People of my age tend to forget about their pension, or they think it’s not important.
We’re young, and I’m not going to retire anytime soon. I’ve got fifty years to save money for my pension. These are just some of the things that stop youngsters from saving.
But I did some major calculations using The Money Advice Service, and my results have really made me think about the importance of saving for a comfortable future.
First, the website asks for your yearly salary before tax. You can then select the wage you’d like to live on when you’re retired. It automatically calculated that I should aim to live on £11,000 per year. Sounds doable.
My work has a pension scheme, and I don’t know many workplaces anymore that don’t offer one.
It asked me how much I currently have in my pension savings. It currently stands at about £200 – I’m only 22!
I then told the system I’d like to retire at the age of 73 – a bit specific, but then 75 sounded too old.
So based on my current salary, the amount I should be saving, and a retirement age of 73, I could be left with £274 per month. If I keep saving the amount I currently am, I would be living on less than £11,000 per year.
Using the handy slider tool, I could choose to take out less than 25% as a lump sum, therefore gaining more spends per month.
But could I really live on £234 per month?!
Let’s pretend that I’m still living with Jay, and we’re mortgage free, because we will have downsized by then. We only have bills to pay at £200, and then £100 on food. The car insurance needs to come out, as does petrol costs. This might be £100. That’s already £400 which, split between the two of us, is……..£200 each. So I have £34 left which definitely won’t cover house and building insurance, life insurance, or council tax.
The above is only the essentials. It doesn’t include meals out, new clothes, birthday presents for others. You can forget about saving for Christmas. It’ll be scratch cards for everyone.
Obviously, this is based on my work pension scheme only. I’ll be adding to it myself at some point, once we’re settled in the house and know our finance position much better.
Say I had £60,000 in my pension pot. That’s a huge amount of money that will only last me about 5.5 years.
How have you saved for your pension?
*This is not a sponsored post. I just wanted to discuss pensions and The Money Advice Service happened to have a good calculator.