Was thinking just the same - when you look at the figures suggested for a comfortable lifestyle by various sites on the web the figures are mind boggling. I have no idea how people save this much, unless they’re earning salaries way way above average
59k for say 30 years is almost 1.8m
Yes. The generation of people between about 55-70 are the most fortunate of all time in terms of their ability to purchase assets (property) on modest salaries while half the population (women) could afford not to work and they have also had final salary pensions almost as standard.
When I've spoken to folk who have retired in the last year or so, they aimed for £48k as a comfortable target. We've based ours on £50k and I think that will be fine - we itemised everything and broke it down with monthly/annual payments and a couple of holidays abroad with some UK travel & stay. Also a buffer for unexpected events like vets bills if insurance does not meet fully and the like which goes back into the pot if unused.
The boomers were the generation that had it best - some of generation X (the early ones) also had it pretty good
With our private pensions + state pension and downsizing we should be OK but I would like to retire at 60 so still a bit till state pension kicks in so I will likely front load like others have suggested until then
I get a non guaranteed performance bonus and I treat it as just that, it’s money I never had and don’t rely on. If there’s anything I want or need then I’ll use some of it, otherwise it goes into my pension. You don’t pay tax on the top up and in my case, work will top the contribution up by 10% so it’s an efficient way to save.
I also get a bonus which I use for family holidays etc, but I do put a decent proportion of my regular salary into the pension - if I didn't, I'd be using the bonus. I'm 45 and very much thinking about retirement vs now - the two main things to consider are how much is going in the pension each year and the marginal rate of tax you are paying on the bonus - if your taxable salary excluding the bonus is £49k or £99k (or, following the budget, now £60k with 2 or 3 kids) you'd be paying a lot of extra tax for the benefit of keeping the bonus.
59k for say 30 years is almost 1.8m
This is very true, many of us Baby boomers are having to invest in helping our children get onto the property ladder, this may include remortgaging the family home.
Yes, I've helped one and am about to help the second, thankfully without taking out debt myself.
I’ve only read a couple of pages but I’m saving it to read properly when I get a moment to myself.
Didn’t that by law we have to pay in minimum 8% come in relatively recently ?Obviously there’s a separate issue in the country where we have an income level where it’s not possible for someone to cover their basic living costs. Let alone a pension. That’s not right and needs fixing.
However 500k is reasonably achievable without having a massive salary or generous pension scheme.
By law we currently have to contribute a minimum total of 8% to our workplace pension. 5% from the employee and 3% from the employer. Someone on the UK average salary of £34k would see £227 go into their pot each month.
That’s made up of:
£142 from the employee
(of which £28 is in the form of tax relief)
£85 from the employer.
If you take a contribution of £227 a month for 40 years and apply average growth of 6% someone would be sat on a pot of about £405k
That’s for the required minimum contribution. The employee has put in just shy of £55k of their own cash. If you contribute another £40 a month you’d be knocking on the door of £500k.
Change it to a 30 year plan and you’d have to save roughly double the monthly total.
Aswell as the issue of people who are at an income level way below what is needed to live is another issue whereby people who could quite easily provide themselves with a reasonable pot in retirement simply don’t, opt out, leave it too late etc.
There a plenty of reasons for this but think a big one is the amount of misunderstanding surrounding pensions in this country.
My workings are slightly fag packet just incase anyone whips out an abacus and starts pulling them to bits