How much pension do I need

[Bluesky999]

I am 50 and have around 60k in pension fund; want to retire when I am 60k with a pensión of around 30k per year. How much do I need to save now? I think probably realistically I won’t get to 30k per year retirement and we may ending having to downsize move somewhere cheaper.

thanks in advance

My husband had a fund of £270k and he's getting £12k from that bit. He had another very small defined benefit pension too and in time the state pension

You need to multiply what you want by 25 to get a rough idea. So £30k a year is around £750k pot. Some of which will be made up of tax relief and growth. If you want to retire in 10 years you'd probably need to be putting around £50k a year in to get close.

Agree with the others, you need a massive fund of £750k to get a 4% draw down annually of 30k.

i think you may have left if too late

You don’t have much time to accrue cumulative interest, so you’re basically saving. If you want 30K a year for probably 20+ years on average, and you aren’t including state pension into that figure you’re going to need to accumulate 600K + in 10 years.

You need to save £50k a year, you save a fortune on Tax putting into your pension but you need good pension advice to save paying tax when you start drawing your pension.

Thanks that put it into perspective.

I definitely left it too late; started working full time 2 years ago and worked part time before with only minimum legal contributions. I am putting 30percent now with employers contributions but that’s still not enough. Unless I progress in my career and earn more.

Try guiide for the calculators.

Gosh. This is helpful to see.

Can anyone explain the thinking if the 4% drawdown. Why that figure?

Because 4% is the figure used by pension advisors and all the good folk on MSE when anyone asks about how much to withdraw each year from a pension fund.

check out how this differs from buying an annuity, which is a guaranteed sum each year. You win if you make it to over 90, and lose if you sadly die the week after you retire.

PensionWise are a free service you can talk to for your options.

pensions are so important and should be a priority for all of us.

@Bluesky999 do you have sufficient equity to downsize? Without a substantial pension it's likely you will have to continue working past 60, perhaps part-time if you can afford until until state pension age

It is a bit depressing; it look like I may have to continue working past 60 and maybe move somewhere cheaper.

I could potentially save 30k per year, currently doing about 24k with employers contributions; but still not enough; or maybe rent the house in UK and move somewhere cheaper

How much do DH and me need to leave a decent life and be able to travel? Is 50k a year enough for both of us?

I have a small ISA, is it worth it to keep putting money on it or put more/everything into my pension?

Something not mentioned is state pension - do you mean £30k a year including or excluding state pension? If including the £11.5k state pension then you only need £18.5k from your private pot for most of retirement, so £460k using the 4% drawdown rule. Plus some to top up your state pension for the years before you get it

To work out how much you need, work out how much you spend now and take off costs you will reduce when not working, such as commuting and possibly finding DC. Add in costs you do want to have you don’t normally have that you’d like to, and that’s your number.

That’s the best start to pension planning- work out what you need/want then subtract state pension(s) and x 25.

What's your salary now and why the £30k figure? Is that comparable to your current earnings or expected expenses?

This will help you understand how much income you need to live the life in retirement you want https://www.retirementlivingstandards.org.uk/

You should add together what you are likely to get, what your husband will get as well as however much of the state contribution you are entitled to.

Broader help on questions such as pension vs lSA can be found on the Money Helper website.

State pension

Why £50K a year?

You won't be paying a mortgage, hopefully won't be doing major works on your house, won't be travelling to work or any costs of work. And any travel can be done outside peak holiday.

The most expensive time of retirement is when you are fit and well. My frail elderly mother saves a massive amount each month as she doesn't go anywhere. You don't need 50K every year.

You can take out annuities that give a pension to a spouse/partner and ones that increase in value over the years. Slightly reduces the initial payout but after a few years it's better. ....I didn't think this was the case until we started sorting my husband's pension and annuity rates happen to be good at the moment

I’d double check your numbers as 30k is a lot.

Assuming the 30k is pre tax
I’d say you want a pension pot of about £1m ish.
so you are £930k short

60k pa into a pension for the next 13 years approx would get you there.
(As you'll accrue interest on earlier payments into pension)
so not too far of 60 really?

Maybe I am overestimating it

You should take into account the state pension.

www.gov.uk/check-state-pension

Will tell you what you are likely to receive in state pension which may mean you need less in private pension.

Realistically I can’t contribute more than 2k per month at the moment, including employers contributions

30k with state pension; not sure I will get the full amount ad have been in the UK for 20 years, plus another 10 working so hopefully I will get the full amount; will check the government website

Don’t think this is possible unless I double up my salary

current salary 60k