I'm 28 and want to retire at 60

Bigbobby

I'm 28 and i have been saving into my company pension since 24. When i was 24 i heard the rule divide your age by 2 and save that as a % towards your pension.
In my case this would have been 12% but i read online 15% is better. This should lead to an income of 2/3 my salary which what is stated is comfortable to live on.
This 15% is made up of 12% personal contributions and 3% employer.
My salary is £18787 and pension pot is currently £13500.
Most people at work call me sad. Some are in their 40s and have no pension savings at all.
Being young the state pension will not be paid until in 68 or even higher.
I would like to retire at 60 but this means an 8/10 year gap to cover until state pension kicks in.
Current salary is not great but i do casual work on the side. What they call "moonlighting". So money is not an issue. I already have 6 month emergency fund.
I have a mortgage - i live in 1 bed flat.
Oh and don't worry i also have a life by having a football season ticket and still see mates!
My question is how much more should i increase my contribution by to retire 2/3 current income at 60?

atush

How much extra do you have to play with each month? What rate is your mtg? have you kept your contribs at 15% since you joined ? ie has it gone up with each rise in salary?

I'd be inclined to split further savings, half into S&S isas, and half to pension.

Your_Hero

Don't follow the silly rules. Use the projections from the pension provider but of course these are entirely accurate due to the amount of assumptions used (they also vary between providers). Having said that, the illustrations now provide the benefits in today's terms as if you retired tomorrow. This makes it easier to understand and plan ahead (rather than saying you will have £50,000 per year in 40 years' time - this doesn't mean anything because of the cost of living in 40 years' time is very different).

Play around with this calculator. Bear in mind there are many, many assumptions used. https://www.hl.co.uk/pensions/interactive-calculators/pension-calculator

At your current rate of saving, you will receive an income of £4,360 p.a. and a tax-free cash of £30k. With no tax-free cash (not really recommended for basic rate payer), an income of £5,810 p.a.

Using the same assumptions, you would need to be saving 45% of your salary (plus 3% of employer contribution on top) to reach your £12,500 p.a which also gives you tax free cash of £86,200.

TrustyOven

There's a nice calculator on this site you could play with:

https://www.hl.co.uk/pensions/interactive-calculators/pension-calculator

HHarry

I'd agree with Atush, with a pension underway look at doing something different with your spare money.

Who knows how the pension rules and regulations will change in the next 30 years? What happens if you end up not being able to access your pension at 60 for some reason?
Hedge your bets and save somewhere else, a Stocks & Shares ISA is a good idea as a starter.

How much will you need? Well opinions differ, and there's no definate rule. Take the amount you want to retire on and multiply it by 20 (or 30!) as a starter, but it's only a starter.

gardengull

Didn't want to read and run, so will just say well done for thinking about your future finances.

atush

I didn't say not to pay more into pensions, just add S&S isas as well. that way you will hedge your bets plus have money to move up the property ladder should you want to eventually.

Dare I say, you might get married and have sprogs too lol

Bigbobby

Cheers for response chaps, i will have a play with the calculators.
In terms of money to play with after bills i would say £300.
Mortgage is £317/month. £68k remaining.
Interest rate is 3.99%.
My payments have stayed at 15% since i was 24. I have not had a single pay rise over the past 4 years.

atush

so an extra 100 or so to pension, and 200 to S&S isas?

Or split it 50:50?

HHarry

atush wrote: »

I didn't say not to pay more into pensions, just add S&S isas as well. that way you will hedge your bets plus have money to move up the property ladder should you want to eventually.

Dare I say, you might get married and have sprogs too lol

Yes, I thought that was want you meant - I was agreeing that continuing pension payments, as well as an ISA might be the way to go.

jamesd

No problem to retire at 60 or 55 or even 50 if you are determined. Just takes the desire and putting the money to work to get it done.