Whats a good amount per year to have a decent pension

v896

Hey All,


Just joined the forum and have some questions. For the last 6 years from finishing university decided to go contracting in the construction industry. This was a decision I made to build up enough money to buy a home, which I have just done last month.


However, now the company I work for took me on as a employee and I have been paying into a pension for 1 year and 9 months. I just like to understand what is a good amount yearly to put away with growth. I currently put away £218 a month and pot stands at 4K.


Is this good bad ? or should I be putting away a lot more per month my main goal is to retire as early as possible. I am 30


Any advice would be great appreciated :-)

AnotherJoe

Two very different possibilities here.
1. The "standard" "retire at 60-65 type of pension, rough advice is to save half your age, as a percentage which then remains constant for the rest of your working life. So, if you start saving ina pension aged 30, save 15% your salary for the rest of your working life. If you start at age 40, you'd always save 20%, and so on. You can work out how your current savings approximates to that, is it 15%?
2. If you really mean what you said about retiring "as early as possible" (and there was a notorious poster here recently who said that but it turns out he didn't mean that at all) , then throw that advice in 1 away, you need to go much more radical, the % message doesn't cut it at all. Starting reading FIRE* blogs.the three I'd recommend are Mr Money Mustache, Monevator, The Escape Artist. MMM especially is very radical and possibly too hard to fully embrace but it does show what can be done.

The latter is whole different mindset and the time. To get into it much better at an earlier age . I was way too late so I retired only about 5 years early, which is definitely not "as early as possible"

* Financial Independence Retire Early

k6chris

How long is a piece of string?! As a rough idea of the magnitude of pensions saving, then as a minimum I would be suggest to anyone that a minimum of 20% of their gross salary goes into pension - 25% is better. Tax relief will mean that the net cost is less than this and this figure includes whatever your employer it paying. So if you are earning £30k a year gross, then a minimum of £500, ideally £625 a month. The earlier you can start doing this the better and make sure you pension is being invested in a sensible fund - which is a thread in itself. Once you adjust to always putting 20-25% of your gross salary into pension, it becomes quite normal and you don't think twice about it....it can be tough at the start however!


Good luck.

v896

k6chris wrote: »

How long is a piece of string?! As a rough idea of the magnitude of pensions saving, then as a minimum I would be suggest to anyone that a minimum of 20% of their gross salary goes into pension - 25% is better. Tax relief will mean that the net cost is less than this and this figure includes whatever your employer it paying. So if you are earning £30k a year gross, then a minimum of £500, ideally £625 a month. The earlier you can start doing this the better and make sure you pension is being invested in a sensible fund - which is a thread in itself. Once you adjust to always putting 20-25% of your gross salary into pension, it becomes quite normal and you don't think twice about it....it can be tough at the start however!


Good luck.

Pension 1 - 4K

I currently have three funds

0 to 35% in shares
Absolute return fund

Asset fund with American bank north American equities (very risky)


Pension 2 - Value 1K

Started with old employer mainly north American equities



I should be putting in 7K a year then based on my salary ?

k6chris

v896 wrote: »

I should be putting in 7K a year then based on my salary ?

What is your gross annual salary?

v896

k6chris wrote: »

What is your gross annual salary?

34K per year

Brynsam

Save as much as you can as soon as you can. Nobody can give you any more 'precise' advice than that, simply because we know so little about you and what you would regard as an acceptable standard of living in retirement.

Just don't save so much now that you can't afford to enjoy life (or worse, have to borrow just to pay your daily living costs), especially if you have any plans for a family.

AnotherJoe

v896 wrote: »

I should be putting in 7K a year then based on my salary ?

No idea, you didn't say what your salary is , but if you really want to retire "as early as possible" then thats nowhere near enough.

£7k a year for 30 years (potential retirement age by then) might return 500k in real terms, eg in todays money.

So, yes, that would allow you to retire age 60. But that isnt "as early as possible" is it?


SO, did you really mean that? If you did, spend some time in the FIRE community.

v896

AnotherJoe wrote: »

No idea, you didn't say what your salary is , but if you really want to retire "as early as possible" then thats nowhere near enough.

£7k a year for 30 years (potential retirement age by then) might return 500k in real terms, eg in todays money.

So, yes, that would allow you to retire age 60. But that isnt "as early as possible" is it?


SO, did you really mean that? If you did, spend some time in the FIRE community.

Thanks for the advice apologies if the phrase "as earliest as possible" was mis-leading I meant that in the most practical terms possible not like person living in la la land.


Most people wish to retire at 60-65 but in my situation I think be more like 70 if don't start doing something radical about it now

cobson

If you are serious about early retirement have a look at this:

https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/

dunstonh

How you re investing is not very good. It is also inconsistent across both pensions. One is in a highly defensive fund that will barely make more than a savings account (which is daft for someone aged 30). The other is in a single sector fund which is designed to be used in a wider portfolio of single sector funds.

Your current provision is a bit behind where it should ideally be if you want to retire at state pension age. As you are looking for earlier retirement, you need to up the provision to something more realistic.

The average retirement age in the UK has been consistent for many years floating around 62-63.