According to new calculations, a person who starts saving at age 50 will need more than four times the monthly contribution of a new pensioner at age 25.
The study also found that self-employed people need to save more than their employees if they want to achieve a “moderate” retirement benefit.
The calculation is based on the PLSA Annual Retirement Living Standards, with an estimated pension pot of £36,500 for minimum retirement, £248,000 for moderate retirement and £530,000 for comfortable retirement for singles. is estimated to be required, but less is required for married couples. Costs are shared.
While an individual’s retirement plans are influenced by individual circumstances, experts from fixed investment platform Interactive Investor know how much you should save for retirement, depending on the age at which you start saving for your pension. was calculated.
Calculations show that a person who starts saving at age 50 will have to pay more than four times the monthly contribution of someone starting to save for a pension at age 25.
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They found that the monthly pension contributions required for single employment pension savers to achieve various levels of retirement were:
Current age: 25
- Starting price: £23
- Moderate: £155
- Comfortable: £331
Current age: 30 years old
- Starting price: £29
- Moderate: £193
- Comfortable: £411
Current age: 40
- Starting price: £46
- Moderate: £314
- Comfortable: £671
Current age: 50
- Starting price: £87
- Moderate: £625
- Comfortable: £1,336
“It’s reassuring that if you start young, you don’t have to save thousands of dollars each month to have a decent retirement,” said Alice Guy, director of pensions and savings at Interactive Investor. .
“In fact, someone who started saving in their 20s could save enough for a decent retirement with a pension contribution of £155 a month, which is just £124 after tax. (assuming you increase your contributions by 2 percent each year and enjoy a 5 percent annual return on investment).
“After the employer’s contribution, their contribution is increased to £248 each month. The younger you are, the longer you will save and the longer it will take for your investment to compound.”
By contrast, someone who starts saving for their pension at age 40 will need to pay £314 a month (twice as much as at age 25) to have a decent retirement.
Interactive Investor warned that the self-employed will not benefit from employer contributions, making retirement savings “much more difficult.”
“You’d have to save about 60% more than someone employed to achieve the same level of retirement benefits,” Guy said.
Pension experts also provided some important tips for those concerned that their pension payments are “lagging”.
- “If you can afford it, consider paying more than the minimum and increasing your pension premium.
- “If you’re thinking about changing jobs, check your future employer’s pension contributions, not just your salary. can make a big difference in retirement benefits.”
- “Check your pension and ISA at least once a year, and discuss your retirement plans with your partner. Married couples need slightly less for retirement than singles, so your partner’s pension is more than your plan.” can indirectly affect the
- “If you’re a homeowner, consider increasing your pension once you’ve paid off your mortgage.
- “If you cannot afford to pay your current pension contributions, consider reducing your pension contributions by a percentage rather than stopping your pension contributions completely. Be careful not to lose valuable employer contributions as employers stop contributions.”
- ‘Don’t forget the tax cuts. According to tax law, it costs only £80 to contribute £100 to a pension, and £100 to a high taxpayer costs £60. You can also get 25 percent tax.” – It’s free when you come to pick up your pension.
- “Check your old pension pot and consider if you can save money and hassle by consolidating your old pension. need to do it.”