How Much Money Is Enough For Retirement?
How much money is enough for retirement? That's a question many investors in the United Kingdom are asking at the moment, because no-one really knows what will happen to the UK state pension.
Eventually, someone in the British Government will have to take the extremely unpopular decision to end the state pension, because as the population gets older, it will become more and more expensive to pay everyone enough to guarantee a basic standard of living in retirement.
The closer someone is to retirement, the less they have to worry.
Most of that generation have grown up in austere times just after the Second World War, have lived through rationing, and understand the importance of saving.
Plus, in the short-term, the state pension is probably safe.
For people with 20+ years to go before retirement, things are more concerning.
The state pension may have disappeared by then, so it's wise to consider saving for retirement in a personal pension - and the sooner the better, because the sooner someone starts making contributions, the larger their pot will be when they eventually retire.
Having decided to start a pension, the next question to answer is how much to set aside each month, to guarantee a good standard of living in retirement.
The key considerations are how many years you have until you retire; what standard of living you want in retirement; and how much you can afford to save.
The best option is to aim to set aside 50-70% of your current income, multiplied by around 20, because most people live for about 20 years after they retire.
That should give you a decent standard of living.
If you want more than that, the answer is simple: put more of your income aside.
The most important thing though is to start saving early, because that gives you more time to contribute and for the fund to grow.
You will probably need an income of at least £22000 a year to have a comfortable retirement.
There are numerous ways to boost a retirement income, if you believe you will not have enough to live on when you finish working.
The most important thing is to review your investments as soon as possible to see whether you need to increase or change your contributions.
Once you've established whether or not you have enough in your personal pension pot, you can decide whether to invest in income-producing funds.
Your financial advisor will be able to provide more information on the funds on the market.
Eventually, someone in the British Government will have to take the extremely unpopular decision to end the state pension, because as the population gets older, it will become more and more expensive to pay everyone enough to guarantee a basic standard of living in retirement.
The closer someone is to retirement, the less they have to worry.
Most of that generation have grown up in austere times just after the Second World War, have lived through rationing, and understand the importance of saving.
Plus, in the short-term, the state pension is probably safe.
For people with 20+ years to go before retirement, things are more concerning.
The state pension may have disappeared by then, so it's wise to consider saving for retirement in a personal pension - and the sooner the better, because the sooner someone starts making contributions, the larger their pot will be when they eventually retire.
Having decided to start a pension, the next question to answer is how much to set aside each month, to guarantee a good standard of living in retirement.
The key considerations are how many years you have until you retire; what standard of living you want in retirement; and how much you can afford to save.
The best option is to aim to set aside 50-70% of your current income, multiplied by around 20, because most people live for about 20 years after they retire.
That should give you a decent standard of living.
If you want more than that, the answer is simple: put more of your income aside.
The most important thing though is to start saving early, because that gives you more time to contribute and for the fund to grow.
You will probably need an income of at least £22000 a year to have a comfortable retirement.
There are numerous ways to boost a retirement income, if you believe you will not have enough to live on when you finish working.
The most important thing is to review your investments as soon as possible to see whether you need to increase or change your contributions.
Once you've established whether or not you have enough in your personal pension pot, you can decide whether to invest in income-producing funds.
Your financial advisor will be able to provide more information on the funds on the market.
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