I don’t get it!!!

[Floofypuppy]

I’m 46, earn a good salary and put 12% away each month into my pension (I pay half/ employer pays half).

My pension pot is £280k which I thought was good but all the calculators tell me this won’t give me enough for a comfortable retirement. Apparently, I need about 600,000k!!

The calculators also all say that I need £42k a year to be comfortable. Assuming I won’t have a mortgage, then this is a lot of money no? 3500 a month. Which is more than I currently have after I pay my whopping mortgage!

it’s all so confusing….

Rough guide re pensions pot is to decide the pot by 25 to work out what annual income you’d get (imperfect guide but indicative)

So your current pot would get you around £11k pa - but it wil have increased by retirement even after inflation adjustment (hopefully) so will be more than that and there will be additional contributions. Plus you’ll have the state pension presumably.

that £45k takes into account tax - so it won’t be that much a month as tax will Be paid on it.

but yeah if you’re mortgage will be paid off and you’re contributing you’re probably lay on track to a good retirement

I find this difficult too. Ultimately it is down to what your living expenses will be in retirement, but that is hard to work out. For example I know my mortgage will be paid off by then and I won't be paying into my pension or saving, but I expect to spend a lot more as I will need more to do.

Even so, the amount the calculators say I need is net of tax 2.5 times the amount I currently have left over after tax, mortgage and pension contributions. I definitely can't get anywhere near where they say I should be.

If I can hold onto my job, I will increase my pension contributions once my mortgage is paid off.

You have twenty more years to build up your pot.

Does the income include state pension?

I

@Octavia64 yes, the projection includes me working at this salary with yearly pay increases (ha, not likely) and also includes the state pension.

So my £280k + state pension + next 20 years of saving is apparently still way too low…..

A lot of pension calculators seem to give an unusually low projection of expected value. The best I have seen is on markinthemoney.com or unbiased.co.uk

It sounds fine to me, you have ages to add more to your pot and you’ll get the state pension too.

If your pension is £280k at 46, why do you think you won’t reach £600k by 66?

What sounds fine. Don't look at annuity projections as people don't tend to buy them anymore. I have a bit less than you and two years younger than you, but even if you don't pay anything else in it should more or less double in twenty years. Use an online pension calculator.

I think it’s odd they always say you need a higher amount to live on when many earn less then that working and have to pay a mortgage.

Well you don't need to buy an annuity if you would rather just draw down on your lump sum in order to supplement your state pension.Though 6you need to do that in as tax efficient a way as possible. You sound in a good position to me and many people will have no where near the pension pot you have so I wouldn't be too worried if I was you.

Yes, I won't need anywhere near without a mortgage!

Money supermarket pension calculator says I'll have 700k at 60 paying in the same rate I do now with current savings of 195k. That will do me.

A pension pot of nearly 300k at 46 is pretty good though.

I’m budgeting on needing £24k a year , £12k for bills (mortgage paid) and £1k disposable - that should be more than enough with modest annual holiday etc -
retiring early is priority vs having a super large pot as health issues mean I may struggle to work past 55.

@freddyfluffball dont forget inflation

But yes that is still good

Thanks all. Scottish Widows just seem unusually pessimistic then!

Look at it the other way, how much do you need in retirement?

Have a look at Which? As they do an annual projection of how much for a basic, comfortable and luxury retirement, and break it down into how much you spend on all the categories eg food, cars, holidays, house repairs.

No housing costs and no putting g kids through Uni costs make a huge difference to what you need

And add on the state pension to your projections.

The more you put in the more Scottish Widows will take in commission

Because the companies that provide them want you to give them lots of your money to invest...

I'm, been teaching 30 y and my lot minute🙄. Will have to see how it goes