How much should I be saving into my pension?
This is a question that I get asked on a regular basis from people and the answer is, as with most financial questions, it depends. How annoying is that?! That there isn’t a clear answer to decide how much you should be putting into your pension. The answer is highly likely to be more than you are currently contributing.
There used to be a formula people used to calculate how much they wanted to get out of their pension when it came to retirement, and therefore thinking about how much your pension is likely to grow over that timeframe, you could work out how much to put in, and the same can be done now, but the main question is:
How much do you need / want in retirement?Â
I am asked this a lot. How much will I need in retirement and the answer is that I do not know, that depends on you and your lifestyle. Many of my clients could retire today if they wanted to, however they would need to live in a mud hut in Peru, so what lifestyle are you currently living and how do you want to live when you no longer work? Look at your current spending and decide how much this will differ in the future. Will you have paid off your mortgage? Will you still have kids at home? Will you have lots more free time to go on holidays and spend money?
Now you can think about whether you will need £20K pa, £50K pa, £100 pa…
The other thing to think about is: what does retirement mean to you?
 Is it the traditional stereotype of growing old, playing golf and going on cruises having completely given up work at age 65, or do you have a different idea in mind? Some of my clients can never see themselves giving up work. It will change as they won’t be going in to do a 5 day a week 9-5 job, but they will still be doing something, whether that is non executive work or part time healing, whatever is your passion / skill, you may never decide to give it up. Or maybe you want to do something completely different, I would love to hear what that is.
When do you want to be able to stop earning money? When do you want to be able to live off your savings, whether this is pensions, ISAs, property, investments, (lottery winnings!!) or whatever, without fear of running out of money? And when will you have enough money saved that you can do so?
