Investment experts have warned anyone with less than £523,000 in their pension pot that they face having a more challenging lifestyle when they retire.
Getting older is something we rarely like to spend too much time dwelling on but for people who are near pension age especially, it makes sense to plan for your future so you’re not caught short in old age.
Indeed, the right decisions through your working life including on jobs, pensions,savings and investmens through your working could make all the difference to your ability to retire comfortably and live out your days without having to pinch the pennies and worry about money.
But you might be surprised just how much you actually need to have saved in your pension pot, according to finance experts, in order to live a decent lifestyle after you retire.
According to investment platform Hargreaves Lansdown, the amount you need in your total savings pot – your workplace pension and other savings – needs to be able to make up any shortfall in your income because the state pension is ‘unlikely to be enough to live off’, even with the Triple Lock in place.
Hargreaves Lansdown says you need somewhere between £89,000 and a whopping £523,000 cash saved up per household in order to retire comfortably.
It said: “The current new full State Pension will pay £23,004 each year (per couple). This more than covers the lowest yearly household spending of £12,678.
“For the middle yearly spending, you’ll need an additional combined pot of around £89,000 per household.
“For the higher yearly spending, you’ll need an additional combined pot of around £523,000 per household.”
You can start to access your private pension funds from the age of 55 (57 from 2028) but you’ll need to think carefully about how long you’ll live and how long the money needs to last.
There are ways to boost your pension pot, such as making additional contributions over and above what your employer is putting in, which are protected from tax at the point of being added to your pot.
Hargreaves Lansdown says that generally, you want an income in retirement that will allow you to have two thirds of your annual salary when you retire, and has a pension calculator to show how far off this you are.
