1. Visiting from the US? Why not try DIYnot.US instead? Click here to continue to DIYnot.US.
    Dismiss Notice

Pensions Pots - How much do you need?

Discussion in 'General Discussion' started by kingandy2nd, 7 Oct 2021.

  1. Brigade77

    Brigade77

    Joined:
    1 Mar 2016
    Messages:
    1,765
    Thanks Received:
    120
    Country:
    United Kingdom
    Something I don't understand about pensions . . . .

    A property worth approx £220k 'round 'ere will generate a monthly rental of approx £750, which is roughly approx what a GOOD annuity will pay. Imagine if that property was purchased in 1990 for £30k cash.

    Now imagine if that rental income was paid by gov'n'mnt benefits . . . .
     
  2. Sponsored Links
  3. kingandy2nd

    kingandy2nd

    Joined:
    29 Jan 2008
    Messages:
    1,513
    Thanks Received:
    182
    Location:
    Liverpool
    Country:
    United Kingdom
  4. Harry Bloomfield

    Harry Bloomfield

    Joined:
    30 Dec 2018
    Messages:
    8,148
    Thanks Received:
    1,130
    Country:
    United Kingdom
    A great deal depends on what you expect from life after retirement, whether you have paid up your mortgage/ paying rent and to a large extent, where in the country you live - finally how good you are with money/ how well you spend what you have.

    I don't have a massive retired income, my (still working) partner is not well paid, but she contributes, house is all paid for, I have substantial savings which constantly increase. Maintenance and repair costs are minimal, because I am more than able do to cope with most of it still. We have a comfortable, warm home, in a decent area, car, tourer caravan and manage at least four weeks holiday per year in the UK, with no desire to go further afield and eat well, with wine at most meals. We dine out, when we feel like it, neither of us have any debt to service. If I spot a genuine bargain, I can grab it without a second thought.
     
  5. charliegolf

    charliegolf

    Joined:
    7 Jan 2014
    Messages:
    2,083
    Thanks Received:
    188
    Location:
    West Glamorgan
    Country:
    United Kingdom
    I can attest by lived experience that depending (as Harry says) on your lifestyle and locale, a couple can have a very comfortable retirement for c£35k.
     
  6. motorbiking

    motorbiking

    Joined:
    31 May 2016
    Messages:
    6,789
    Thanks Received:
    768
    Country:
    United Kingdom
    It works well if both are ready to contribute to the income. Two smaller pensions are better than one bigger one due to the tax benefits.
     
  7. JohnD

    JohnD

    Joined:
    15 Nov 2005
    Messages:
    74,125
    Thanks Received:
    4,282
    Location:
    Crossgates, Europe
    Country:
    Cook Islands
    That's more than UK average earnings, and considering you have no NI to pay, and (with luck) no mortgage, it's not to be sniffed at. If still active, a retired person can still do gardening and odd jobs round the house.

    There are plenty of people of working age doing much worse.
     
  8. cwhaley

    cwhaley

    Joined:
    10 Jan 2017
    Messages:
    967
    Thanks Received:
    91
    Location:
    Derbyshire
    Country:
    United Kingdom
    One of my biggest regrets in life was not starting a pension pot early enough. I'm nearly 31 now and have only been paying into it for a year so I'm hugely behind many of my contempories. Unfortunately I will be relying on an inheritance to help top up my pot.

    The other half, on the other hand, has been in the NHS for ten years and currently pays 9.5% into her pot and she's on top band 5 wages. I am a bit envious but it's my own fault for making stupid decisions!
     
  9. JohnD

    JohnD

    Joined:
    15 Nov 2005
    Messages:
    74,125
    Thanks Received:
    4,282
    Location:
    Crossgates, Europe
    Country:
    Cook Islands
    Still another 40 years to go! (y)
     
  10. Sponsored Links
  11. cwhaley

    cwhaley

    Joined:
    10 Jan 2017
    Messages:
    967
    Thanks Received:
    91
    Location:
    Derbyshire
    Country:
    United Kingdom
    Now't really, is it? :(

    Saying that my Dad retired at 65 but struggled to adjust and got taken back on with better pay! Properly retired now, however.
     
  12. JohnD

    JohnD

    Joined:
    15 Nov 2005
    Messages:
    74,125
    Thanks Received:
    4,282
    Location:
    Crossgates, Europe
    Country:
    Cook Islands
    A lot can happen in 40 years.

    I have recently decided that I am now "retired"

    It is difficult to break the habit of tucking money in, and start drawing it out.
     
    • Like Like x 1
  13. mrrusty

    mrrusty

    Joined:
    1 May 2018
    Messages:
    732
    Thanks Received:
    146
    Country:
    United Kingdom
    Unless you are completely risk-averse, i suggest to choose pension funds invested in the stock markets and spread it around a bit - UK, US, Asia. Check out, for example, the funds from baillie gifford. Not zero risk, but overall, even if the markets sink for a while, they tend to come back up, so unless you need to sell out at the bottom, just hold on. You should be able to get 5-8% from medium risk funds. As of today I'm up about 15% from January in med-high risk funds. Personally, I like funds with named fund managers - the charges are slightly higher but IMHO the results outweigh the fees. I know there is another school of thought that says just invest in trackers and TBH not much wrong with that advice too. Just don't get stuck in the ultra-safe ultra-boring ultra going-nowhere managed funds that pension companies have a tendency to dump you in by default.

    My 2p
     
  14. kingandy2nd

    kingandy2nd

    Joined:
    29 Jan 2008
    Messages:
    1,513
    Thanks Received:
    182
    Location:
    Liverpool
    Country:
    United Kingdom
    Interestingly I talked to Financial Advisor yesterday that was recommended to me. Seemed like a nice bloke and was going to come back to me with a proposal for my pension.

    He is tied to St James' Wealth Management, and a bit of googling seems to indicate they aren't all that good. However, with such things I'm never sure if the reviews are fair or loaded.

    @JohnD as you seem to know a lot about this stuff, do you have any view on St James?
     
  15. ellal

    ellal

    Joined:
    23 May 2004
    Messages:
    12,299
    Thanks Received:
    248
    Country:
    United Kingdom
    Be very nice to her over the coming decades! :)
     
  16. mrrusty

    mrrusty

    Joined:
    1 May 2018
    Messages:
    732
    Thanks Received:
    146
    Country:
    United Kingdom
    I have some experience here because my own inherited "financial advisor" is also st james, however I bypass them to avoid their fees. The advice may be sound, my understanding is the funds are OK, BUT they are an extra tier between you and the fund provider, taking commissions and fees.

    If you are talking about pensions and already have a pensions provider - Aegon, Royal London etc. you will find that they all have an on-line fund chooser and changing facility. There is nothing to stop you googling the various funds, reading their info sheets and picking the ones you want. If you spread around with funds that traditionally have had OK performance (and steady as she goes is always better than a short term flash in the pan) and are in the principle markets - US, UK, EU, Asia then you are unlikely to go wrong. Avoid the high risk stuff like commercial property, small unquoted companies, and stick to funds invested in the big PLCs. If you spread your pension across half a dozen or so good funds, even if one tanks a bit, likely another has a good run.

    I've been following my own advice for 10+ years ever since I realised my pension was in boring managed funds, and it's done more than OK. However, funds that do well overall, do tend to be a little volatile, so you do get fluctuations in value week to week - it isn't always up!

    Interestingly a few years ago, my FA pestered me to come and talk "investments", and then when he went through what I already had decided he honestly couldn't do any better - decent bloke, he could have tried churning me, but didn't.
     
    • Thanks Thanks x 1
  17. JohnD

    JohnD

    Joined:
    15 Nov 2005
    Messages:
    74,125
    Thanks Received:
    4,282
    Location:
    Crossgates, Europe
    Country:
    Cook Islands

    IIRC their charges are very high.

    I had a quick goggle and found a page saying for pensions "There will be an initial product charge of 1.5% of your investment. There will also be an annual product management charge of 1% but this will be waived...." And another for ISAs saying "The total of these charges is therefore a charge of 5% of the initial investment and an ongoing charge that for a typical portfolio will be between 1.6% and 1.9 ..."

    When your growth (after inflation) is a few percent a year, this takes a big chunk out of it.

    The salesmen will say that their company's skill and knowledge give you such big returns that it compensates for the high charges, but numerous studies find that no fund consistently bears the index, and high charges lead to lower returns.

    Interactive Investor charges £10 a month and some Vanguard funds have charges of 0.1% a year with no initial charge. There are other good value companies around but those are examples I use.

    In my case I also have shares in particular companies. This adds the risk that you make a bad call, or stick with someone going downhill. I once had shares in RBS

    An account at Interactive means I am not tied to any one fund management company. I do everything online.

    Best advice is probably to go for low-cost trackers. You will not get the services of a salesman. Sorry, I mean "adviser"

    You can diversify by having, say, a UK fund, a European fund, a Far East fund, an International fund. Some people think that since Brexit, UK is bound to lag Europe. So far they have been right. If you think that Healthcare is a coming growth industry, you can invest in a Healthcare fund. No stock picking, so no highly paid guesswork, they just invest in the wide market.

    Probably unwise to put everything into one sector.

    I generally buy the Income version of funds, there are usually Accumulation or non-distributing ones which are otherwise the same. I set mine to "income reinvestment" but when there have been hard times, I just change it to have the income paid to me. No need to sell holdings or close the account. I also have shares in Investment Trusts, and in a "Fund of Investment Trusts" which has been one of my best.

    My main pension has six constituents, which is enough because each has hundreds of holdings.
     
    • Thanks Thanks x 2
    • Like Like x 1
Loading...

Share This Page