Saving for pension - any regrets?

[d000hg]

At 40, my pension pot is virtually nil. I started one as a newish contractor ~10 years back and contributed the first year only, but for several years I was effectively using contracting to work part-time on my own terms so didn't amass a huge fortune over and above what could be withdrawn efficiently from the company. That's changed the last couple of years but I can't really get excited about pensions. I've always viewed them as ultimately a way to force you to save by locking the money away like a Christmas stamp scheme. Obviously there are the tax incentives which TBH I am rusty on - I'm due a chat with the IFA so time to review perhaps.

[eek]

At 40, my pension pot is virtually nil. I started one as a newish contractor ~10 years back and contributed the first year only, but for several years I was effectively using contracting to work part-time on my own terms so didn't amass a huge fortune over and above what could be withdrawn efficiently from the company. That's changed the last couple of years but I can't really get excited about pensions. I've always viewed them as ultimately a way to force you to save by locking the money away like a Christmas stamp scheme. Obviously there are the tax incentives which TBH I am rusty on - I'm due a chat with the IFA so time to review perhaps.

My viewpoint -

1) have a pension scheme set up.
2) Use it for contracts that are inside IR35* - and live on the money you get from outside work.


* you do have to be paid minimum wage which will be £350-400 a week but everything else can go into the pension pot.

[ladymuck]

I put 12k a year into my pension and the rest of my money goes on gin, holidays and London rent. I am 46 and although I got my pension pot off to a good start when I was younger, through company schemes, I stopped paying anything for a very long time when I first went freelance and I've been trying to address that so I at least have something to live on.

As long as I remain healthy, I can't see me quitting work for a long time. What work I do will no doubt change but I don't expect to fully retire until I have to.

I know that "when the time comes" I will have to move out of W8 and relocate somewhere with a far lower cost of living but I'm not tired of life yet so London is where I'll stay until I really can't afford it any more (or my landlord raises the rent in the next review at the end of the year!).

[mattster]

I think I've probably had the exact same thought as you recently - I started contracting at 25 and have been putting away about £10k/year into my pension - now at 33 I've been pondering whether I should have just been keeping it in my company with a view doing an MVL around the time my kids will be in their late teens / early 20s so I can help them to buy - with the housing market the way it is I can't see how their generation will ever be able to afford anything without significant contribution from the BOMAD

Waiting until I'm 55+ to access the money again is starting to seem like a waste/inefficient use of the money, even considering the apparent tax savings in the short term. Yes I'll be able to use it and spend it (assuming I'm still around by then) but my kids will be almost in their 30s

The returns of putting money into a pension are so great that it is never going to be a "waste" or "inefficient". Depending on your tax bracket (claw back zone, child benefit thresholds etc), you can see an immediate effective return of near 100%, and that's before you start investing. I don't know how old your kids are now, but if they can wait a few more years for a bank of mum and dad handout, you'll be able to take a tax free lump sum in your late fifties. Take it from me as a one time 33 year old, your fifties are going to be upon you alarming soon (next year for me). I've neglected my pension for too long and the plan now is to dump just about every available penny into it until retirement.

[TheDude]

I've neglected my pension for too long and the plan now is to dump just about every available penny into it until retirement.

That is my plan as well although in retrospect I should also have been a lot more aware of the funds my exisiting pensions were invested in and how they were performing.

I plan to educate myself on investing and be a lot more proactive

[Lance]

I plan to educate myself on investing and be a lot more proactive

don't do it.

use a fund. Preferably a tracker.
Index Trackers vs Managed Funds - The Motley Fool UK

S&P500 is pretty good.
FTSE-100 trackers are historically good.
And keep management costs as low as possible.
Don't piss about managing your own fund. You might get lucky, but not very likely.

[psychocandy]

I read recently that the average retirement pension pot is around £68k.

Obviously lots of people cannot afford to save for a pension but I suspect many more have traded lifestyle now in the hope that inheritances will pay for their future (a dangerous assumption and in any case this does not apply to me)

Really? Just 68K?

And theres the fella above saying 300k wasnt good.

[psychocandy]

Im gonna just claim benefits when I retire!

[TheDude]

Im gonna just claim benefits when I retire!

State pension is a benefit which retired Daily Mail readers just cannot compute.

[TheDude]

don't do it.

use a fund. Preferably a tracker.
Index Trackers vs Managed Funds - The Motley Fool UK

S&P500 is pretty good.
FTSE-100 trackers are historically good.
And keep management costs as low as possible.
Don't piss about managing your own fund. You might get lucky, but not very likely.

That is what I meant - my pensions have a choice of funds and some of mine could have earned a lot more if I had moved to a higher performing fund.

I have no intention of creating my own portfolio and managing that.