How Much Should I Save For My Retirement?

Dithering_Dad

purch wrote: »

To get a Pension Pot of £ 2.5 bars in 31 years

£2,000 a month I would guess

Lordy! :eek:

rathga, are you on track for that sort of a pension? It certainly knocks my £300 per month Stakeholder pension payment into a 'cocked hat'!

p.s. did anyone answer the OP's original question? I always wonder if they're chased away when everyone get's out their actuary tables, psion calculators and slide rules.

fimonkey

I'm lost!! Don't even know what actuary means!.. attempted those equateions and worked out I need to save double what I'm earning to have any kinda decent old age (More to do with my appalling maths I think).

elantan

according to the hl one i have to put £1,400 a month to achieve my pension:rotfl: :rotfl: :rotfl:

epsilondraconis

I've just used the H-L calculator too:

http://www.h-l.co.uk/pensions_and_re..._calculator.hl

In today's money, I am currently looking at getting £11.5k per annum, after retiring at 60 and taking 25% on retirement.

I'm putting in £200 per month, employer £166 per month (40% tax band).

Gulp. Please someone tell me I've made a mistake and in fact I'm destined for a long life and a very comfortable pension payout.

dunstonh

30 years of paying £366pm gross would mean a pension pot of around £275,000 in real terms in retirement which at 5% per annum = £13,790p.a

Remember that you wont always be paying £366 though (I had to guess an age). You would be expected to increase the contribution each year to keep up with inflation. The people that generally get less from pensions are those that forget to top up and spend 30 years paying £50pm.

Back in the late 80s, paying £50 was a decent contribution. However, you could fill a tank of petrol for under a tenner. Now, petrol is 6 or 7 times more but you still have people paying £50pm into their pension expecting to get a big pot of money. You must keep the contributions up with inflation and many calcs do not take that into account.

fimonkey

I have a pension dilemma too, it's here http://forums.moneysavingexpert.com/showthread.html?t=709777

Basically, my eployer will contribute 5% to TPS (Teachers final salary scheme) or Stakeholder only. If I join TPS I have to sacrifice 7.17% of my salary to make up the employers contributions, plus 6.4% employer contribution, so this would mean a reduction in gross salary of 13.57%. My final pension is based on this reduced salary.

I've used calculations in the other thread to determine a pension pot of £15827.35p.a if I join TPS (it's a 1/60th final salary scheme). I'm wondering if I can achieve better than this in a stakeholder with me still contributing 13.57% and my employer 5%.

I want to retire in 33 years, and I currently earn 31K.

Using Dunstohs calculations, it would be 33 years with my employer paying £1550pa and me paying £4206pa = total = £5756pa/12 = £479 per month. How much of a pension pot would this give me with a stakeholder scheme?


(why did my font change halfway through typing???)

Hope that makes sense and MANY THANKS in advance for all this help, it's really helping to educate me on something i thought I'd never understand

rathga

Dithering_Dad wrote: »

Lordy! :eek:
rathga, are you on track for that sort of a pension? It certainly knocks my £300 per month Stakeholder pension payment into a 'cocked hat'!

Hopefully on track - although my plan is a little different in that I intend to put in heavy amounts in the early years and then stop. If everything works out, should hopefully max out my forecast in 2-3 years (as long as I am still employed and can keep making the big contributions!)

Retired IFA: agree that you can have a complex model, but my point was more that you could instead just look up today's rate on the type of annuity you want and then knock a few points off it for conservatism. This is much easier than modelling mortality tables and should hopefully get you to largely the same result. (i.e. the assumption is the mortality tables are implicitly included in today's annuity spread over gilts.)

Dick_here

dunstonh wrote: »

The people that generally get less from pensions are those that forget to top up and spend 30 years paying £50pm.

Back in the late 80s, paying £50 was a decent contribution. However, you could fill a tank of petrol for under a tenner. Now, petrol is 6 or 7 times more but you still have people paying £50pm into their pension expecting to get a big pot of money. You must keep the contributions up with inflation and many calcs do not take that into account.

Yes, that is where an employer's scheme still scores. You pay a % automatically and that goes up automatically each time you have a pay rise, and better still, the employer does the same (putting in more than you do too).

whu

agree with !!!!!! Here- another point to consider is if you got a decent pay rise you may want to increase your contributions a little - say 1%- you probably wouldnt notice the difference but it will add to your pension pot - or if you got a bonus why not think of adding a lump sum payment to your pension

Robin_T_Cox

Speaking as someone who has recently retired, I would suggest the following.

Save as much as you can reasonably afford, but in doing so, do not save so much that you miss the opportunity to live as full a life as you can between now and your retirement. After all, you may not live long enough to cash in and it would be such a shame not to have lived in the meantime.

Bear in mind that nobody knows what tomorrow may bring, nor what investments will prosper. So beware of all fancy formulas, or complicated calculations, because real life ain't a mathematical certainty, and even the 'laws' of probability only give you a best guess as to what the eventual outcome of your investment will be.

Remember how many professional finance experts have recently been totally wrong.

Do keep track of your investments in pension funds. If you don't, you may well spend months if not years trying to track down the present whereabouts of the benefits due to you. Especially if you have worked for a number of employers whose pension schemes have been taken over by the firms who took them over.

Finally, when you do come to retire, be prepared for a pleasant surprise. You may well find that your investments are actually worth a lot more than you thought they would be.

Good Luck!