Ideal pension pot to target £70k per annum

izawa

Hello,

Ideally what pension pot should we target if we, as a couple, would like to target £70k per annum?

I have a long desire to retire early and if I had to do maths on how much to contribute, what would the pot between two of us be? Even counting worst case scenarios where the growth is very low.

Assumptions

• House - Paid off
• No state pension being paid (i dont think ill be alive by then haha)

Prism

Rough guidance for a 30 year retirement is around 25x the yearly amount - so £1.75m

leosayer

£70k per annum net?

A pot exceeding £2m at retirement would be prudent, but this is highly dependent on:

- The age you want to retire
- Whether you have the ability to accrue any final salary pension 
- Your life expectancies
- Whether you want a higher income earlier in retirement and lower later
- Whether you will both be earning and saving into a pension or just one

It's not clear why you have ruled out state pension but that makes a massive difference, over £20k a year. 

Albermarle

Assumptions

• no state pension being paid (i dont think ill be alive by then haha)
  

This would not seem a sensible assumption to make. Unless you or your partner have some specific life limiting illness, you are very likely to  reach State Pension age , even if it is increased to 70.
If you retire very early though you will probably need to buy some NI years to top up .

dunstonh

Ideally what pension pot should we target if we, as a couple, would like to target £70k per annum?

Is it net of gross?
Will any funding of gap until state pension be needed?
What age will you look to retire?   (3.5% is generally considered a good ballpark but if you retire in your 50s, it is safer to use 3% and if you retire in your 70s, then maybe 4%.  However, you need to factor in investment risk level as well as a low risk investor would likely get lower returns and need a lower draw rate. Which means they would need more capital).

• No state pension being paid (i dont think ill be alive by then haha)

Statistically, around 1 in 5 won't make it.  It usually pays to plan on the basis of the majority option as that is most likely unless your circumstances suggest otherwise.  For those in normal health, with a higher level of earnings to both be dead by state pension age has to be extremely low odds.

NedS

Alternatively, if you want £70K gross as a couple, £35K each, less £10k state pension each, would require a pension pot capable of yielding £25K each so you would each require pension pots of around £625,000 each.

Albermarle

NedS said:

Alternatively, if you want £70K gross as a couple, £35K each, less £10k state pension each, would require a pension pot capable of yielding £25K each so you would each require pension pots of around £625,000 each.

However the OP said I have a long desire to retire early , so looks like some substantial funding will be needed before state pension age.
So if they retired  at 60 , I think something around the £2Million mark would be needed as previously mentioned.
Even more of course if they wanted to retire at 55.

Marcon

Albermarle said:

NedS said:

Alternatively, if you want £70K gross as a couple, £35K each, less £10k state pension each, would require a pension pot capable of yielding £25K each so you would each require pension pots of around £625,000 each.

However the OP said I have a long desire to retire early , so looks like some substantial funding will be needed before state pension age.
So if they retired  at 60 , I think something around the £2Million mark would be needed as previously mentioned.
Even more of course if they wanted to retire at 55.

....and they might need some non-pension savings if that's the case and they won't both reach age 55 before the minimum pension age increases to 57 in 2028, and possibly higher after that.

NedS

Albermarle said:

NedS said:

Alternatively, if you want £70K gross as a couple, £35K each, less £10k state pension each, would require a pension pot capable of yielding £25K each so you would each require pension pots of around £625,000 each.

However the OP said I have a long desire to retire early , so looks like some substantial funding will be needed before state pension age.
So if they retired  at 60 , I think something around the £2Million mark would be needed as previously mentioned.
Even more of course if they wanted to retire at 55.

Yes, factoring in early retirement, I agree they are looking at pots of around £1M each - not easy to achieve for 1 person in their 50's, let alone both members of a couple.

Pat38493

By the way £70K net per annum in today's real terms is a pretty high spending plan to be targeting for a couple.  It's significantly higher than all of the various benchmarks out there even for a "luxury" retirement.  Everyone is different of course but it's just for info.

Albermarle

Pat38493 said:

By the way £70K net per annum in today's real terms is a pretty high spending plan to be targeting for a couple.  It's significantly higher than all of the various benchmarks out there even for a "luxury" retirement.  Everyone is different of course but it's just for info.

Although with a true luxury retirement ( Billionaire style) you might well spend £70K on a birthday party !