Another person seeking advice.

spursboy

Hi all,

I have a question which really boils down to how much should I be saving?

I am fully aware that you should start young with pensions and started contributing at 23 as my employer at the time offered matched contributions 4%ee/4%er (circa £200 p.m) to a stakeholder pension.

I kept that up for over three years until I changed jobs last September.

The company I moved to offers access to a standard stakeholder pension (as required by law) but without matched contributions until you have completed a years service. After 1 years service they offer a very generous 13% employer contribution (circa £500 p.m)

As above I really want to get an idea of is how much I should really be saving! I am aware that in retirement you are likely to be mortgage free etc and as such dont need huge amounts to live on but wondered if anyone had a guide of how much roughly you should start to put away whilst you are young!

Also how does the compounding work and does anyone have an excel sheet or link to an online calculator where you can put in X per month and it compunds it up over 30 years say?

Thanks in advance for any assistance.

Stuart

p00hsticks

I'd guess the answer is as much as you can afford to!

But I wouldn't be putting it all into a formal pension - although they have their advantages (contributions are tax free) they also have restrictions in that you can't get at the money before you're 50 (soon to be 55).

Are you making use of your ISA allowances ? that's another tax efficient way of saving which isn't as restrictive as a pension.

Manual_Reversion

First post here for me but I'd say a broad-brush statement is that you need to pay in 25% of your gross income every year for around 30 years assuming 7% growth per year in order retire with the same disposable income as the day before you retired, assuming mortgage payments cease on retirement.

Of course, this is a very tall order for the majority of people, but if your employer will contribute 13% then you're more than halfway there.

I agree with p00hsticks. Until your employer matches your contributions, consider using an ISA, and then match employer contributions the second that they offer them and wrap it up in a pension.

Do a search for pension calculators, and I'm sure you'll find plenty. My pension is with Friends Provident and I know they have a calculator on their site.

If you are into Excel you can make your own spreadsheet based on more specific circumstances than a generic internet calculator; I did so and found the FV function very useful. The risk you take is that you make a mistake and subsequently base your retirement planning on bad data. Personally I found the generic calculators made too many assumptions to give anything of much use.

I offer the above in good faith however there are far more astute people than me on this board.

I think you have the best thing on your side though - time!

Kind regards.

cyclonebri1

Manual_Reversion wrote: »

First post here for me but I'd say a broad-brush statement is that you need to pay in 25% of your gross income every year for around 30 years assuming 7% growth per year in order retire with the same disposable income as the day before you retired, assuming mortgage payments cease on retirement.

Of course, this is a very tall order for the majority of people, but if your employer will contribute 13% then you're more than halfway there.

I agree with p00hsticks. Until your employer matches your contributions, consider using an ISA, and then match employer contributions the second that they offer them and wrap it up in a pension.

Do a search for pension calculators, and I'm sure you'll find plenty. My pension is with Friends Provident and I know they have a calculator on their site.

If you are into Excel you can make your own spreadsheet based on more specific circumstances than a generic internet calculator; I did so and found the FV function very useful. The risk you take is that you make a mistake and subsequently base your retirement planning on bad data. Personally I found the generic calculators made too many assumptions to give anything of much use.

I offer the above in good faith however there are far more astute people than me on this board.

I think you have the best thing on your side though - time!

Kind regards.

Without wanting to cause offence, and I realise that you only posted this to highlight to problems with maintaining lifestyle after retirement, but;
"you need to pay in 25% of your gross income every year for around 30 years"

To be honest I don't think that could be either possible or desirable to anyone, unless you want to be the richest corpse in the graveyard.

Life should be about compromise, live some, save some;)