260k For Comfortable Retirement

Published / Last Updated on 26/05/2018

How Much to Save into a PensionHow much do you need to retire comfortably?

Royal London has conducted research with pensioner clients and found that £260,000 is the optimum target pension fund to be able to retire comfortably.  They worked on figures based upon a person earning  UK average income of £27,000 and then with lower travel costs, no mortgage costs etc needing income in retirement of £17,500 pa inflation linked.  Assuming you have a full state pension, currently £8,545 pa. and a £260,000 to provide private income of £9,000pa. also inflation linked.

It is why, perhaps, you keep seeing advertisements online from some companies suggesting they can show you how to retire with £250,000.

We decided to take this one stage further, as the £260,000 is the suggested minimum today, what will you need if you are retiring in 10 years, 15 years etc.  The table below assumes a 5% income from pension fund and that you start taking private pension income when you reach state pension age.

What might you need when you retire?

Years to Retirement

Year

Projected State Pension

Savings Needed

5%pa Income from Savings

Total  Income

0

2018

£8,545.68

£260,000.00

£13,000.00

£21,545.68

1

2019

£8,759.32

£266,500.00

£13,325.00

£22,084.32

2

2020

£8,978.31

£273,162.50

£13,658.13

£22,636.43

3

2021

£9,202.76

£279,991.56

£13,999.58

£23,202.34

4

2022

£9,432.83

£286,991.35

£14,349.57

£23,782.40

5

2023

£9,668.65

£294,166.14

£14,708.31

£24,376.96

6

2024

£9,910.37

£301,520.29

£15,076.01

£24,986.38

7

2025

£10,158.13

£309,058.30

£15,452.91

£25,611.04

8

2026

£10,412.08

£316,784.75

£15,839.24

£26,251.32

9

2027

£10,672.38

£324,704.37

£16,235.22

£26,907.60

10

2028

£10,939.19

£332,821.98

£16,641.10

£27,580.29

11

2029

£11,212.67

£341,142.53

£17,057.13

£28,269.80

12

2030

£11,492.99

£349,671.09

£17,483.55

£28,976.54

13

2031

£11,780.31

£358,412.87

£17,920.64

£29,700.96

14

2032

£12,074.82

£367,373.19

£18,368.66

£30,443.48

15

2033

£12,376.69

£376,557.52

£18,827.88

£31,204.57

16

2034

£12,686.11

£385,971.46

£19,298.57

£31,984.68

17

2035

£13,003.26

£395,620.75

£19,781.04

£32,784.30

18

2036

£13,328.34

£405,511.27

£20,275.56

£33,603.91

19

2037

£13,661.55

£415,649.05

£20,782.45

£34,444.01

20

2038

£14,003.09

£426,040.27

£21,302.01

£35,305.11

21

2039

£14,353.17

£436,691.28

£21,834.56

£36,187.73

22

2040

£14,712.00

£447,608.56

£22,380.43

£37,092.43

23

2041

£15,079.80

£458,798.78

£22,939.94

£38,019.74

24

2042

£15,456.79

£470,268.75

£23,513.44

£38,970.23

25

2043

£15,843.21

£482,025.47

£24,101.27

£39,944.49

26

2044

£16,239.29

£494,076.10

£24,703.81

£40,943.10

27

2045

£16,645.28

£506,428.00

£25,321.40

£41,966.68

28

2046

£17,061.41

£519,088.70

£25,954.44

£43,015.84

29

2047

£17,487.94

£532,065.92

£26,603.30

£44,091.24

30

2048

£17,925.14

£545,367.57

£27,268.38

£45,193.52

Comment

Alongside your home, your pension is probably the biggest investment you will ever make.  The reality is that if you paying monthly £400, £700, £1,000 in mortgage payments yet you are only saving £50, £100, £200pm into a pension, then you will likely undershoot your pension.  Do try and match what you pay in mortgage payments or rents into a pension.

You may wish to try out some of our calculators including pension target and shortfall calculators.


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