), my kids will both need all sorts of financial assistance (absurd uni fees and house buying help?), and the investment will be poor as things globally really do seem to be going pear shaped, as Byron pointed out.

I'm paying in out of duty more than anything else, the real question is "when am I going to die" and it's a difficult one to plan for, financially. At what age do kids start becoming expensive?

 

I am lucky at this stage to have a reasonable salary and have low running costs, live cheap, don’t chase bigger and bigger houses etc happy with my lot, if it wasn’t for family I’d probably be living in a bedsit somewhere

Age (to nearest decade): 50’s
Age when pension started (to nearest decade): mid 40’s when I really started thinking about it but did enter some work schemes beforehand say 10yrs before.
Pension contributions (% of gross salary inc employer): ~55% including any bonuses in, making up for lost time…… prior to my 40s it was less than 4% if I didn’t blow it all on cars, holidays and beer.
Pension pot (relative to current gross salary): ~3.0x
Retirement target – 55-57 not sure what form this will take, or if it will be a reality, too many external factors that can impact it, most likely not a proper retirement, more a reduced work life, do maybe 3-6 months a year for pocket money and to pay for general travel and toys etc when I go into pensioner low power mode, but want to try an enjoy some time before I become too old and decrepid to do anything, so not hanging on ‘til 67, if I can even make it that far.

Started quite late, In one company I used to take the pension contribution as cash and blow it on fun times, I am fiscally irresponsible like that. I calculated what I would have if I had done things properly from when I started work using the paying 50% of your age as a percentage rule of thumb, I would have had a million or so by now…… so start early.

I have been teaching my daughter to do better and already she has a couple of pension pots, her work, plus a SIPP which I also contribute to and other investments etc. she is not yet 18 , so she will hopefully have a better start than me, she likes money, learnt from her mother how to extract the most from Dad

 

I wanted to Like this but somehow that feels inappropriate! Made me laugh though

 

Yup, this is one of my risks, fortunately my first financially responsible thing I ever did was spurred on by the introduction of the Government CTF, seemed like a good idea, this got me doing regular investment from the day my daughter was born, for her future, did it whether I could actually afford it and sacrifice my wants and needs to do so, this kind of opened my eyes to doing sensible things with money as when it moved out of the terrible CTF accounts to S&S ISA I got to see the growth in her account, which was huge, she had more dough than us and went hmmm, there's something in this investing lark, sad that it took that I know, but she is set for all that now.

The number of times me and the missus would look at her pot salivating at the prospect of using it realizing how bad we had done for ourselves

Really helped that it was her account that I couldn't access rather than saving in mine for her as I would have blown it all at the first job loss or financial problem rather than do what was needed to solve such problems and we had many hardships over the years.

 

Age (to nearest decade): just on left side of 40
Age when pension started (to nearest decade): early 20s
Pension contributions (% of gross salary inc employer): 21% IIRC
Pension pot (relative to current gross salary): just over 3x

BUT wife's career hasn't got off the ground before kid, so she has zero retirement pot and just minimum years for state pension from having a kid.

Not sure on retirement age. We'll see when we get there.
1 kid mid of primary school, wife worries a lot about his higher education. Again, we'll see when we get there, 10 years to go.


Inspire saving? I think the recent proposed change to pension salary sacrafice will do the opposite! /rant... sorry

 

Yup missus has similar low pension issues, I have taken a portion I would put into either an ISA or my pension to put into a SIPP for her, she still gets the relief etc, whilst terrible from a tax perspective versus me sal sacrificing into my own the reality is when we do draw pensions we want to reduce tax impact on withdraw when not earning. Still do it now despite her working and have workplace pension because 2 pots is better than one.

In addition to that if she finally decides she has had enough of me I can show she has been fully supported at every juncture and have less of a claim on my pension in a separation, though you could argue I am only giving away what I would loose anyway

She seems tolerant though, coming upto 30yrs......

 

I don't know how to explain this because my pension is a mess but basically:
Since reaching legal working age, I lived in Portugal for 5 years and the US for 2. Nothing was put to pension during that time except my state Portuguese pension, which will be pennies.
During my first 8 years in the Netherlands I didn't put anything to pension because "I need this money now, not when I'm practically dead."

Now that I'm older, wiser (HAH) and responsible for someone else (as she is for me), I've been paying into a private pension along side my matched and state pensions.
If my maths is correct (probably not?), I will have made up for those 15 years of no pension when I retire at the age of 67 and 9 months.

That, together with 5 of years of no mortgage before retirement and a decent life insurance policy in case either of us (mostly me) keels over should have us covered until we can upload our conscience to San Junipero.

Meanwhile, MrsYuu is planning to retire at 45. This neurotypical world isn't made for a neurodivergent person, if she were to keep going neither of us think she'd make it to retirement. My salary and my pension should cover us both.

 

My wifes pension pot is also rather small because she firstly had low paying jobs, then kids with either no work or part time hours. She's still part time but earning enough to bung a big percentage into her pension so it will hopefully catch up. For retirement planning I'm not counting on her pot (except state) so it should just be fun money. That's if she hasn't had enough of me by then - we met at 18 so she seems to be able to tolerate me!

 

Age (to nearest decade): 50's
Age when pension started (to nearest decade): 50's
Pension contributions (% of gross salary inc employer): Me 10.5% Employer about 15%
Pension pot (relative to current gross salary): ~0.7x

Was only in a position to start paying in 3 years ago and whilst it's a very good pension scheme, I am under no illusion that I will be working until the bitter end to have anything half tidy.
It is what it is.

 

Age (to nearest decade): 50's (wrong side of)
Age when pension started (to nearest decade): 40's (current main pension) - most of us were contractors
Pension contributions (% of gross salary inc employer): Me 7.85% Employer about 21.5%
Pension pot (relative to current gross salary): 1/80th final year salary (so much for a gold plated pension everyone goes on about, 16 years service would give me approx £4K per year)
(already part-retired)
Civil service pension changing this year, meaning I'll pay less in, but employer pays more, to compensate, still works out crap if you ask me (new scheme is designed for younger poeple to stay longer in, to build up their pot, not people nearing retirement)
Retiring in May 29 - to get a new (out of the IT industry) job away from the chaos of current work

 

Age (to nearest decade): 40's
Age when pension started (to nearest decade): 30's
Pension contributions (% of gross salary inc employer): me 10% employer - minumum - 4%?
Pension pot (relative to current gross salary): current pot is equal to a years salary, despite having been saving a bit for the last 5 years, not sure if thats good or bad!

 

One of my friends at work had been looking at the investment and decided to move his pension to the "performance" fund, for high growth.

Two days later Trump invaded Iran

 

It's a long slow process, but time is on your side

Yup the impact is bad, still not as bad as when Covid hit, but there is still time

 

I'll just preface this by saying that it is not financial advice, I am not a financial advisor and I am not qualified to give financial advice.

As @sandys says, time is on your side here.

That said: a very rough rule of thumb to work out how much money you might get from your pension pot in retirement in a sustainable way so you don't end up broke before you die is:

• Take 4% of the pot's value as a pension each year.

Now this is very, very much just a rule of thumb and your own circumstances will have a massive influence on whether it's appropriate for you. It also assumes that you don't take any of your pot as a tax-free lump sum at retirement (or, if you do take a lump sum, which can be up to 25% of the pot's value, you'll need to calculate 4% of the post-lump sum amount).

And this only applies to Defined Contribution (DC) pensions (aka Money Purchase pensions) - pensions where the money you and your employer put in are invested in a "pot" and you end up with what you end up with at retirement. So if investment returns over the period to retirement are good, you'll have a larger pot, and if they're bad, you'll end up with less. This is in contrast to Defined Benefit (DB) pensions (aka Final Salary pension), where you are guaranteed a set amount of pension per year once you retire, usually based on a fraction of your final salary for each year of service. DC pensions are much, much more common than DB pensions these days.

 

A couple of things (again, not financial advice):

• It's pretty common to pursue a more risk-tolerant investment strategy when you're still a fair way off your proposed retirement age - all things being equal, you should have more time for your investments to recover from any blips along the way.
• It's also common to de-risk as you approach retirement age, by transitioning from more risk-tolerant to more risk-averse investments (e.g. moving from equities to bonds, or even to gilts), again with the logic being that you don't want things to go tits-up just before you retire leaving you insufficient time to recover.
• Exactly when you switch your investement strategy depends on personal risk appetite. Most providers have a "Lifestyle" investment fund or a "Target retirement year" fund that will do this for you.

And everyone loves a pension projection calculator Are you allowing for the impact of inflation in your calcs? Worth seeing what difference it makes to play around with different future inflation assumptions vs future investment returns (and future salary increases). 3% salary increase seems reasonable if a bit racey, again it's worth seeing what flexing this assumption does to your final projection (it'll have far less of an impact than inflation will, to be fair).

It can be really quite eye-opening to play around with your assumptions (investment return, inflation, salary increases, contribution levels). And the main takeaway from all of this is: if your projection shows that you aren't on track to meet your expectations in retirement, you longer you have until you retire, the easier it is to do something about it.

 

And apologies for the triple post, but to get into the spirit of the thread:

Age (to nearest decade): 50's
Age when pension started (to nearest decade): 30's
Pension contributions (% of gross salary inc employer): 28% currently, this has gone up quite a bit in the last few years
Pension pot (relative to current gross salary): ~5.0x

Retirement target: realistically it'll be State Pension Age, so 67 for me. I don't foresee a scenario where I can retire earlier. Although my situation looks pretty good in isolation, my wife's pension situation isn't anywhere near as rosy, not least because of the decade or so she spent working part-time when the kids were younger. So she has a lot of catching up, which is very hard to do, and we'll need to pool our resources in retirement.

My projection for my own retirement assumes I take no tax-free cash and, crucially, assumes that my investment returns match but do not exceed inflation, which is a pessimistic assumption. It also assumes any future salary increases do match inflation, which on the basis of the last few years is actually an optimistic assumption. But salary increases vs inflation is a lot less material than investment returns so I'm comfortable with this.

It also assumes that my current level of contributions will continue up to retirement. This is a tricky one, because there may well be wiggle room to increase contributions once the mortgage is paid off, but conversely the government's plans to restrict National Insurance Contribution relief on pension contributions from 2029 mean that I'll have less in my pocket from that point which might mean needing to reduce how much goes into the pension.

So there's quite a lot to consider when making these projections, which is why I'd always recommend speaking to an IFA if you're unsure about any of it.