Want to retire at 55? Here’s how much you’ll need to save every month
WORKERS aged 30 will need to put away £1,000 a month so that they can retire at 55 with a comfortable retirement pot, according to the Pension Review Service.
If you can stick to this seriously pricey saving plan you can look forward to putting your feet up at 55 with a £26,000 a year pension.
As the average salary for in the UK last year was £26,500, this would mean that the average worker would need to be putting away nearly half of their wages a year to be able to hit this target.
This £26,000 is pension pot won't be enough to have a very lavish retirement, but it will make sure that all of the essentials are paid for.
How much you need to save for your pension depends entirely on what kind of lifestyle you want to have when you stop working.
The Pension Review Service calculate that you can save an extra £43,000 into your pension if you start putting money away at 25.
So, The sooner you start and the more you can save the sooner you will be able to escape the nine to five slog.
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One of the best ways to maximise your pension pot is to start saving early so that you can get the benefits of compound interest.
Mark Abley from the Pension Review Service said: “For example, a 30-year-old who starts putting aside £1,000 a month, increasing with inflation, could build a retirement pot of around £625,000 in (today’s money) by the time they’re 55."
“Your original capital earns a return in the first year, in the second year both the original principal and the first years return benefit from any growth in the second year. In the third year your investment is further enhanced by any returns achieved."
"The concept of earning a return on top of your return is the miracle of compounding."
“The magic number? Aim for £1,000 (net) a month. While that figure will not be realistic for many workers, you will be surprised how even the most modest contributions can grow with tax breaks and employer contributions to bring you closer to life’s longest holiday.”
“It’s very much like a snowball effect. As your capital rolls down the hill it becomes bigger and bigger. Even if you start with a small snowball, given enough time, you can end up with an extremely large snowball,”
Reasearch by consumer experts Which? also found that to have a comfortable pension you will need have an annual income of £26,000.
Though if you retire at 55 you will still have to wait 13 years until you can recieve your state pension.
The amount that you and your employer have to pay into your workplace pensions went up last month, here is how to keep on top of your pension savings.
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