There’s been a lot of noise about how much to pay into your pension this year. We’re all getting more freedom in how we spend our pension pot when we come to retire. But are we saving enough?
Figuring out what the changes to pensions mean for you is one thing, finding the money to put away to build a pension fund is another.
Our new pension guide, looking at how much you need to save, is designed to help.
We asked our members how much they thought they needed to live on for a comfortable retirement. The average amount was £18,000 per year.
Similarly, a NEST survey showed that pensioners’ sense of satisfaction with life increased markedly for those with income of £15,000-£20,000 and above.
So, how much to pay into your pension?
So people have pretty high expectations of what they’ll need in retirement.
We calculated how much you’ll need to start saving at different ages to have £15,000 or £30,000 per year in retirement. This included the state pension and assumed that you’d get nothing in the way of company contributions.
At 35, you’ll need to squirrel away £215 a month for £15,000 and £654 for £30,000. By your mid-40s, you’ll need to be saving £322 and £981 per month respectively.
The state pension counts for a smaller proportion of the £30,000, so the savings needed are three times, rather than double, those required for £15,000.
The numbers are quite scary. With all the will in the world, is it possible to put these amounts away each month for a happy retirement with all the other demands on our income? Or is this just the new reality?