When we think of retirement, we often think about all the aspects of life that we would like to enjoy without the worry of having to work every day. So, it’s not surprising that we often also ask the question, what amount of money should I be aiming to save for my retirement?
If you’re in employment, the chances are you have a pension that you, and potentially your employer, pay into every month. This, along with national insurance contributions being put towards your state pension, should be putting a nice amount in the pot for your later life. However, if you’re looking to plan ahead for a retirement that involves no financial worries for the future, it is good to question what sort of sum you should be aiming for.
The issue with an automatic enrolment pension plan is that, potentially, we are still not saving enough to really take advantage of our retirement years. That’s why many people in the last 10 years have invested in private pension schemes which are flexible both in “terms” as well as geographically, i.e. you can transfer your pension scheme overseas. Companies such as the QROPS Help Centre, http://www.qropshelpcentre.co.uk, specialise in such schemes.
Many of us dream of taking long holidays, seeing more of the world, spending more time with our families and being able to offer them more financial support as we reach an older age. But, in contrast to this, according to research carried out by the PLSA (Pensions and Lifetime Savings Association) in 2018, over 80% of us aren’t confident that we are saving enough to live well in retirement.
So, what should we be aiming for? Well, the most common calculation in terms of what you should aim to have is basically around two-thirds of your previous annual income per year. So, for example, if your annual salary was £26,278 (the average in the UK as of 2018), then you should ideally be hoping to have a pension income of £17,519. Part of this, however, can be made up from your state pension (around £8000). So, you’re looking at aiming for an annual income of at least £9,000 from your private or workplace pension.
With this in mind, it is worth looking into what kind of interest is offered on your current or future savings plans, such as your private pension, for example. The better the interest rate, and the sooner you are able to put money into it each month, the better. If you are able to aim for around £200 per month, particularly if you are in your thirties and forties, and you have a good pension plan, or even a great investment opportunity, you could be well on your way to a very comfortable retirement.
Investing is another way through which you can make money in your retirement, such as UK property investments, or investing in housing abroad,
At the end of the day, it all depends on your current lifestyle, how much you are able to save each month, and what sort of retirement you are aiming for. But our advice would be to start now – the sooner the better. And if you are unsure of which pension, investment or savings options might be best for you, we advise speaking to the experts to find out more.