For those of us in our 20s and 30s, saving for retirement is often the furthest thing from our minds, and even when we do have to think about it, estimating just how much we need in our pension pot in order to enjoy a comfortable retirement is pretty difficult.
A recent survey by stockbroker Selftrade showed that 45% of people aged 20 to 30 estimate they’d need approximately £250,000 in their pension to get them through retirement.
They’re missing the target by quite a way: in fact, we’d need half a million pounds in order to receive an annual income of £25,000, the average annual wage for British workers.
As ever, the best advice is to start saving as early as possible, even if it’s only a small amount, as you can then benefit from the power of compounding. The later you start, either the later you’ll have to retire, or the more you’ll have to save from day one, in order to build up a larger pension value.
For example, a 30 year old looking to retire with £500,000 in their pension pot at 65 would have to put away £450 per month from now on. How affordable is that going to be for the average 30 year old?