# Pension value is currently 190k. No idea if this is good or not?



## colin79ie (30 Apr 2021)

I'm 41 and my most recent statement tells me my fund value is just shy of 200k.

I have no idea about pensions , I just joined up to the company one when I was 24. I did increase my contributions as I am aware of the tax benefits. My limited knowledge of the statement always makes me think it's never enough.

So between me and the company, 13.5% is paid in. Salary is 85k. Think it's s defined contribution? It's with Aviva.

Without wrecking anyone's head, does this seem reasonable for my age, assuming I continue with it etc.

My plan at 24 was hoping to retire by 55 or 60. However, we are now thinking about buying a new home, probably 60-80k equity in our current one. Would that make retiring early a pipe dream ?


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## Steven Barrett (30 Apr 2021)

It is very rare for someone to be able to retire at age 55. It is usually for people who have sold a business, high paid PAYE workers or people who save a lot and have low outgoings. 

If you continue to save 13.5% of salary into a pension and your salary increases by 2% per annum, you will have a fund of €634,548 at 55 and €898,747 at 60. 

Of course, inflation will eat into the real value of that, so your €898,747 is worth €616,927 in today's money and €634,548 is worth €480,908. Based on your income, I wouldn't say that's enough. 


Steven
www.bluewaterfp.ie


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## 50andOut (30 Apr 2021)

On what basis do you think you could retire early?
Do you have a clear understanding of your exact expenditure now and can you estimate for the future?

Without more info I will assume you pay half the 13.5%.  It is completely unrealistic to think saving only 7% of salary for 30 years would enable enough to then live on that for 30+ years.

The general rule of thumb is work out your annual expenses then x25 - this is the pension you require at minimum.

50+o


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## garbanzo (30 Apr 2021)

Hey 50andOut

Re that rule of thumb. Is that to work out your pension at age 60, 65, 66 or 70?

g


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## Sarenco (30 Apr 2021)

colin79ie said:


> I'm 41 and my most recent statement tells me my fund value is just shy of 200k.


Another (very) crude rule of thumb is that you should have a pot equal to around 3 times your salary at 40.  So, by that metric, you're not doing too badly.

However, that assumes that you will retire at 67 (at which time you would aim to have a pot equal to around 10 times your final salary).

If you want to retire early, then I would suggest that you would need to materially increase your pension contributions.  At your age, you can make tax-relieved contributions of up to 25% of your income (in addition to your employer contributions).


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## colin79ie (30 Apr 2021)

50andOut said:


> On what basis do you think you could retire early?
> Do you have a clear understanding of your exact expenditure now and can you estimate for the future?
> 
> Without more info I will assume you pay half the 13.5%.  It is completely unrealistic to think saving only 7% of salary for 30 years would enable enough to then live on that for 30+ years.
> ...


I didn't 'think' anything on any basis so your post is not really of any benefit. 
It would be nice to retire as early as possible. I don't envisage major expense. I would hope to have no mortgage to pay or children to pay for.

The assumption of saving 7% for 30 years was pulled from thin air . In my case I've never put less than 10% and currently put 13.5% into my pension .

As a matter of interest, or these 'thumbs', what's the average pension pot for retirees in Ireland if is it an industry secret?


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## ivannomonet (30 Apr 2021)

colin79ie said:


> I didn't 'think' anything on any basis so your post is not really of any benefit.
> It would be nice to retire as early as possible. I don't envisage major expense. I would hope to have no mortgage to pay or children to pay for.
> 
> The assumption of saving 7% for 30 years was pulled from thin air . In my case I've never put less than 10% and currently put 13.5% into my pension .
> ...


I remember reading something saying most people in Ireland who have a DC pension retire with a pot worth on average €80k.
That wouldn't go far!


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## 50andOut (30 Apr 2021)

colin79ie said:


> The assumption of saving 7% for 30 years was pulled from thin air . In my case I've never put less than 10% and currently put 13.5% into my pension .





colin79ie said:


> So between me and the company, 13.5% is paid in



So "BETWEEN me and the company 13.5% is paid in" - So your own statement advises the total as 13.5% including the companies - so a reasonable assumption based on the very limited info, that you pay half.



colin79ie said:


> didn't 'think' anything on any basis so your post is not really of any benefit.



Your plan at 24 and now at 41, (whilst also looking to buy a new home at god know what cost), asks if its a pipe dream to retire early - so yes you have thought about it but clearly not enough.

My post was clear in the suggestion that you need to have a grasp on your average annual costs - this is the KEY info before you can question whether your fund size is big enough. 

Suggest you complete the money makeover template to provide a clearer picture in order to get any more meaningful advice


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## NoRegretsCoyote (30 Apr 2021)

colin79ie said:


> As a matter of interest, or these 'thumbs', what's the average pension pot for retirees in Ireland if is it an industry secret?



The CSO finds that the median 55-65 year old has €63k in a voluntary pension pot..

But that hides a multitude. Lots of people have no pension fund at all, and lots of people of that age are in DB schemes too.


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## ginslia (30 Apr 2021)

If you want to retire early and/or minimise your tax bill over time, you should be contributing close to the maximum revenue limits to your pension fund.  For your age - that's 25% salary for your contribution, ignoring anything from your employer.

If you have access to the portal for your scheme, or the last statement, it will probably show projected incomes at different retirement ages.  Have a look at the income for 50, 55, or 60 - do you think it will be enough to cover your living expenses and any lifestyle plans for the years before you qualify for any state pension?


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## Gordon Gekko (30 Apr 2021)

They should be providing you with a Statement of Reasonable Projection each year. I looked at my income requirement now, excluding the biggest ticket items which should fall away in retirement (i.e. mortgage payments, retirement funding itself, etc). Then I adjusted the numbers for 2% inflation. Then I could approximate my income requirement in retirement. Then I assumed a 5% return from an all equity strategy and worked out what I need to have at retirement and what I need to be putting away now.


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## Marco 1972 (30 Apr 2021)

Maybe he meant retiring from existing job and getting part time employment which may be more feasible,  l think the only way to access pension benefits at a reasonably young age (55-60) is to retire and then take up a part time job.


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## colin79ie (30 Apr 2021)

I will have my current mortgage paid off and kids through college before I'm 50.
I'm hoping that my expenses will reduce somewhat as a result. It will be mainly modest lifestyle and running a car, holidays etc. 

I do plan on engaging a financial planner to help me map out this period of my life and consider all I've mentioned. I just used this forum to get some feeling as to whether my current pension fund, at my age, is good in general or poor in comparison to an average, if it exists. I have zero in-depth knowledge of this stuff.

All I want is to retire as early as I can so I can enjoy life, in a house that I own etc. I've worked every day since I was 18 in a highly stressful job so I would like to give some time back when I get older


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## JMG (1 May 2021)

What kind of work do you do? does it allow the option of reducing your hours as you get closer to retirement age? Might be a way to ease into retirement, giving you more free hours while still having an income. 
I am not  an expert on pensions, far from it, but even if you were not planning for early retirement, 13.5% (especially as it include the employer contribution) seems very low to be investing into your pension. Have you considered AVCs? I'd imagine they would be the first route any financial adviser would direct you towards. OF course, I'm assuming that you have the spare cash to invest in AVCs.


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## Marc (1 May 2021)

I recently posted a few graphs illustrating how a financial planner would assist you to answer these questions 

Post in thread 'Buy out Bond - what are my options'
https://www.askaboutmoney.com/threads/buy-out-bond-what-are-my-options.223236/post-1716667


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## NoRegretsCoyote (1 May 2021)

Gordon Gekko said:


> Then I assumed a 5% return from an all equity strateg


That's probably conservative.

For the S&P 500, inflation-adjusted annual returns over 30-year windows since 1951 have been between 4% and 8%.


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## Gordon Gekko (1 May 2021)

NoRegretsCoyote said:


> That's probably conservative.
> 
> For the S&P 500, inflation-adjusted annual returns over 30-year windows since 1951 have been between 4% and 8%.


Yep, that’s why I use 5%.

Better to end-up with Gran Reserva instead of Reserva through investment performance rather than ending-up with Crianza because your plan was too aggressive…


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## colin79ie (5 May 2021)

So I got online access finally and my limited knowledge shows the current value is 202k, with 161k paid in by me since I started at 24.

The fund says it's l&g multi index V Ser B. 

My current annual payments are just over 11k.

Taking aside all the talk of early retirement, I think the general consensus here is to pay as much in as I can afford.

As a side note, I'm paye so will be entitled to the full state pension also, at 68.


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## Steven Barrett (6 May 2021)

Gordon Gekko said:


> They should be providing you with a Statement of Reasonable Projection each year. *I looked at my income requirement now, excluding the biggest ticket items which should fall away in retirement* (i.e. mortgage payments, retirement funding itself, etc). Then I adjusted the numbers for 2% inflation. Then I could approximate my income requirement in retirement. Then I assumed a 5% return from an all equity strategy and worked out what I need to have at retirement and what I need to be putting away now.



Did you add in the extra expenditure purely because you have more free time? Able to go away whenever you want? Spending more money purely because you aren't in work. Retirement isn't as cheap as people think it is. 



colin79ie said:


> *I will have my current mortgage paid off and kids through college before I'm 50.*
> I'm hoping that my expenses will reduce somewhat as a result. It will be mainly modest lifestyle and running a car, holidays etc.
> 
> I do plan on engaging a financial planner to help me map out this period of my life and consider all I've mentioned. I just used this forum to get some feeling as to whether my current pension fund, at my age, is good in general or poor in comparison to an average, if it exists. I have zero in-depth knowledge of this stuff.
> ...



Doesn't mean the kids won't be looking for financial help. "Help the kids out" is now a common expenditure for parents, especially with the way house prices are. I wouldn't presume that they will stop being an expense once they finish college. 


Steven
www.bluewaterfp.ie


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## Gordon Gekko (6 May 2021)

Steven Barrett said:


> Did you add in the extra expenditure purely because you have more free time? Able to go away whenever you want? Spending more money purely because you aren't in work. Retirement isn't as cheap as people think it is.
> 
> Doesn't mean the kids won't be looking for financial help. "Help the kids out" is now a common expenditure for parents, especially with the way house prices are. I wouldn't presume that they will stop being an expense once they finish college.
> 
> ...


Hi Steven,

I hope you’re well.

Yes, I think I’ve covered that off, but it’s a very good point. To be honest, we spend a hell of a lot on travel and experiences as things stand, so I genuinely can’t see that increasing from its current level.

You’re absolutely right in relation to the kids as well. We have a figure in mind for helping them with their first home purchase and thankfully we’re young enough that we should still be working when they’re at the finding their feet stage and might need additional support.

But very valid points.

Gordon


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## Gordon Gekko (6 May 2021)

The figure we came up with is €5k net a month in today’s terms. So if we were retiring today, we’d want €5k a month net to cover all angles. And that gives plenty of wriggle-room. It might sound like a lot to some people or a little to other people. I was actually surprised and expected it to be more.


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## time to plan (6 May 2021)

Gordon Gekko said:


> The figure we came up with is €5k net a month in today’s terms. So if we were retiring today, we’d want €5k a month net to cover all angles. And that gives plenty of wriggle-room. It might sound like a lot to some people or a little to other people. I was actually surprised and expected it to be more.


Thanks for sharing - interesting. I've been doing some similar calculations but in less detail that you. Turns out Mrs TTP and I are nearly at 5k per month there by just combining: 1 UK state pension each, 1 Irish state pension each, 1 NHS pension (8 years' service), 1 UK university scheme pension (12 years' service). I've just set up an Exec Pension now, but really not sure I need to kill myself working hard until I'm 65 to max my pension.


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## NoRegretsCoyote (6 May 2021)

time to plan said:


> working hard until I'm 65 to max my pension.


UK pension kicks in at 67 for you probably, Irish state pension at 66 (though that may rise).

You might need to bridge the gap.


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## Gordon Gekko (6 May 2021)

time to plan said:


> Thanks for sharing - interesting. I've been doing some similar calculations but in less detail that you. Turns out Mrs TTP and I are nearly at 5k per month there by just combining: 1 UK state pension each, 1 Irish state pension each, 1 NHS pension (8 years' service), 1 UK university scheme pension (12 years' service). I've just set up an Exec Pension now, but really not sure I need to kill myself working hard until I'm 65 to max my pension.


Likewise, thanks for sharing. I think it’s a useful exercise to share. AAMers are prudent by definition, but the big takeaway for me is that it was less than I thought so I could hang up my boots earlier than I thought. Not that I will, but it’s comforting to know that a time will come when you don’t absolutely have to work.


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## David_Dublin (6 May 2021)

Gordon Gekko said:


> The figure we came up with is €5k net a month in today’s terms. So if we were retiring today, we’d want €5k a month net to cover all angles. And that gives plenty of wriggle-room. It might sound like a lot to some people or a little to other people. I was actually surprised and expected it to be more.



That's a good way to look at it, start with net monthly requirements, work forwards.

Begs the question, how to reverse engineer that 5k a month into gross pension pot needed at retirement to fund 30 years retirement.

Even a back of envelope type calc that takes in state pension from 67, tax, assumes retire when state pension kicks in. Or is there an online calculator for this?


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## colin79ie (6 May 2021)

Steven Barrett said:


> Did you add in the extra expenditure purely because you have more free time? Able to go away whenever you want? Spending more money purely because you aren't in work. Retirement isn't as cheap as people think it is.
> 
> 
> 
> ...


Yes I guess that is a reasonable assumption regarding kids in the future. Both are planning to pursue professional qualifications in the medical field so all going well they will have good paying careers from an early age. Of course, I have no crystal ball so can only speculate as to how that will unfold.


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## time to plan (6 May 2021)

NoRegretsCoyote said:


> UK pension kicks in at 67 for you probably, Irish state pension at 66 (though that may rise).
> 
> You might need to bridge the gap.


NHS and uni pensions kick in at 60. Exec pension I have control over when it kicks in so just need to sequence it.


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## 50andOut (6 May 2021)

David_Dublin said:


> That's a good way to look at it, start with net monthly requirements, work forwards.
> 
> Begs the question, how to reverse engineer that 5k a month into gross pension pot needed at retirement to fund 30 years retirement.
> 
> Even a back of envelope type calc that takes in state pension from 67, tax, assumes retire when state pension kicks in. Or is there an online calculator for this?



Yep working out your expenses is key. As mentioned higher up, re the general rule of thumb figure = 25x annual exp. (google 4% rule)

Calculating at retirement age makes it quite simple as you don't need to adjust for higher drawdown initially.  -Annualise the €5k =  €60k - minus any state pension entitlement/other income, then multiply by 30. (assume inflation is covered by fund growth).

Its a very basic back of the envelope idea.


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## Wm Kee (6 May 2021)

So you recon a pens


50andOut said:


> Yep working out your expenses is key. As mentioned higher up, re the general rule of thumb figure = 25x annual exp. (google 4% rule)
> 
> Calculating at retirement age makes it quite simple as you don't need to adjust for higher drawdown initially.  -Annualise the €5k =  €60k - minus any state pension entitlement/other income, then multiply by 30. (assume inflation is covered by fund growth).
> 
> Its a very basic back of the envelope idea.


So you recon a pension fund of €1.5m will provide an annual pension of €50,000 (€1.5m divided by 30)?


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## David_Dublin (6 May 2021)

My reading of it was you could increase that 50k figure per annum by the state pension.


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## 50andOut (6 May 2021)

Wm Kee said:


> So you recon a pens
> 
> So you recon a pension fund of €1.5m will provide an annual pension of €50,000 (€1.5m divided by 30)?


based on the question asked "to reverse engineer that 5k a month into gross pension pot needed at retirement to fund 30 years retirement." 

The maths is simple as its a back of envelop guide - take 40k per year from 1.2 million and it will last 30 years. (Assuming there are state pensions covering the extra 20k, but adjust the annual required expense as required)

no sequence of return risk, taxation or inflation taken into consideration.


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## MrEarl (6 May 2021)

Gordon Gekko said:


> Yep, that’s why I use 5%.
> 
> Better to end-up with Gran Reserva instead of Reserva through investment performance rather than ending-up with Crianza because your plan was too aggressive…



You could always buy a small vineyard, produce your own wine, and save a fortune on retail prices ...

Then you wouldn't have to worry about investment performance, and perhaps even reduce your current contributions... which could then be put towards buying more gran cru now 

So, next things to worry about are the cost of living, and the tax implications, if you emigrate to one of the wine growing countries.


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## Steven Barrett (7 May 2021)

David_Dublin said:


> That's a good way to look at it, start with net monthly requirements, work forwards.
> 
> *Begs the question, how to reverse engineer that 5k a month into gross pension pot needed at retirement to fund 30 years retirement.*
> 
> Even a back of envelope type calc that takes in state pension from 67, tax, assumes retire when state pension kicks in. Or is there an online calculator for this?


It's not very straight forward. We have different sources of income becoming available at different times and at different taxation levels. Also, most people take their ARF income as a percentage and not as a fixed amount, so that income will vary too. 

Then your expenditure will vary too. The first few years in retirement will most likely be the most expensive. You get a big lump sum and spend it on changing the car, fixing up whatever in the house, big holiday etc. You are also younger and the thoughts of being in the airport 5-6 times a year is fine. As you get older, you will spend less but if health deteriorates, you may spend more on medical bills. Care homes is a massive expenditure at the end but thankfully we have a system here that if you don't have any money left, the State will help out. Otherwise, you will be keeping a huge chunk of your retirement fund for care home costs; something you may never actually avail of. 


Steven
www.bluewaterfp.ie


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## Cervelo (7 May 2021)

Gordon Gekko said:


> The figure we came up with is €5k net a month in today’s terms. So if we were retiring today, we’d want €5k a month net to cover all angles. And that gives plenty of wriggle-room. It might sound like a lot to some people or a little to other people. I was actually surprised and expected it to be more.



If your were to retire today, hypothetically speaking how are you going to fund the €5k a month which I presume is around the €90 to €100k a year gross.


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## Gordon Gekko (7 May 2021)

David_Dublin said:


> If your were to retire today, hypothetically speaking how are you going to fund the €5k a month which I presume is around the €90 to €100k a year gross.



It’s nowhere near that actually. With two incomes, it’s about €68k in total from age 70.

PRSI disappears from age 66 and USC falls at age 70.

I’ve a State Pension entitlement (no USC), let’s call that €13,000.

Taxable rent is about €15,000.

Mrs Gekko has a DB pension which would more than bridge the gap.

And that’s before I take my fund into account.


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## DublinHead54 (7 May 2021)

It would be great if some of the points for working out expenditure and adjusting for inflation etc to estimate required pension pot could be made into a key post.


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## Cervelo (7 May 2021)

Gordon Gekko said:


> It’s nowhere near that actually. With two incomes, it’s about €68k in total from age 70.



On the face of it it all sounds good, State Pension, Rental Income and the jewel in the crown the "DB"
With the added bonus of a cherry on the top your own fund, what's not to like about that plan

Though I am a little surprised that €68k nets down to €60k, it's not an area that I've given much thought to at the moment
simply because it's a good 15 years away for us and a lot can/is going to change in those years with regards to taxation and wealth


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## MrEarl (7 May 2021)

Cervelo said:


> . .. it's a good 15 years away for us and a lot can/is going to change in those years with regards to taxation and wealth



I am running into more and more people, who are considering retiring abroad, primarily due to concerns about Ireland's future tax regime.


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## Cervelo (7 May 2021)

MrEarl said:


> I am running into more and more people, who are considering retiring abroad, primarily due to concerns about Ireland's future tax regime.


Yeah it's a topic that I hear myself from time to time and something that crosses my mind at least a few times a year
but on those days I'm not really thinking about bang for your buck but rather how I can improve the weather and make it more consistent 

When I'm in Spain I run into quite a few English people who made the move to Spain before Brexit for this reason
Now some of them have had to readdress the move because of Brexit and the implications of it on their retirement plans and finances
Myself I'd love to sell up and move, my heart and head say do it but my gut shouts No because it would be a irreversible move.


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## Protocol (7 May 2021)

MrEarl said:


> I am running into more and more people, who are considering retiring abroad, primarily due to concerns about Ireland's future tax regime.



That's odd, as my retired parents pay 8% approx direct taxes on their 50k approx income, and anywhere else would charge higher taxes for the benefits they receive:

two medical cards
two FTP
free TV licence
35 pm off elec / 420 pa


We have very low effective tax rates, relative to the benefits.


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## OMG_OMG (7 May 2021)

OP dont forget that there are a lot of expenses you wont have during retirement too.
I recently retired in my 50s.  Too much info to stick in one post but here is the thread that helped me finally be at ease with it.






						Retiring at 51
					

I thought I would give an update in January, but tbh nothing much happening. Covid has put the Kibosh on plans to do anything really. One good thing though is we seem to have more money than we know what to do with now. Nothing to spend it on really with covid.  Even without covid, we probably...



					www.askaboutmoney.com


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## colin79ie (8 May 2021)

Thanks everyone, plenty of useful information to take on board.

In my head I will aim to retire at 60 and get a proper financial plan in place for that. Having taken proper advice already, I have improved my protection situation. I could never get income protection due to my profession and had a life cash policy instead, sold to me when I was young and carefree. I have death in service of around 180k so I ditched the cash policy and put in place a specified illness policy for slightly less monthly cost.

For now I plan on increasing me pension contributions another few percent and try and build it more if a payrise comes in the coming year or two.

Hopefully things will slowly fall into place and I can look closer at it in another few years.


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