Advice you would have told your 30 year old self...

[Yellowelephant1]

Hi guys,
I just wondered what you would say was the right amount of savings you should have to retire comfortably... I’m not talking inheritance as I would say we are the last generation for even some inheritance (not that it’s a given and getting more rare) but for people who have experienced it, experiencing it or just have a general idea, what would you say from 30 years old (if not earlier) you should have in savings to be able to retire comfortably... along with any other advice you would give your 30 year old self...

Inheritance is a big thing going forward. I heard there’s about 300 trillion being passed down from boomers this time round. If those recieving it have had family financial education or bothered to learn themselves, they will pass it down too.

Advice: Use your ISA allowances and Pension allowances. Buy fund units every month. 9% per annum return is easy to achieve, 20% is possible. Try to double your savings every 5 years.

30-year-old me realised that saving is just a habit – in that once you do it you just keep doing it and it doesn't take much work once you've started – and set up a direct debit to put away money in an ISA every month.

I started a SIPP about 10 years later, and since then half my savings have gone into an ISA - so they would be accessible in an emergency - and half into the pension. If I have ever had to take money out of the ISA I increase my payment in to pay it back over time. It's just great to have something to fall back on - and in the long term, to have pension savings.

I've saved what I could afford but for me the key was that I have saved regularly - it would have been so easy not to but once started I just kept going through inertia. I am planning to step it up once the mortgage is paid off (which we also started paying when I was 30 and will be paid off in a few years time). I do think it will make a proper difference on top of the state pension. It hasn't been particularly painful to do, though harder in the two small kids/nursery fees years.

I read somewhere that you need £500k to retire comfortably.

Whimper. I have about 50p.

You need to save £500,000 to get a pension of £20,000 a year on a rough calculation that if you withdraw 4% a year from your pension fund and it still grows by (I think) 7% a year then it will last for 30 years. But in fact you most likely don't need to save that yourself to get a pension of £20,000.

The first £9,000+ is the state pension (and you get a full year credit for every year in which you claim child benefit – aim is to get 35 years overall). Then any company pensions - and right now everyone in the UK in a job should be automatically enrolled in a company pension, however small. Add those up and it's the difference between that sum and whatever sum you think you could live on in retirement (eg £20,000 - 9,000 state pension - eg 3,000 corporate pension = £8,000 a year to save. £8,000 x 25 = £200,000. 4% of £200,000 is £8,000. Or even, £12,000 - 9,000 = 3,000, for which you'd need to save £75,000.) Sounds loads but can be done by saving regularly – and starting as early as possible. Government gives you £25 for every £100 you save in a pension if you are a basic rate taxpayer. This is how I'm doing it anyway – I'm not any kind of a financial professional though.

I would have said to work in the public sector. I've saved into private pension schemes all my working life and have a pension to come from that. DH has always been public sector, earning on average about the same as me and paying less into his pension pot. his pension is 5 x the amount that i can buy with my pot, and it is inflation linked to 5%. he has even got another little part time job in the public sector and is saving into a new scheme - 10% matched contributions! Even taking into account the tax he will pay when he fully retires it will pay for a super holiday or some works to the house with ease, or maybe one of the children's weddings.