Pensions

[Into Darkness]

Judging by the financial mess the world is currently in, is it worth getting one? is there not a danger of losing money?
I need to start thinking about my retirement, even though there's still 25-38 years to go before I'd be claiming it I need to start thinking about opening one and putting something in it.

Will pensions even be around that far in the future or are we gonna have a financial collapse?

I just dunno what to do.

 

[Melakon]

You should be asking a lawyer or financial analyst, rather than random people on the web. As a cautionary tale though (as someone about 30 years older than you), I didn't put anything back in my younger days, so now I have nothing and am dependent on the government after health problems forced me to quit working about 10 years ago.

 

[Shazam!]

Into Darkness, are you currently employed? Wasn't there a thing a few months ago about everyone being automatically 'opted in' to a pension scheme?

Besides, they keep moving the goal posts anyway. We'll probably be working until we die.

 

[Into Darkness]

Into Darkness, are you currently employed? Wasn't there a thing a few months ago about everyone being automatically 'opted in' to a pension scheme?

Besides, they keep moving the goal posts anyway. We'll probably be working until we die.

I work but im below the threshold for auto enrollment.

You should be asking a lawyer or financial analyst, rather than random people on the web.

On the contrary, I'd rather ask random people on the web because these "random people" are the people who will have actual knowledge and experience on the matter and people may have experience they can share with me that will help me out. I'd choose talking to random strangers on the internet about it over a supposed financial adviser any day of the week.

 

[Scout101]

Yes, put money in, and put in as much as you can afford. Every dollar put in now has that much more time to grow (even counting occasional recessions) whereas if you wait 10 years and try and start it, you'll have to contribute 5-10x as much to try and catch up to where you would have been. Time is on your side here, unless you decide to do it 'later', in which case, you'll never get there...

 

[Into Darkness]

Yes, put money in, and put in as much as you can afford. Every dollar put in now has that much more time to grow (even counting occasional recessions) whereas if you wait 10 years and try and start it, you'll have to contribute 5-10x as much to try and catch up to where you would have been. Time is on your side here, unless you decide to do it 'later', in which case, you'll never get there...

Thankyou for the advice.
If I may ask, what would your opinion be on ISA's? Pensions seem to have a lot of risk attached to them, would saving in an ISA be safer and give a similar level of savings?

 

[Lindley]

You're going to want something that gives you a broad range of investment options. Usually that means a wide range of mutual funds; some accounts give you direct access to stocks as well. Index funds are often a good choice because they have lower management fees.

You'll need to decide whether to make pre-tax or after-tax contributions. I don't know how it works in the UK, but in the US after-tax contributions are called "Roth". The difference is when you pay your taxes. If you contribute on a Roth basis, you pay your taxes now, but don't owe any tax on that money when you pull money out in retirement, even if it has increased 500% due to investment gains. If you contribute on a pre-tax basis, you are able to put more money into the account now (since you don't have to deduct taxes) but you'll owe normal taxes when you withdraw it. I'm no expert, but my feeling is it's usually best to contribute on a post-tax basis when you're young.

 

[propita]

If you live with your parents, put as much as you can, pre or post, remembering that you're going to need money for when you DO move out.

When I was at home with my parents, I have money going to a 401k and a pension--I had a total of 20% going out pre-tax to savings. My only bad part was that I was too conservative in my investments and didn't get the advantage of the 90's boom. But we seem to be in line for retirement.

 

[Gryffindorian]

Some old geezers at work always tell me, "You should start saving for retirement while you're young." While I can see it's a beneficial piece of advice, it's easier said than done. I make a decent living, but the pay could always be better. The good thing is that I'm a civil service employee who works for a public agency, and my employer has a strong and stable pension system, in addition to optional deferred savings plans. I currently opt to contribute 5% of my biweekly salary to my 401K. Unless I get a big promotion or raise, that rate ain't gonna change. And ike I said in another thread, I don't know if I'll live even long enough to enjoy retirement.