How much has everyone else got in a pension?

We published our big annual pensions survey this week, taking a detailed look at what we’re all up to. Thought I’d share some snippets here, and let’s start with... What’s everyone else got?!

This is what we really want to know but are often too British to ask. It has been shown in multiple surveys that we’re happier talking about hanky-panky-wink-nudge than we are talking about money. So allow me to step in and be vulgar. (NB - The numbers below take into account pensions from work and any private pensions. They do not include the State Pension.)

• Aged 25 – 34? In total (and mostly from your workplace pension), the average pension savings stash is £18,000. And nearly 3 in 10 of you have at least 2 pensions.

• 35-44? The average combined pensions total is £37,000 and 33% of you have multiple pensions.

• 45-54? You have £77,500 amassed and over 4 in 10 of you have multiple pensions.

• 55+ and not yet retired? The average war chest is £101,500 and 44% of you have 2 or more pensions.

Self-employed alert here – over 3 in 10 have NO pension. If this is you and you want somewhere easy to start, Penfold has been set up to help the self-employed, or I walked my builder cousin through a few options and he set up a pension with Aviva. It sits on a dashboard with various insurance bits, and he seems happy.

What does this all mean?

Back of a fag packet alert here guys BUT as a rule of thumb, if you divide your total pensions savings by about 20, that gives you a rough idea of how much retirement income that would get you every year. So if you’ve got £100,000 in total, you might reckon on that generating you £5,000 a year when you retire. Add the full State Pension to that (about £10,600 today), and the total income goes up to £15,600 a year.

What does retirement even mean?

Lots of you have helped us and shared your stories around retirement. Thank you. Many of you who have retired were pushed into it by work, Covid changes, dodgy employer attitudes towards older people, and health issues. For many, it’s all about the money of course – full retirement isn’t yet an option.

For the under 45s, retirement doesn’t seem to mean much. Many of you think you’ll keep on working into your 70s and possibly beyond. And interestingly you are twice as likely as other generations to see yourselves caring for grand-children or a partner. Maybe providers will move with the times and stop irritating the bejaysis out of us, with silly pictures of grinning grey-haired people on cruise ships! That doesn’t match the picture in our heads. (And I literally would rather poke my own eyes out than go on a massive floating prison with 1000s of noisy people and queues everywhere! 😉)

Brain fry alert – I need some advice!

Finally, lots of people want help and advice with pensions. Nearly 1 million Brits who are older than 55 but not yet retired are planning to get financial advice in the next 12 months. What help is realistically available?

The Full Monty

• If you’re considering traditional financial advice, you should really have at least £75,000 - £100,000 in investments or pensions – that’s the average minimum a financial adviser will work with.

• Expect to pay the adviser an upfront fee for all the work – 3% of your total assets is a rough guide or they may charge a single flat fee to get it all set up. I prefer the fixed fee myself – seems fairer but not everyone will offer this. On an ongoing basis, expect to pay between 0.5% - 1% a year for the financial advice, and a further 1% ish for all the admin, investments and pensions combined.

• If you prefer to pay an hourly fee – ask the question. Increasing numbers of advisers work this way and will charge between about £150 - £250 an hour.

• What to look for? Check out client reviews and feedback online. See if the adviser is on Twitter or LinkedIn – what are they like? What does your gut say? You can check the qualifications – ‘CFP’ or ‘Chartered’ means they’ve done all the exams so they tick the technical boxes. And are they open and honest with you? If you’re not comfortable with %s, ask them to be clear in £s what your likely charges would be – for everything. And what are they like with your spouse or children – would you trust them to be a financial rock for your family if something happened to you?

Cheaper options

Don’t panic if you have a smaller war chest, or don’t want to pay for ongoing advice. You have increasing options when it comes to ‘one-off’ packages to help plan your retirement. For example, Nutmeg will support you to create a financial plan for a fixed cost of £575 including VAT. Charles Stanley offer a OneStep Financial Plan service for £900 including VAT. More on your various options in coming weeks.

DIY

If you’re under 55, unless you have mega bucks or a complicated life, then it can be pretty straightforward to just set up a DIY pension online, and make monthly contributions. And let it plod along. Vanguard offer low-cost simple options with their LifeStrategy range which take the pain away if you want an easy life. If you want things digital and on an app, then I think Moneyfarm has been getting steadily better, will help novices, and has a current cashback offer on any pension transfers in of more than £5,000. And if you fancy making some investment choices and learning as you go, AJ Bell is a decent solid pension option which has a large range of choices available.

We can all suffer from a paralysis of choice – what the flipping heck do I actually choose once I’ve got the money in the pension? Check out a ‘multi-asset fund’ (explained here) or read up on what a single global ‘ETF’ can do for you, as a one-stop shop. Invesco explains more here.

I hope that’s been a helpful pensions update. Just remember not to panic and not to stick your head in the sand. If you don’t have anything, our tables will help you to choose. Why not open one, and stick in £80? Just to get that first step done. I say £80 because for most taxpayers, the Government then waves its magic pensions wand and the £80 turns into £100 in your account. (Tax relief.) And higher rate taxpayers can claim another £20 back when you do your tax return.

And you wonder why I think pensions are MUCH more exciting than hanky panky... (🤣) Have a great weekend everyone.

Holly

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