Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    Money Advice Service
    How much do you think you値l need to save up to retire on?
    • #1
    • 9th Nov 18, 12:36 PM
    How much do you think you値l need to save up to retire on? 9th Nov 18 at 12:36 PM
    How close are you to that goal? Do you wish you started earlier?

    #TalkMoney

    This thread is part of a Hub post aimed at helping people new to personal finance start a conversation on it. It’s aimed at newbies, so please be patient with anyone posting on here.

    We’re verified representatives of the Money Advice Service, working with MoneySavingExpert on a Hub and series of posts as part of Talk Money Week to encourage people new to personal finance to discuss money. If you have any questions please ask below or get in touch with a member of the Forum Team.

    We'd love it if you got involved with our other #TalkMoney week conversations we've started. Check out our hub with all the links - https://forums.moneysavingexpert.com/showthread.php?t=5921799
    Last edited by Money Advice Service; 12-11-2018 at 3:00 PM. Reason: typo
    Verified Company
    I am a verified representative of Money Advice Service. MSE has given permission for me to post in response to queries about the company so that I can help solve issues. You can see my name on the Verified Companies list. I am not allowed to tout for business at all. If you believe I am please report it to forumteam@moneysavingexpert.com This does NOT imply any form of approval of my company or its products by MSE.
Page 3
    • Stubod
    • By Stubod 10th Nov 18, 11:00 AM
    • 525 Posts
    • 398 Thanks
    Stubod
    The basic OP question is very "open" as it depends on the age that you want to retire, and how much you already have in pensions and how much you want to spend?

    For us we wanted to finish at about 60 and we have some "guaranteed" pension, then more or less full state pensions at 66. We aimed for about 」500,000 in savings before we felt "comfortable", as this should provide an ongoing total "income" of about 」30k to start and then increasing with inflation...(hopefully..)
    • MallyGirl
    • By MallyGirl 10th Nov 18, 1:26 PM
    • 3,049 Posts
    • 8,074 Thanks
    MallyGirl
    Interesting, for us 1m at 55 would be quite sufficient and we would definitely put more value on extra years of retirement over more money in retirement but 5 less years of it. (All values assumed to be in 2018 pounds)
    Originally posted by michaels
    I expect to review when we hit 55 in 3.5 yrs time. DH isn't currently as keen on early retirement as I am. Our fixed costs (council tax, fuel, water, insurances, pets, cars, basic food, phones & BB etc) come to 」23k pa in the current house and we don't plan to move for a while. Add in some decent travel and a bit of eating out and the number rises quite quickly
    • Albermarle
    • By Albermarle 10th Nov 18, 3:00 PM
    • 199 Posts
    • 100 Thanks
    Albermarle
    We aimed for about 」500,000 in savings before we felt "comfortable", as this should provide an ongoing total "income" of about 」30k to start and then increasing with inflation...(hopefully..)
    I think this is erring on the optimistic side . Probably to be more sure of a 」30K income ( not including SP) and keeping pace with inflation then 」700K would be the figure ,
    • michaels
    • By michaels 10th Nov 18, 3:05 PM
    • 21,582 Posts
    • 100,232 Thanks
    michaels
    I think this is erring on the optimistic side . Probably to be more sure of a 」30K income ( not including SP) and keeping pace with inflation then 」700K would be the figure ,
    Originally posted by Albermarle
    But not including SP would be wrong - assuming full entitlement it is 17k pa for a couple and will keep up with inflation so once they reach SPA the gap will only be 13k.
    Cool heads and compromise
    • Audaxer
    • By Audaxer 10th Nov 18, 6:02 PM
    • 1,432 Posts
    • 871 Thanks
    Audaxer
    I think this is erring on the optimistic side . Probably to be more sure of a 」30K income ( not including SP) and keeping pace with inflation then 」700K would be the figure ,
    Originally posted by Albermarle
    I think hoping for a 」30k income from even a 」700k pot of investments is very optimistic as it means withdrawing over 4% per annum increasing with inflation. Depending on the sequence of returns, that withdrawal rate could mean eventually running out of money.
    • Peelerfart
    • By Peelerfart 10th Nov 18, 8:18 PM
    • 1,983 Posts
    • 1,714 Thanks
    Peelerfart
    I retired on 60% of my previous salary, would have liked more of course, who wouldn't?

    I did start paying into a pension, albeit forced (thankfully), when I was 19.
    Space available for rent
    • Alexland
    • By Alexland 10th Nov 18, 9:15 PM
    • 3,632 Posts
    • 2,969 Thanks
    Alexland
    I think this is erring on the optimistic side . Probably to be more sure of a 」30K income ( not including SP) and keeping pace with inflation then 」700K would be the figure ,
    Originally posted by Albermarle
    As per Audaxer's comment even that wouldn't be enough.

    I think Stubod was talking about 」30k total income from SP (when payable), other pensions and the 」500k savings. In addition to the 」500k (which wouldn't really be enough to both cover the missing 6 years of SP and generate an uplift to 」30k pa) there is some guaranteed pension income which presumably gets them to where they want to be.

    Alex.
    • Stubod
    • By Stubod 10th Nov 18, 10:48 PM
    • 525 Posts
    • 398 Thanks
    Stubod
    As per Audaxer's comment even that wouldn't be enough.

    I think Stubod was talking about 」30k total income from SP (when payable), other pensions and the 」500k savings. In addition to the 」500k (which wouldn't really be enough to both cover the missing 6 years of SP and generate an uplift to 」30k pa) there is some guaranteed pension income which presumably gets them to where they want to be.
    Originally posted by Alexland

    Yes exactly, spouse has an index linked pension (+lump sum) at 60, then we both have state pensions at 66. So the 」500k is in addition to pensions. I would not expect to get 」30k index linked from 」500k
    • NewShadow
    • By NewShadow 11th Nov 18, 2:47 AM
    • 3,302 Posts
    • 14,291 Thanks
    NewShadow
    Well... I'm 33 and single - my main source of retirement income will be my works pension. Key dates will be work pension due at 65 and state pension at 68. Assuming all my current savings are used as a deposit on a house within the next few years. Working with the idea of retiring at 60:

    1. Post retirement housing costs - Housing is my biggest single outgoing. I aim to have a mortgage and have a mortgage paid off by 60 at the latest. I have 27 years to 60 so a 25 year mortgage would be realistic. My current rent is higher than my anticipated mortgage payments in the area I intend to buy, even when stress testing at 6%

    2. Post retirement income - Alpha accrues at a rate of 2.32% pa and is payable at state retirement age. I'm currently paying EAP-3 to access my pension at 65. Payment age is subject to change as it will always be three years before SRA, and I'm expecting my SRA to be 70 in the not too distant future.

    Ignoring what I've already got accrued - My forecast accrual for the next 4 years averages out at c.」800 pa. If we assume I do not seek further progression and continue to work until 60, then my annual pension would be 」800*27 = c. 」21.5k. Add the state pension of c. 8K at 68 and I think I'll be more than comfortable.

    3. Bridging the gap between 'retiring' and pension provision - If retiring at 60 with mortgage paid, and allowing some for property maintenance/improvements, I would need in the region of 12k per year to comfortably maintain my current standard of living - so around 」60k to keep me going for the 5 years between age 60 and 65.

    The most efficient return for me is probably the LISA - given the guaranteed 25% bonus when paying out at 60 and tax free status. I've got 17 more years that I can pay into a LISA and get the 25% bonus - to have 」60k at 60 I need to pay in the max amount for at least 12 years between now and then. Hedging against future increases in the schemes retirement age, if I max my LISA every year until I'm 60, I'll have 」85k as a buffer - around 7 years forecast income needs.

    I currently save in the region of 」800pm towards my deposit and currently max my LISA contributions each year with no difficulty so do not anticipate any problems meeting this commitment.

    4. The wild cards - The above all ignores interest and inflation. My alpha pension is index linked and so, theoretically, inflation proof. The state pension is determined by the Government and it's possible it'll be means tested by the time I'm eligible so I'm not relying on it. Tax rates are also subject to fluctuation and can't be forecast 25 years in advance.

    5. Additional saving - Currently, any additional monies I have left at the end of the month are split equally between an ISA and a SIPP, both invested in a global fund. The money currently in ISAs will be used towards my eventual deposit, with future money being added to the SIPP, which will form part of my bridging money for early retirement. The rate of these savings will increase once I'm no longer paying towards a deposit - my future LISA will also be invested in S&S as a long term investment to protect against inflation.


    The above has all been an interesting back of an envelope view of the next 25 years - any views and comments, and conversations about dodgy maths, welcomed.
    Last edited by NewShadow; 11-11-2018 at 5:18 AM.
    That sounds like a classic case of premature extrapolation.

    House deposit: 26% = 」26,000 + 」800pm * 9 months = 」33,000

    Goal: Keep the bigger picture in mind...
    • crv1963
    • By crv1963 11th Nov 18, 8:02 AM
    • 538 Posts
    • 1,163 Thanks
    crv1963
    Hi NewShadow- sounds good but, I'd throw in another wildcard- long term partner/ spouse. You never know what they might want. Good luck you sound like you have a good plan.
    CRV1963- Light bulb moment Sept 15- Planning the great escape- aka retirement!
    • lisyloo
    • By lisyloo 11th Nov 18, 10:44 AM
    • 22,733 Posts
    • 11,308 Thanks
    lisyloo
    I am aiming for something near 」2m between us as a couple across DC pensions and ISAs. No DB pensions for either of us. That is at 60. This gives us what I think we need plus what we want to be able to enjoy some travel and leisure time.
    Originally posted by MallyGirl
    Like michaels I value the time off when we池e healthy more than the money so looking at 」1.7m and 55 but even over a 5 year period it does depend on health.
    If we池e both healthy and I知 enjoying work i might carry on a bit longer.
    DH retires before me so if he痴 having a ball that will also affect my choice, but the opposite might happen.
    • badmemory
    • By badmemory 11th Nov 18, 10:49 AM
    • 2,212 Posts
    • 3,172 Thanks
    badmemory
    I think what is often overlooked is that the lower an earner you are the higher percentage of that income you need in retirement. I knew that when I retired if anything I would need a higher income. This is because I had very small work related expenses (walk to work, no smart clothes required except by choice etc). If I had only 60% of my pre-retirement income (we'd been on short time since the crash) then my car would have had to go, not an option I was prepared to accept!


    I think a lot of people on lower income come & read these threads & wonder if they are living in the same world & go away again, which is a great pity as the info is usually excellent & could be scaled down to suit oneself.
    • Happier Me
    • By Happier Me 11th Nov 18, 10:56 AM
    • 450 Posts
    • 1,012 Thanks
    Happier Me
    We're a couple aged 43 and 42. Mortgage free in a house we could realistically downsize from at some in the future.

    Ideally we want to have the choice to retire at age 55. We were aiming for a net annual household income of 」30k but I am considering increasing this to 」35k per annum for added comfort. We currently spend between 」30-35k as a family of four now.

    I am fortunate to have a DB scheme that will pay 」12.5k from 60. This figure is in today's money and is already 'in the bag'. I'm still paying in, so it continues to grow, but I may move employers in the future so I incorproate my accrued benefits when working out our existing pension savings only. Both on track for full SP and hubby has a company DC, that we will draw down from to zero. We also receive around 」2.5k in guaranteed passive income until age 62.

    In simple terms we have already achieved the 」30k from age 60, as long as hubby carries on contributing to his DC at the current rate. We have a savings gap between 55-60 and obviously any increase in the 」30k target creates a further gap to address. I also want a lump sum saved too but not sure how much. My DB will give me a 」20k lump sum and we could release 」150k from downsizing. But we have a further 12 years of saving to address all these gaps. Our next steps are for me to pay into a DC so I can take advantage of my annual allowance pre 60 and for us to start saving into ISA's.

    Just a couple of years ago I had an idea to retire at 55 but no actual plan to achieve this. I now have a solid and realistic plan in place, thanks mainly to this forum and its members.
    • bugslet
    • By bugslet 11th Nov 18, 11:44 AM
    • 6,422 Posts
    • 30,401 Thanks
    bugslet
    I think what is often overlooked is that the lower an earner you are the higher percentage of that income you need in retirement. I knew that when I retired if anything I would need a higher income. This is because I had very small work related expenses (walk to work, no smart clothes required except by choice etc). If I had only 60% of my pre-retirement income (we'd been on short time since the crash) then my car would have had to go, not an option I was prepared to accept!


    I think a lot of people on lower income come & read these threads & wonder if they are living in the same world & go away again, which is a great pity as the info is usually excellent & could be scaled down to suit oneself.
    Originally posted by badmemory
    I think that's a really good point bad memory. People with little chance of getting these big numbers must feel a little disheartened.

    I'm aware that having a pension pot of 400kish and investments cash of a minimum of 250k is well out of the reach of many, never mind when people quote 6 figures!
    • Flim
    • By Flim 11th Nov 18, 12:52 PM
    • 5 Posts
    • 10 Thanks
    Flim
    While working we spent about 24k per year, but when you are working 5 days a week with maybe 6 weeks hols per year you don’t really get much chance to spend it. In retirement we planned to increase our expenditure to nearer 35k..
    • crv1963
    • By crv1963 11th Nov 18, 1:21 PM
    • 538 Posts
    • 1,163 Thanks
    crv1963
    I think what is often overlooked is that the lower an earner you are the higher percentage of that income you need in retirement. I knew that when I retired if anything I would need a higher income. This is because I had very small work related expenses (walk to work, no smart clothes required except by choice etc). If I had only 60% of my pre-retirement income (we'd been on short time since the crash) then my car would have had to go, not an option I was prepared to accept!


    I think a lot of people on lower income come & read these threads & wonder if they are living in the same world & go away again, which is a great pity as the info is usually excellent & could be scaled down to suit oneself.
    Originally posted by badmemory
    I agree badmemory. When I first started on this forum I was amazed at some of the figures banded about but I took the attitude of good on you, now what can I do for us in our situation and ask questions about our circumstances. Then we came to our plan which we are following- the we being very much a "royal we" as Mrs CRV turns cold at the whole thing, she would rather know the bottom line of how much and when!

    I would say to people that are just starting the journey don't worry about what anyone else is doing/ has got, you're here for you. Or at least that was the way I approached it.
    CRV1963- Light bulb moment Sept 15- Planning the great escape- aka retirement!
    • Puddylove
    • By Puddylove 11th Nov 18, 8:52 PM
    • 497 Posts
    • 830 Thanks
    Puddylove
    I agree that some of the numbers talked about in both the pensions and savings boards could seem completely daunting and unrealistic for the average person.
    However, when I've asked questions the same (rich) posters have been incredibly helpful and have even resisted temptation to mock paupers like me .
    This is more than I can say for my work colleagues who emailed me 101 gruel recipes when I moaned about a large vet bill.
    So - if you are poor like me - still post and you'll get lots of help.
    • ams25
    • By ams25 11th Nov 18, 9:49 PM
    • 222 Posts
    • 297 Thanks
    ams25
    For those wondering about the larger numbers sometimes quoted...starting early is just so important...I opened a private personal pension over 30 years ago and made relatively modest contributions to it for a few years...then changed employer and entered a DB. Scheme....and didn't pay a lot of attention to the private pension...
    Yet 30 years later it has become a pretty substantial 6 figure sum..which frankly still surprises me.
    30 years of compounding (helped by ok markets) really is a wonder to behold.
    So for those at the other end of the journey.....the larger numbers need not be fantasy land if you can start young enough (I think I was about 22) even with modest contributions. I wish this was better and more widely understood - it would make a huge difference to so many people.
    • Alexland
    • By Alexland 11th Nov 18, 10:07 PM
    • 3,632 Posts
    • 2,969 Thanks
    Alexland
    In addition to starting early - contributing enough is also very important. I do wonder how people think they are going to get 30+ years of happy retirement while only contributing single digit or low double digit percentages. Maybe they overestimate the benefits of compounding by not discounting fees and inflation?

    In some ways auto-enrollment is set at such low percentages that it is harmful in giving people the idea that it might be sufficient. If it is only enough to keep them off means tested benefits what's the point?

    Alex
    Last edited by Alexland; 11-11-2018 at 10:14 PM.
    • lisyloo
    • By lisyloo 11th Nov 18, 10:41 PM
    • 22,733 Posts
    • 11,308 Thanks
    lisyloo
    I think that's a really good point bad memory. People with little chance of getting these big numbers must feel a little disheartened.

    I'm aware that having a pension pot of 400kish and investments cash of a minimum of 250k is well out of the reach of many, never mind when people quote 6 figures!
    Originally posted by bugslet
    Agree that not everyone can get into 7 figures but people are living longer, so if you can稚 then perhaps a 30 year retirement and retiring at 55 is not possible. Early retirement isn稚 a right unfortunately. Like a lot of things it痴 a luxury for those who can afford it.
    It痴 a downside of longevity in a way.
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

2,688Posts Today

6,705Users online

Martin's Twitter