How much is enough?

bamgbost

1) I have heard the rule... put in half your age % wise. From whenever you start working and keep it up throughout your working life.
2) I have also heard, that you will need approximately 2/3rds of your normal income at retirement age.

So although you should try and put in as much as you can afford... realistically by following 1) above will you get approx. 2/3rds of your income @ retirement age??

Or where did the idea of 1) come from??

dunstonh

1) I have heard the rule... put in half your age % wise. From whenever you start working and keep it up throughout your working life.

Its a broadbrush guide to get people thinking of the sort of amount they should be looking to pay in. It's main purpose is to get people to realise that paying in £100pm is just not going to be good enough.

However, it is not a good enough guide if you plan early retirement. Or invest at a low risk profile.

2) I have also heard, that you will need approximately 2/3rds of your normal income at retirement age.

Again, a broad guide. It depends on what you plan with your life.

jennifernil

How much you need will depend on your lifestyle and circumstances.

We retired 7-8 years back on just over half our previous total income, but with no mortgage, debts, or children to keep. We have found that just to keep things "ticking over" we, personally, need about £16k as we have not downsized. This includes all bills, running 2 cars, but not holidays or replacing cars.

We do have considerably more so can take holidays, save for major replacement items, and help our children with housing costs.

We indulge our hobbies but do not eat out much, so a fairly inexpensive lifestyle, same as we always had.

TBagpuss

Also, % figures are not very helpful as so much depends on how your pension fund performs.

many pension providers have calculators available which can give you a rough idea - there is one here, https://www.moneyadviceservice.org.uk/en/tools/pension-calculator

As dunstonH says, it depends on what your lifestyle is now and what you want it to be in retirement. For instance, if you have a mortgage and are paying into a pension, then those are outgoings you are funding now, but will presumably not be funding once you retire, so think about what proportion of your income you currently spend on those outgoings. There may be other costs which will be higher (or lower) when you retire.

What do you want to do in you retirement? If you want to spend it mostly gardening or writing a book, then your income needs will be different than if you want to travel the world and spend 6 weeks every winter somewhere warm, for example.

Another factor which makes a difference is what, if any, other kinds of saving or investment you have. If you have a large house because you have several children, then you may plan to downsize when you retire and release some of the capital from your property.

uk1

It is better to have more than less.

Broken_Biscuits

bamgbost wrote: »

1) I have heard the rule... put in half your age % wise. From whenever you start working and keep it up throughout your working life.
2) I have also heard, that you will need approximately 2/3rds of your normal income at retirement age.

So although you should try and put in as much as you can afford... realistically by following 1) above will you get approx. 2/3rds of your income @ retirement age??

Or where did the idea of 1) come from??

ive stuck to rule 1 or better since 18.
rule 2 sounds like a load of rubbish to me. If i got a pay rise that doubled my pay, id just save considerably more rather than adjust my spending to match.

i probably get by on a little over the equivalent of minimum wage. The rest gets invested.

cant see that changing too much regardless of how much i earn.

atush

1/2 and /3 depends on your own circumstances and lifestyle.


Only you know if you are married (or will be) have children (or not) if you will own a home to live in w/o mtg etc. You have to work out what you need,

chucknorris

How long is a piece of string, springs to mind. The possible good news though for retirees is no more commuting, national insurance or mortgage costs, balanced against addition leisure costs. Personally I have got it completely wrong, but in the right way, as we have over provided for our retirement, which is why I am going to retire next year. A decision that seemed difficult at first, but now I have really warmed to it, and feel really happy with the decision.

Broken_Biscuits

well done chuck, would you be prepared to give an indication of how early you are retiring and percentages wise what you saved?

thanks

Good_bad_and_ugly

Chuck,

Enjoy your mistake - don't you just hate it when you get things wrong?!

JB9302

We are both aged 63yrs house paid for and children grown up with own houses , I am retired on company pension (state pension in Jan 17) , wife continuing to work till 65 next yr and deferred her SP last year .
At the moment our net income is £3200 approx of which we save £1000 pm , so it seems we get by on £2000 pm easily .
When I get my SP our net income will be around £3400 pm , we dont holiday much but enjoy a new car every 3 yrs and pay for replacement household items ( washer/dryer/boiler etc ) from savings .
We are much better off now than in our earlier working life and have no debt .