One of the things I get asked a lot is: ‘have I left it too late to start saving in to my pension?’. When you are young the last thing on your mind is putting money away that you won’t see for 30+ years, especially when there are far more fun things to spend it on! As you grow older, you start to think about just how much longer you want to carry on working, whilst the draw of retiring and going on all the holidays you couldn’t do when you were younger grows stronger. You start to take a bigger interest in your pensions, perhaps with a slight annoyance at the ‘younger you’ for not doing this sooner. 

The good news is that it is never too late to save into a pension. To borrow a Japanese saying: ‘The best time to plant a tree is 20 years ago, the second-best time is now’.  

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The overarching question is how much do you need in retirement? Or even better, how much do you want in retirement. You can do the maths and predict how much you would need to cover your outgoings if you stopped working but if you have worked your whole life you don’t want to ‘just’ cover your outgoings. You will want to enjoy your life and the extra free time you will have.  

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So, how much do you need in your pension to get what you want in retirement? Conventional wisdom says a savings pot can sustain an income of 4% of the value; as long as the pension remains invested, although we would have to say this is an overly simplistic assumption. On this basis, if you were wanting £20,000 per year in retirement you would need a pot worth £500,000. This looks scary, I admit, but there are other factors to take into account, mainly that you would also be entitled to the state pension which is up to £10,600 per year (in 2023/24). The long-term effects of inflation should also be taken into account.

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I could write many more pages about all the options available when saving for, and taking your retirement but I will keep this short for now. If you would like professional advice on your current pensions situation and/or future pensions provision, please feel free to give us a ring.