Guys, question, how stupid would I be if I decide to not contribute to my pension and keep the amount and invest it by myself?
I am still researching and trying to understand, so if you guys already have researched and can share more or tell me where I am wrong, much appreciated.
The State Pension (paid for by national insurance contributions) age is 67 from 2028. This means I can get it in 2065. And I can have it regardless if I contribute to my pension or not as I must have to pay NI.
On the other hand, I can access my pension money as early as when I turn 55. I need to contribute 5% and the employer will contribute 3%.
Not paying for the pension means losing a 3% bonus from the employer and 20% of that amount in taxes. If I pay ÂŁ100, the employer would pay ÂŁ60, which goes to my pension fund, and I am not sure what the average return rate is, but it should be around 5/5.5%.
Now, If I invest it by myself, even going full S&P 500, I might achieve more, around 8%. After paying the 20% taxes on my £100, I’d get £80 to invest, which can be invested into my ISA as currently not filling it every year, and probably won’t be able to fill it for a long time as I will probably send money back home for buying land or building on my dad’s land + need to support the family financially. So that’s basically tax-free.
Using some compound calculator, I can see that the difference is not much, and considering the fact that I need to pay around 40% in taxes if I decide to access all the money in one go (the first 25% is tax-free), looks better to invest by myself.
My plan is to not be forced to retire at 55, and I am trying to retire as early as possible, maybe when I am 40 or 45 at most, and this would give me more “freedom” and “control”, but it’ll probably be a bit more riskier.
Any advice? Am I thinking wrong or missing something?