Pensions explained for beginners - help please!

fernando_vaz

I don't have a pension at all at the moment, and having read the guides wanted some help/clarification.

My info:
I'm make, 38, income of around £40,000 a year. I would anticipate retiring around 70, and would like an income of around £20,000 a year.

After what I would expect to get from the state pension, how much would I need a year to get to £20,000? And to get that amount, how much would I need to contribute a year assuming my employers had a pension scheme that contributed 5%?

Sorry if this is a very basic question, but I'm not great with figures!

BLB53

If we take say £8K as a ballpark state pension, you would then need a private pension of £12K.

To generate income of £12K p.a you would need a pot of around £300K and then drawdown 4% p.a

Assume a return of 5% p.a (after inflation) you will need to save £2,900 p.a net of HMRC tax top-ups to get to £300K in 32 yrs.

ThinkingOutLoud_2

It is good to start as you have by thinking about what income you will want in retirement and when you will want to retire.

There are lots of things to think about and lots of places you can get some help and advice. None are perfect, but you get some level of understanding and also use some tools to trial what kind of savings deliver what kind of results.

This is simple enough example
http://www.aviva.co.uk/retirement/tools-and-calculators/my-retirement-planner/

Keep posting as you have questions.