How much do we need to save for retirement?

MaxiRobriguez

I would rather save more, and pass on the money I didn't have to use between 90 and 100, because I died at 90, than get to 90 and then realise I've ran out of money.

The consequences of the risk coming to fruition is much greater than saving a little bit more every month in your working life, even if the chances of the risk coming to fruition are small.

For a forum whereby many of the concepts and suggestions mooted on a day by day basis are based on risk management, the idea to just ignore the prospect of being one of the lucky ones to make 100 because it probably won't happen is just naive. Some of us here absolutely will make that age, it's guaranteed, simply because there's hundreds of us posting on here!

Linton

Stargunner wrote: »

At 60, you probably need to factor in 35-40 years worth of living, and for that you would probably want a DC pot of £400k minimum if you were wanting £20k a year, considering you won't get state pension for at least 8 years after retirement.

£400K sounds too small. 8 X £20K before you get your SP leaves you with £240K. £240K sould generate about £8K/year. Though for a couple that would perhaps be OK assuming you would be happy with £20K for 2.

Why does everyone need to budget to live to a 100, as only 5 % of the population live beyond 90, so the chances of both partners in a couple even living to 90 are almost non existent.

Where did you get that number from! The latest published statistics show that currently about 25% of the population alive at 65 last into their 90s or beyond. That figure is expected to increase significantly as those people who are beyond 65 now are much more likely to have smoked or worked in life-shortening conditions than those who are younger.


Why 100? Two reasons:
1) What chance are you willing to accept of running out of money before you die? Certainly 1 in 4 seems like a moderately high risk.
2) The calculations have a very wide band of error. Therefore it makes sense to be pessimistic about living too long.

Also, as you get a lot older and your health starts to deteriorate your lifestyle changes which reduces your expenditure. You may no longer be able to go on holidays or you may have to give up your bowls or golf club membership, maybe even have to give up driving. Even when it comes to eating, older peoples appetites are much smaller so they don't spend much money on food.

On the other hand other costs increase. Giving up driving means paying more for taxis. Then we get into the problems of paying for care. This may start with a gardener and help with keeping the house clean and go on to possible full time live-in care. So it seems to me to be too much of a risk to assume that costs will decrease. Do you want the trials of real old age to be compounded with the stresses of insufficient money?

Bravepants

jonnygee2 wrote: »

Pay off mortgage debt before putting money into a pension? This is terrible advice.

The OP didn't ask about emergency savings funds either. And they clearly have no need to start reading books about investment vehicles or investing directly in different asset classes. I think instead of copying and pasting a load of stuff it would be better just to answer the OP's situation directly.

I said "non-mortgage debt"! (Apology accepted!)



There is more to the ability to retire early, and comfortably, than simply having a pension.



Those bullet points are a collection of what I see as key points that, individually, have been repeated many times on this forum by other posters.

atush

jonnygee2 wrote: »

Pay off mortgage debt before putting money into a pension? This is terrible advice.

The OP didn't ask about emergency savings funds either. And they clearly have no need to start reading books about investment vehicles or investing directly in different asset classes. I think instead of copying and pasting a load of stuff it would be better just to answer the OP's situation directly.

I agree about the mtg. But i dont agree about emergency cash. Even if they didnt ak about it.

For soneone who is in a lot of debt, having an emergency stash will keep them out of debt later once the debt is paid off. But i wouldnt save 3-12 months first, i'd start with a few K then hit the pensions alongside the emergency savings until your pot is large enough, then just pensions (and maybe S&S isas too).

And it is never a bad idea to learn about investing.