Pension - how much?
Discussion
Im 30, dont have a pension yet, admitedly havnt started looking for a provider either, but talking to people it seems some folk put away a LOT 
Id like a good pension (two, actually.. plus hopefully some real estate one day) but have yet to get started. What could/should/does the average jo put away each month?
Id like a good pension (two, actually.. plus hopefully some real estate one day) but have yet to get started. What could/should/does the average jo put away each month?
My accountant he tell me conventional pensions now perform shite.
He tell me do it myself by purchasing commercial property.
Me no sure that it is right time to purchase any property.
Me sit on fence and leave cash in bank.
Dad died at 63 and Grandad at 58, so me no need pension anyways.
Cheers
Pat
He tell me do it myself by purchasing commercial property.
Me no sure that it is right time to purchase any property.
Me sit on fence and leave cash in bank.
Dad died at 63 and Grandad at 58, so me no need pension anyways.
Cheers
Pat
There's no simple answer - nobody yet has been able to predict the future (Well apart from Sara Freider, of course) but, as a very simple "rule of looking at things in the simplest way thumb" if the govt. gives you X amount of allowance for tax relief, that's got to be a good starting point!
From April, the pension market is getting a shake up.
I have just taken a policy on pro advice and pay £200 a month, and the Inland Rev pay some form of tax credit in for me too. I thought long and hard, about this and the housing route. At the end of the day, I decided this was the painless and easy route. I trust them, as they have done wonders for my folks.
FWIW, I am 32, but my knowledge has helped me squirrel away some art and antiques for a rainy day. I have a modern art collection growing 3 or 4 a year, and I think it is worth about 4 to 5 times what I paid. This, I think, will only go up. I concidder it to be a secondary pension.
I have just taken a policy on pro advice and pay £200 a month, and the Inland Rev pay some form of tax credit in for me too. I thought long and hard, about this and the housing route. At the end of the day, I decided this was the painless and easy route. I trust them, as they have done wonders for my folks.
FWIW, I am 32, but my knowledge has helped me squirrel away some art and antiques for a rainy day. I have a modern art collection growing 3 or 4 a year, and I think it is worth about 4 to 5 times what I paid. This, I think, will only go up. I concidder it to be a secondary pension.
beano500 said:My dad showed me an equation. Put away 50 quid a month, and by the time you are 65, its worth £1 million pounds.
There's no simple answer - nobody yet has been able to predict the future (Well apart from Sara Freider, of course) but, as a very simple "rule of looking at things in the simplest way thumb" if the govt. gives you X amount of allowance for tax relief, that's got to be a good starting point!
Start at 30 rather than 20, and its only worth half a million (or something).
I dont remember the amounts exactly, or the interest rates, but the earlier you start, the more exponential your growth is. I thought £100 a month might be a decent sum (no clue, not looked into it) but there are people putting a LOT more than that away monthly. I should look into it, although I admit the idea doesnt appeal - dont like pensions. Get divorced once, and you loose whatever property portfolio you set up. Scary old world. Except for the Pat's amongst us
cosmoschick said:Good god, thats generous of them. We'll assume you didnt have to do any favours for anyone in the company either
I never bothered with having a pension scheme until 3 years ago and now I'm paying in 6% of my salary and my company contributes 20%! Yep, that's right 20%. Which is okay if I stay where I am for the next few decades...
Well done though, that does sound like a good deal!UKBob said:
We'll assume you didnt have to do any favours for anyone in the company either
Cheeky git!
Perhaps I ought to approach them for a new kitchen! Their sick leave policy is very good, too. Apparently (although each case is assessed individually) you can have up to 3 years' paid leave for long-term illnesses. They don't like to retire people early on the grounds of ill-health unless absolutely necessary.
The death-in-service benefits and annual holiday entitlement are also generous!
UKBob said:
stuff
Now realise that I'm a 110% cynic in this arena......
There are plenty of "rules" which you can come up with to "justify" contribution levels. 99.97% were dreamed up by salesman and marketing-muppets. The rest, you can bet, had little to do with actuaries!
I'm sorry, that's perhaps too cynical. But, when it comes to "defined contribution" schemes, there really is no right or wrong.
Go with what the more informed advisers have recommended, please. Don't commit to something you can't afford. Please understand, from all the info you get, the limitations likely on your chosen contribution level. But you'll never invest "enough". And then again, you have to live today, too.
cosmoschick said:You work for an attorneys office... IIRC - seems very generous to me
We'll assume you didnt have to do any favours for anyone in the company either
Cheeky git!
Their sick leave policy is very good, too. Apparently (although each case is assessed individually) you can have up to 3 years' paid leave for long-term illnesses. They don't like to retire people early on the grounds of ill-health unless absolutely necessary.
The death-in-service benefits and annual holiday entitlement are also generous!
For a rough and ready estimate, work out what income you want from your pension and multiply it by about 25. That'll give you a ball-park figure for the lump sump you need to have saved by the time you retire. If you wanted a £25k pension in real terms for 35 years (i.e. from age 65 to age 100) based on inflation of 2% and risk-free return of 4% you would need to have just under £630k to invest. Assuming the same inflation and rate of return, you'd need to start saving £8k a year in real terms every year from age 30 to 65. This is a very simple model. In reality you might want to lob as much money as possible in now to give it the longest possible time to grow, or you might have genuine prospects of big earnings increases in years to come, so you might anticipiate being able to invest more at a later stage, etc, etc. The average joe doesn't put anything like enough money aside for the future. Best to take some professional advice or read up on it.
A pension is just a form of savings account where you receive tax relief on what you pay in but are taxed on the eventual income. In exchange for which you hand over control of your savings to the Government.
Personally I'm not a fan. But I'm a suspicious bugger, espcially about these SIPPS, for a higher rate tax payer it looks far to good to be true, especially from that bugger Brown.
Personally I'm not a fan. But I'm a suspicious bugger, espcially about these SIPPS, for a higher rate tax payer it looks far to good to be true, especially from that bugger Brown.
beano500 said:
In exchange for which you hand over control of your savings to the Government.
Who sets the rules on when you can begin drawing a pension? What assets you can put into it? What rate the income will be taxed at ultimately? Ho wmuch you can put in? What you can buy with the lump sum?
I understood that it was the Government.....
anonymous said:
[redacted]
The idea of a 60% income tax rate on income from pension pots over £1.25 million was being put to parliament a while back.
£1.25m sounds like alot but factoring in 30yrs inflation to my retirement and it looks more like a £250k pot today......not that huge is it.
My guess is something like the above that will affect very few people today, then leave the limit fixed and let inflation do the rest. Same as the 40% income tax rate.
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