Am I saving enough?

johnsmithy

Saving half your age as a % is generally the way to go. Earning 37k a year with increases to contributions each year, you are ideally looking for an income of minimum £15k a year, so its been touted, but to aim for the 25k, you'd need to do a forecast to see how much you'd need to contribute, as opposed to how much the employer contributes and the government, to see how you would achieve that target.

You are lucky to earn 37k a year, as those on a lower wage, I would imagine would find it a lot tougher to get to a desired pot. It is said a minimum pot of £250k would get an income of £15000 a year, which is what you really need. So in that case, you'd be looking of a pot around £416,000 to get a 25k income, by my calculations, so do a forecast to ensure that contributions all round are working towards this pot, for your desired income at retirement - its possible, but it depends how much you can afford to contribute.

ThinkingOutLoud_2

johnsmithy wrote: »

Earning 37k a year

Maybe - he says he is 37 (years if age I assume) not that he earns 37k, which may also be true.

He tells us however that current contributions are 21% ee plus 12% er - so 33%.

ex-pat_scot

johnsmithy wrote: »

Saving half your age as a % is generally the way to go. Earning 37k a year with increases to contributions each year, you are ideally looking for an income of minimum £15k a year, so its been touted, but to aim for the 25k, you'd need to do a forecast to see how much you'd need to contribute, as opposed to how much the employer contributes and the government, to see how you would achieve that target.

You are lucky to earn 37k a year, as those on a lower wage, I would imagine would find it a lot tougher to get to a desired pot. It is said a minimum pot of £250k would get an income of £15000 a year, which is what you really need. So in that case, you'd be looking of a pot around £416,000 to get a 25k income, by my calculations, so do a forecast to ensure that contributions all round are working towards this pot, for your desired income at retirement - its possible, but it depends how much you can afford to contribute.

Half your age as a % of salary - this is a broad minimum for retirement at State Pension Age.
You note you would like to retire at 60 - that will require some accelerated contributions / investment performance above this base line.


You will need to use something like cFireSim to model how you could get a decent size pot at 60 then draw it down before SP kicks in at 68 (or whenever). General broad brush "% of salary" approaches are not sufficiently robust for your needs.

ThinkingOutLoud_2

Rawhammer wrote: »

oh, £56k salary

OK so there are lots of calculators which have varying assumptions and levels of sophistication.

Using Aviva's which is not perfect but shows a nice graphical view where you can "drag" sliders to see the impact of retiring early or later, contributing more or less and takin a tax free lump sum or not...

Inputs = Age 37, Salary 56k, continuing a combined contribution of 33% of salary and retiring at 60

Using a drawdown model - it gave a pot worth 823k at age 60 which would bring you income drawdown of £34,000 per year until aged 68 and then £25,907 per year until aged 100 (assuming state pension of £8093 tops that up from 68).

Their annuity tool is less clear given the impact of early retirement vs need for consistent income. But this brings a lesser figure as of course the annuity is someone else's absolute promised of income.

So you look to be on track for your needs and some. Not a surprise as you are contributing way over your age/2 as a%.

Best thing is you go here - enter your details and have a play - https://www.direct.aviva.co.uk/myfuture/RetirementPlanner/AboutYou

LXdaddy

johnsmithy wrote: »

Saving half your age as a % is generally the way to go.

I think the "half your age" broad brush indication relates to what % you need to contribute when you START investing in your pension. SO if you start at age 20 you should contribute 10% but if you delay until 40 you should start contributions at 20% of salary.

When the suggestion was originally made I don't believe it meant that you need to increase your contribution rate by 0.5% each year. It was intended to show that the later you started saving the higher the proportion needs to be. (because you have to catch up all the contributions you have missed)