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Pension Provision - Is £220 a month enough?

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Is £220 a month enough for a pension for one person?

Lets assume the average wage is £25,000 what should the average pension provision be per month?

In all our circumstances I think we are Mr and Mrs average now so can only expect the average in retirement.

The problem is for 25 years at least only put away £25 a month well below the average. This is why the change of heart on figures and have increased the figure.

What do you think should I increase it even more to avoid being a pauper in retirement or even worse not being able to retire and have to keep on working till I drop?
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  • Towser wrote: »
    Is £220 a month enough for a pension for one person?

    Lets assume the average wage is £25,000 what should the average pension provision be per month?

    In all our circumstances I think we are Mr and Mrs average now so can only expect the average in retirement.

    The problem is for 25 years at least only put away £25 a month well below the average. This is why the change of heart on figures and have increased the figure.

    What do you think should I increase it even more to avoid being a pauper in retirement or even worse not being able to retire and have to keep on working till I drop?
    If you've been paying in peanuts for the last 25 years, then £220 per month is almost certainly not going to be enough. But then again, it depends on what an "average" retirement looks like in your eyes.

    The real question should be: how much do you need when you retire?
    Stephen Covey once said that "when you teach once, you learn twice". That is the primary reason for my participation on the forums as an IFA.

    Although I strive to provide accurate information in my posts, there may be the odd time when I fail. Yes I know it's hard to believe but even Your Hero can make mistakes. Apologies in advance.
  • marvin
    marvin Posts: 2,186 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker I've been Money Tipped!
    I started late due to being a carer so...

    I am currently putting 12% of £30000 (about £325) into a pension and this is nowhere near enough it will only provide me with a pension of around £2500 a year (year not a month) in order to reach a decent cash income by retirement I need to be putting some £2000 a month into the pension pot.

    Hopefully by then no mortgage to pay and no work expenses and probably a few benefits (ill health I don't get any now but health is getting worse I expect to be ill in later life if I am not them bonus) will plug some of the gap.

    http://www.standardlife.co.uk/customer/pensions-and-retirement/looking-for-a-pension/pension-calculator.page
    I started with nothing and I am proud to say I still have most of it left.
  • patanne
    patanne Posts: 1,286 Forumite
    People quote all sorts of different percentages of current income required for retirement. But it is a really personal figure. Also it is my belief that the lower your income before retirement the higher the percentage of it you need in retirement. I decided many years before I retired that I needed almost 100% on retirement. You just have to decide what your number is. What do you want to do with your time.

    Sitting at home watching the goggle box because you can't afford to do anything else is not a good way to go. Staying in bed because you can't afford the heating on is not a good way to go. And my major trigger, having to get rid of the car because I couldn't afford to run it. You can't even say that well I live in town so I'll hire a car if I need one, because the chances of hiring a car over 70 is slim to negligible.

    So what is your number and how can you reach it?
  • patanne
    patanne Posts: 1,286 Forumite
    You also need to check your state pension age and decide whether you can work that long and if not do you have enough savings to fund those years?

    Do you have a state pension forecast as the rules are changing again very soon & will affect you? That will give you some idea of how much of your retirement will be funded by your state pension & how much you need to fund.
  • greenglide
    greenglide Posts: 3,301 Forumite
    Part of the Furniture Combo Breaker Hung up my suit!
    The first question must surely be "how old are you and at what age do you want to give up work".

    I assume the £220 per month is pension contributions not the target amount?
  • Towser
    Towser Posts: 1,303 Forumite
    oh dear well I am stuffed then, it looks like I will be a pauper in later life. I will have no choice the figures seem impossible to achieve. My number will have to be whatever I can afford. I will have to try and put as much away as possible. Hopefully by then no mortgage to pay.

    I too am a carer for my disabled son. I was under the impression you get your bit accrued by the government if you are a carer. I will probably always be a carer as my son is Autistic. Euthanasia is not even an option as he will always need caring for.

    I have a resolve that I can live off anything by sheer budgeting. Looks like I will be below the poverty line then but then won't benefits kick in?
  • marvin
    marvin Posts: 2,186 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker I've been Money Tipped!
    [QUOTE=Towser;66778626
    I too am a carer for my disabled son. I was under the impression you get your bit accrued by the government if you are a carer. I will probably always be a carer as my son is Autistic. Euthanasia is not even an option as he will always need caring for.
    [/QUOTE]

    There is a slightly enhanced state pension for Carers but don't pin too much hope on this.

    The main pension will be worth currently about £5000 or so a year so calculate £5,500 or £6000 for this.

    My calculations are on having £15,000 after tax income a year which I am currently well short of. My pension contribution of 12% is 6% each between me and employer but is sadly going into a stakeholder and not a final salary as it would have been till recently.

    I also have other savings vehicles like share purchase plans through the employer this is about 6% of take home (the maximum available is being used.

    The thing is start something and contribute as much to it as you can don't forget there are tax advantages and if your employer uses salary sacrifice it saves more on tax and NI too.
    I started with nothing and I am proud to say I still have most of it left.
  • Bootsox
    Bootsox Posts: 171 Forumite
    edited 19 October 2014 at 8:40AM
    To OP, just to help you on your way with the calcs, unless you have a drugs/drink/gambling habit suggest the following:

    £10/12k (net*, per annum, per person) in a mortgage free property, with no dependents, would provide a basic standard of living with occasional holiday treat.

    Circa £24k (net*, per annum, per person) would provide a comfortable living, e.g. run a small car plus a 2/3 foreign holidays plus occasional weekend treats.

    add 50% to above for a couple in same circumstances.

    ....and all shades of grey in between.

    *means free from deductions, i.e. after tax
  • marvin wrote: »
    I started late due to being a carer so...

    I am currently putting 12% of £30000 (about £325) into a pension and this is nowhere near enough it will only provide me with a pension of around £2500 a year (year not a month) in order to reach a decent cash income by retirement I need to be putting some £2000 a month into the pension pot.

    Hopefully by then no mortgage to pay and no work expenses and probably a few benefits (ill health I don't get any now but health is getting worse I expect to be ill in later life if I am not them bonus) will plug some of the gap.

    http://www.standardlife.co.uk/customer/pensions-and-retirement/looking-for-a-pension/pension-calculator.page

    Hi Just to say with the changes in pensions legislation there is no 'amount you can have a year', rather you have a pot from which to draw money from. In retirement you tend to spend more at the start, say for the first 10 years, then this tends to drop for the next ten to fifteen years, to then increase again at the end of retirement. Please remember to bare this in mind!

    Paid off all Catalogues 10.10.2014
  • brewerdave
    brewerdave Posts: 8,711 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    Income after retirement is a very personal thing -as example, I have a retired friend who ,with his wife, has a total household income of £4500+ per month AFTER all tax -however,he is always complaining that they are broke and currently is moaning about overdraft charges !!!!!!:rotfl:
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