How much for retirement?

Thrugelmir

japmis wrote: »

I've averaged 5% a year for the last 3 years; this includes a promotion. :j

What guarantees do you have for the next 10, 20 or 30 years?

Spending wisely is the only choice for the majority of people. As a decent pension (at an early age) requires a sizable capital sum to be accumulated.

uk1

The chances of you risking "over saving" for retirement is so remote that I would say simply save as much as you possibly sensibly save as you can. Until it hurts. Many of us were lucky to save for retirement when making such calculations might have made more sense. But I think the chances of having too much cash is remote.

Also with someone leading such a decent lifestyle you might find that a lot of adjustments you might not even consider now but take for granted will be uncomfortable choices when you retire and may be concessions you do not wish to make. For example premium air travel and staying in decent hotels perhaps in suites etc. Eating decent food and drinking decent wine and driving a new decent car.

Also if you have a family then you may find that your generations kids need even more help and you may want to do this. Many of us have had to become the bank of mum and dad.

I'd forget the calculation and simply bury as many acorns as you can.

georgehere

I am just repeating the advice above - but maybe that will help ... With 20-30 years to go things are just too unpredictable, the best you can do is make a guess, plan to that guess, keep on track until you have a better guess or something significant changes in your circumstances - then re-plan, and so on.


Keep it simple - you will be wrong so don't agonise over it now. Guess what you will need ... £20k a year. Add on a bit for tax and one time spends (white goods/cars etc) ... say up to £24k. You have £12k covered. Guess you could get 5% income from your savings so you need £240k. Use an online calculator ..2.5% interest, 25 years, needs £575 a month savings - oops, can't afford that ... hmm, I'll go for £300. Job done, make a note to do same again in 5 years time.


In my own case, over time 3 things have changed for me:
1)my expectations of what I would need in retirement has come down
2)my expectations of the income my savings would generate has also come down
3)my desire to retire earlier has increased

atush

japmis wrote: »

hahahahaha that just shows how clueless I am as I thought the top tax bracket was £42k :rotfl:

For a start, w/o anything else. you should put into a pension of some type all your income above the HRT threshold of approx 42K. Every 100 into your pension will only cost you 60. It is a no brainer.

Then start working out your Number as far as you can. The amount you need to live on (deduction things like mtg which should be paid off and pensions, savings and work expenses) will determine how close you are to your goal and if you need to save more.

Bootsox

japmis wrote: »

How do I know if £1,000 a month is going to be enough to live on? Do I need to start pumping more cash into my pension? :undecided

At present day prices, unless you are going to live an "oddball existence", you are going to need about double that (net).

japmis

Thanks everyone for your replies!

I'm currently putting in 8% and my company puts in 7%; I will up this to 10% as this still gives me the flexibility to overpay my mortgage.

racing_blue

Why not aim high: the lifetime allowance of £1m?

stubtoe

You haven't said what type of pension you've got - Defined Contribution (personal pensions) or DB (final salary type)?

Assuming it's DC, are you happy how your pension is invested? If you're invested too cautiously you'll have to sock away a helluva lot more than if you increased your allocation to growth assets such as equities.

With a timeframe of 30 years plus there's an argument even the most risk averse individuals should still weight quite heavily to equities (80%+), especially if you plan to stay invested post retirement via drawdown. That said, de-risking, even if only for tax-free cash, should still be given some thought starting 5-10 years pre retirement date.

p.s. Personally I'm aiming for my wife and I to have c.£600,000 in pensions and ISAs by age 55. Assuming we leave that invested, it should provide us with a sustainable income of around £24,000 per year (4% withdrawal rate). I see that as plenty given we'll have no mortgage, kids can fend for themselves etc. I'm also not banking on state pension being there.

kidmugsy

NorthernMonkey1 wrote: »

If you have spare cash, then putting it into a pension instead of spending it on beer or fags will mean you have more options in 33 years time.

But you'll need more because you'll live longer.

missbiggles1

Bootsox wrote: »

At present day prices, unless you are going to live an "oddball existence", you are going to need about double that (net).

Doesn't that rather imply that any working person earning less than £40k (assuming £500 pcm rent/mortgage) is living an "oddball existence"?