Advice for someone with no pension.

Over the weekend I’m going to have a look at my old pension that I mothballed and find out its value. Will also look into Vanguard. I really do appreciate that there are lots of people far worse off than me and it truly makes me sad to think of people struggling at retirement age. It just doesn’t seem right after a lifetime of hard work.

Vanguard.  2 years ago I put the proceeds of a NEST pension (not much, £30,000) into a couple of their safer funds as a drawdown pension.  I took 25% out straight away.  The rest has grown by just over 1%.  Not wonderful.  I think ISAs would have been much better.

Well this thread gave me a bit of a kick up the bum to do a spot of admin and I found 25k down the back of the sofa, a pension I’d totally forgotten about as my previous and current employers have shifted providers about a number of times and this chunk got overlooked, also probably got grand or two in a nest pension when I was doing a bit of contracting so they’re sending out new log in details, will get a look at this next week. So it’s definitely worth getting organised if you’ve bits and bobs lying around. I was a fairly late starter, not as late as the op but there’s still time for them make use of the tax relief but needs to make sure they’re putting a good wedge away each month and use a pension with a draw down option (some don’t – as I found out today! – that’s getting shifted!). With no kids etc. equity release might be an option for the OP. I know there’s a lot of sharks in that pond but it might suit their circumstances and as there’s no one to leave it to, get the bugger spent.

Personally I think dieing early is a terrible plan

While it may be, I’ve not had a grandparent since the age of about 3 (2 of them were gone before I was born and probably didn’t make it to my current age). My Dad went early 70’s but spent the last 10ish years wheelchair bound after a massive stroke, my Mum’s doing ok at the moment though into her 70’s now. So I’ve got form and I sully expect the retirement age to rise before I get there (currently 45), after that the conservatives (who’ll probably still be in power) will have a policy where unless you are 1% rich you go to live on a farm in the country* to reduce you burden on society.

*Not an actual farm, not actual living

I think financial education and specifically retirement planning should be taught at school. Little and often over a very long time make a world of difference.

100% agree with @hammy7272. Just some basic stuff could really make a difference. I remember having a really short chat with my two boys (16&18) about pensions and it totally clicked with them. That’s a good age to understand about this stuff imho.

I remember, a long, long time ago (1988 or 1989 so I was 21 or 22), I went to see a financial advisor. At the time I was earning £7,000 a year which was (IIRC, it was a long time ago) about £450 a month take home. They tried to make me sign up to their fantastic pension, paying in half of that a month, saying any less would be pointless in the long term. It scared me off and it took me a long time before starting again. Looking back, I wish I had got advice from someone else that wasn’t trying to shaft me so they could get their fat commission 🙁

Martin Lewis has been pushing for personal finance education in school and has managed to get some traction with a textbook and teaching guide link

I think financial education and specifically retirement planning should be taught at school.

It is

There’s a fair amount of evidence that retirement isn’t good for men.

My aim is to go on working for as long as possible.

So, question.

Why is everyone advising waiting until retirement to downsize? Wouldn’t it make more sense to downsize earlier and put the released equity (assuming there is some otherwise my point is moot) into the pension pot and the associated tax boost?

Or have I missed something?

There’s a fair amount of evidence that retirement isn’t good for men.

Some men. If I had the money I’d happily quit working tomorrow. Pick up playing an instrument again, give drawing or painting a go, learn a few skills etc. Work is what gets in the way of living in my opinion.

Bank robbery ?

You get away with it and theres plenty of money to fund the lifestyle. Or if you get caught then the prison service will give you a small centrally heated room and free meals.

Exactly retirement doesn’t have to mean sitting on your arse watching tellybox for 14hrs a day 7 days a week waiting to die.

plenty of stuff for me to replace ‘work’.  I just hope I have my health when I get there….if I get there

If only A.I. could work for us all then we could do want we want…

I know it’s not the point of this thread, but what’s this with pensioners needing a new car every three years? Fine, I’ve never bought a new car ever, so I’m not target audience there, but why oh why get a new one every three years? 🤯

If you’re still paying a mortgage i’d try and prioritise paying that off first.

This isn’t necessarily good advice: it’s not always wise – with minimum 20% tax relief, even with mortgage rates where they are now pension contributions will almost always be more advantageous than overpayments. The immediate gain of £80 up to £100 (then some pension growth) performs better than overpayment, especially over shortish-medium timescales. Especially more so if you’re a higher rate tax payer.

As others have said – its not too late to start a pension –

This is excellent advice!!

Any amount you can spare, don’t prioritise overpayments, probably don’t think about reducing your working days. Not yet! IMO.

new car every three years

Car warranty 3 years long, mot after 3 years. Makes sense to sell or trade in after 3 years and get a new one.

(to some people who can afford it)

Basic awareness of pensions (and credit cards etc…) should be taught at schools.  Dunno if it is now, but it wasn’t when I was at school and I was completely clueless until I landed a job by chance at a pensions firm.  Had zero guidance from my parents on it either.  Just wasn’t spoken off at all.  Maybe they were clueless too

I guess most of us are children of boomers and taught by boomers.  Either you had a good pension, provided by the company where you probably spent your life, or you had no pension and we’re relying on state pension to see you through (but your own parents probably didn’t have a particularly long retirement), teachers typically had final salary / defined benefit pensions back then and so prob weren’t the ideal people to explain to average Joe.

Some men.

Most men.

Why is everyone advising waiting until retirement to downsize? Wouldn’t it make more sense to downsize earlier and put the released equity (assuming there is some otherwise my point is moot) into the pension pot and the associated tax boost?

Depends what you think will do better. House prices or pension funds. If house prices are going up quickly then it’s tax free anyway so there’s less point putting it into a pension fund, especially as most people dial back the risk (and thus potential reward) as they hit 50-60.

Depends how much value you can release and depends how you can get it into a pension. Assuming you can release a fairly big chunk, significantly more than the annual allowance, then you’ve got to have it sat in a normal savings account for a few years (paying tax on the interest) while you use it to make additional payments into the pension (unless it’s so much money that it’s worth putting into a pension quickly as the compound interest would outweigh not getting your 20-40% back from HMRC).

Most men.

What’s the evidence?

Car warranty 3 years long, mot after 3 years. Makes sense to sell or trade in after 3 years and get a new one.

(to some people who can afford it)

“Makes sense” is doing some really heavy lifting there. Financially it’s by far the most expensive way to never own a car (because it’s on 3 year PCP). And reliability wise it’s dubious Vs a slightly older car as you’re in the poopy bit of the bathtub curve so probably no more likely to avoid a breakdown, it’s just paid for if you do.

johndoh – did your employer all those years not tell you about their pension scheme and/or encourage you to join?

I never paid attention to the future early on. No pension etc, lived for the next night out.
When the auto enrollment was kicking off I asked the firm when they were joining / setting it all up. I got a piss poor response so I set up a stocks and shares ISA through an IFA.
I now have 2 pensions (one is pretty low) and a neat one thats growing.
My ISA currently makes (and loses) more on a daily basis than I pay in each month so I’m probably looking at setting up something else and increasing my pension contributions once my wife goes back to work.
I keep meaning to set up a pension for my 2 boys (5 & 2) and trickle funds in for them to give them a better / earlier start to their retirement.

As for downsizing, the estate I live has many folk who bought off plan in the 70s and now have one wee old biddie rattling around herself with carers coming to visit. I think it’s a travesty the new estates aren’t built with a whole mix of houses so there are places for people to downsize to and stay in the same community. My in-laws have a 4 bed house and want a smaller place but want a smaller detached bungalow with garden, garage and drive. They ain’t gonna find that near them.

The thing is, most people seem to say that you need about a million quid in your pension pot to comfortably retire.

No, most people don’t.
It’s marketing spiel pushed out by some of the less scrupulous financial services companies.

What most people don’t have is any clear understanding of how much they would need in a pension pot to fund different levels of pension lifestyle.

I use a chartered financial planner and have an accountant; neither have ever said anything to me about a ‘target value’ for my pension pot.

People with all their money in property are taking a hell of a risk IMO.

WRT men not doing well after retirement, there was a health/economics podcast that I listened to that covered it, can’t remember the exact one. It’s also something, sadly, that I see quite often as a GP.

I would love to be able to afford a mini retirement (career break) to go travelling but getting back on the treadmill would be hard. To be honest the thought of retiring gets me through my day at work. That in itself is pretty sad.

Mostly what @frankconway said.

Estimate what you’d want in retirement, see what you can save and invest, make a plan for how you’ll manage the difference when you consider the potential state pension.

I’d thought the ‘£1,000,000 target’ came from the £1,000,000 tax-free lifetime pension savings allowance.

This allowance was £1.5m when set in 2006. ‘Austerity’ Osborne reduced it to £1m 4 years later. In the last budget the limit was removed. https://www.thisismoney.co.uk/money/pensions/article-11862935/amp/Will-Budget-pension-lifetime-annual-allowance-changes-help-you.html

I keep meaning to set up a pension for my 2 boys (5 & 2) and trickle funds in for them to give them a better / earlier start to their retirement.

No harm in putting money aside for their future. My SO made sure we budgeted to save for the amount we’d have to top up our children’s maintenance costs at university. Good call.

5 & 2 seems a bit young for a pension? Will they be able to take advantage of the tax efficiency on the contributions you’ll be making?

We were recently reminded about the Child Trust Fund that Gordon Brown established for newborns back in the day. This scheme was stopped after a short time. Nonetheless, our children got their forms in and the £200(?) had turned into about £1,000. Sadly the investment program was not a great one. #1 child commented that it would have been worth 20% more if they’d cashed it in a year or so ago.

I think financial education and specifically retirement planning should be taught at school.

Given that people actually with jobs and 20 years to retirement don’t “care” about pensions. How much do you think someone 60 years from retirement cares about it. Remember when we were 16 it was all live fast, die young, I won’t make 30.

FYI

Free pension advice from independent source (*but just 1 hr and age limited, also pension type limited)

https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-wise

I used them and I got good advice. I’d suggest doing some homework first, getting a clear and full picture of all your finances, all current/existing pension details, savings, debts, commitments etc. Thinking realistically about when you want to retire and what your personal lifestyle wants are.

There’s a fair amount of evidence that retirement isn’t good for men.

My aim is to go on working for as long as possible.

Some men and an awful lot to of that is due to socioeconomic pressures

I’m retired and so much happier ( ignoring other stuff) than when working.  All the men I know that are retired and for some of them thats 25 years retired and they are are happy and thriving.

I never lived to work.  I always worked to live.  I feel sorry for those who have their entire identities based on their work and who have no interests outside of work.

Given that people actually with jobs and 20 years to retirement don’t “care” about pensions. How much do you think someone 60 years from retirement cares about it. Remember when we were 16 it was all live fast, die young, I won’t make 30.

A part of the reason I became a nurse was for the pension.  That was a decision made when I was under 20.

Same as Jeremy here.

Work to live…. no more.

Retired on a pittance and loving it.

Ignore all the braggards telling how big their pension pots are and how much they will have after working mega hours a week.

You need far far less to retire on than you think. Just live a more simple life.

100% @ton

johndoh – did your employer all those years not tell you about their pension scheme and/or encourage you to join?

No – the last time I was employed was 19 years ago so long before workplace pensions and they never had a pension scheme set up.

No harm in putting money aside for their future. My SO made sure we budgeted to save for the amount we’d have to top up our children’s maintenance costs at university. Good call.

yeah that’s one thing we have done – £100 a month for each child since they were about two years old – it won’t cover the full cost, but will certainly help.

Retirement is bad for most men.

Clearly ones who don’t own a quiver of bicycles, a fleet of windsurfing boards, no friends ,multiple SUPs , carp fishing kit , sea fishing kit, a shed and garage , a set of tools , a house , a car or 2 . Don’t get any pleasure from reading and probably haven’t planned for any retirement whatsoever and still have significant others who think they are the sole keeper of a magical money tree which means holidays to the Seychelles are still possible.

Sure there’s days in mid February where you might say to yourself  You know what , I’d rather be at work today, but for 9 months of the year…hell no.

there is not a single day I have thought ” I wish I was still working”I don’t own all that stuff either.  Just some bicycles

It’s not about boredom and suicide.

There’s a 40% increased risk of CVD and related issues in the year post retirement in men -toys doesn’t fix that.

Women are likely to fare much better at around 1-1.55% increase in the same.

CVD cardio vascular disease

Correct, hobbies like carp fishing won’t fix a blocked artery for sure.

But keeping your CV system in good shape by putting yourself through regular mild stress by cycling or surfing , sea swimming etc will almost certainly help than a sedantry lifestyle of zero exercise , poor diet and possibly increased alcohol consumption.

All of which aided my dad into a wooden box at 70 .

For balance  – what the Daily Heil will resentfully refer to as a ‘gold plated pension for some’ (their paymasters resent these because we’re not then over a barrel to employers who want to behave like total barstwards and rip up our contracts or force us only worse conditions) came at a cost.

I was paying nearly 25% of my salary into it for a long period of time (averaged about 20% for 30-odd years – increasing as the pension black hole got larger due to the Tory Gov of the 80s and early 90s letting companies have ‘pension holidays’ and not contributing themselves whilst employees still did, for years).

Have only lived in a small house for 20+ years – so no option for us  to downsize and release equity, only had 2 foreign holidays (done cheaply staying with friends) in 20 years, have run older cars, and never  had an 8 grand Santa Cruz or Specialized Turbo Levo in the shed or a VW T6 camper on the drive,  no Sky TV etc.

WRT men not doing well after retirement, there was a health/economics podcast that I listened to that covered it, can’t remember the exact one. It’s also something, sadly, that I see quite often as a GP.

I’m healthier, fitter, faster on a bike, my blood pressure is down and I’m happier since retiring. I am lucky enough not to have any concerns about money, and because I’m a cyclist my base fitness was better than a lot of those my age, but I’m struggling to see any downsides to retirement.