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  • FIRST POST
    • kev2009
    • By kev2009 2nd Apr 18, 8:07 PM
    • 288Posts
    • 405Thanks
    kev2009
    Pension
    • #1
    • 2nd Apr 18, 8:07 PM
    Pension 2nd Apr 18 at 8:07 PM
    Hi,

    I was wondering if there was any guide lines on how much you should have saved in a pension at a given age i.e 40 for example for a pension of say 20k a year?

    I've been looking around and not seen anything, just trying to see if my pension is anywhere near where it should be at 40/41.

    Thanks

    Kev
Page 1
    • Brynsam
    • By Brynsam 2nd Apr 18, 8:25 PM
    • 1,740 Posts
    • 1,277 Thanks
    Brynsam
    • #2
    • 2nd Apr 18, 8:25 PM
    • #2
    • 2nd Apr 18, 8:25 PM
    Depends what age you want to retire. It's impossible to predict market factors (especially possible investment returns and interest rates) when you may be 20 or more years from needing to draw your pension. The only sensible guideline is the somewhat unhelpful, but still true, 'save as much as you can as early as you can'. Remember that it doesn't all have to be in a pension scheme - there are other tax efficient routes which may better suit your needs and give greater flexility in case you need to access cash unexpectedly before you reach an age at which you can tap into your pension.
    • kev2009
    • By kev2009 2nd Apr 18, 9:00 PM
    • 288 Posts
    • 405 Thanks
    kev2009
    • #3
    • 2nd Apr 18, 9:00 PM
    • #3
    • 2nd Apr 18, 9:00 PM
    Thanks Brynsam. For now, i'm going with my official retirement age of 67. So still a fair way to go but just wondered if there was a guide saying you should have x in a pension pot by age y etc. I saw this article https://www.telegraph.co.uk/financial-services/investments/investment-pensions-service/what-is-a-good-pension-pot/ and thought wow those number seem low for the average savings at certain ages and it then goes on to say for 27k pension you need 500k in pension so was just trying to see if there was guide around to give some idea of what you need to have at a certain age ideally.

    My pensions provider provides a option online to predict what pension pot etc i'd have but it isn't flexible enough to change the numbers. For instance it is based on a certain % increase in salary etc which I have not got for a good few years and wont allow me to set my salary increase manually, its a preset figure but by that token it also basis it on a 5% increase in value each year and last year mine went up 20% so it isn't overly useful. i realise it may become more useful when i'm nearer retirement age at say 60.

    Kev
    • Brynsam
    • By Brynsam 2nd Apr 18, 9:09 PM
    • 1,740 Posts
    • 1,277 Thanks
    Brynsam
    • #4
    • 2nd Apr 18, 9:09 PM
    • #4
    • 2nd Apr 18, 9:09 PM
    I've looked at the article and found some of the numbers a bit odd. Take: 'Someone looking to achieve an income of 27,000 a year at retirement would need a pension pot of around 500,000, whereas if you wanted an income of 40,000, you'd need a pension pot of around 1m.'

    Bit hard to figure why 2 x 500,000 would only buy you 40,000 a year - why not 27,000 x 2? There is also no indication of the age at which the pension is being taken and whether it increases in payment/provides benefits for a surviving spouse.

    If you go to a table of current annuity rates (e.g. https://www.hl.co.uk/pensions/annuities/annuity-best-buy-rates), you can see how much 100,000 would buy you at today's rates and work backwards, so to speak, to work out how much you would need to save to get the income you are looking for. The snag, of course, is that you are looking so far into the future....
    • kev2009
    • By kev2009 2nd Apr 18, 9:26 PM
    • 288 Posts
    • 405 Thanks
    kev2009
    • #5
    • 2nd Apr 18, 9:26 PM
    • #5
    • 2nd Apr 18, 9:26 PM
    Thanks Brynsam, yes I noticed some of the figures looked a bit odd and rather low. thanks for the link so 100k does actually get you a little over 5k as an annuity so to get 20k i'd need 400k in my pension pot or maybe a bit less depending if i want my pension + state pension to equal 20k or just have 20k from my pension and the 8k state pension on top which sounds appealing but then i'd end up paying tax on it so will need to see nearer the time what the tax free allowance is by the time i get there.

    Thanks

    Kev
    • TARDIS
    • By TARDIS 3rd Apr 18, 7:46 PM
    • 119 Posts
    • 87 Thanks
    TARDIS
    • #6
    • 3rd Apr 18, 7:46 PM
    • #6
    • 3rd Apr 18, 7:46 PM
    Thanks Brynsam. For now, i'm going with my official retirement age of 67.
    Originally posted by kev2009
    Sorry but if you are 40/41 I think your state pension age will be 68
    What you need in retirement will be individual to you.
    If you have the time you may find the number thread interesting: http://forums.moneysavingexpert.com/showthread.php?t=2146737#topofpage

    This site is American, but has a load of free retirement calculators you may also find useful: https://financialmentor.com/calculator/retirement-calculator
    • kev2009
    • By kev2009 3rd Apr 18, 8:08 PM
    • 288 Posts
    • 405 Thanks
    kev2009
    • #7
    • 3rd Apr 18, 8:08 PM
    • #7
    • 3rd Apr 18, 8:08 PM
    I thought that as well but then I saw a post referring to HMRC website where it said if you were born between 1970 - 1978 it would be between 67 and 68, after 1978 would be 68 so i'll wait and see when the changes happen in 2037-39..

    Thanks for links, will check those out too.

    Kev
    • kev2009
    • By kev2009 16th Apr 18, 2:19 PM
    • 288 Posts
    • 405 Thanks
    kev2009
    • #8
    • 16th Apr 18, 2:19 PM
    • #8
    • 16th Apr 18, 2:19 PM
    Hi, Just found the page which mentioned about my retirement age being between 67 - 68: https://www.gov.uk/government/news/proposed-new-timetable-for-state-pension-age-increases

    Also I just checked my state pension statement and it shows I have an estimated 120.xx a week pension up to April 2017 (I presume they haven't updated it yet for April 2018) and then it says I need to pay in for 10 more years to get the 164.35 a week state pension of which I have 27 more years to contribute. There is a note regarding possible increase in state pension age but I think that refers to the link above so all looking good for me state pension wise, I should get the full amount, fingers crossed, providing I contribute for 10 more years.

    Kev
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