How much should I really aim for as a pension?
Resume IA
L'auteur cherche à savoir si son objectif de pension de 52k£ par an est réaliste, étant donné ses contributions actuelles et ses autres sources de revenus
Conseil cle
utiliser la règle de retrait de 4% par an pour estimer les besoins de pension
I am 42, so nowhere near the pension age (which is likely 68). I have just received a cost-of-living pay increase of 3% which takes my annual earnings to just under £65k a year. I contribute 5.5% to my pension via salary sacrifice, which I am upping to 7% following the pay increase. My employer splits their NI savings with me 50/50, so my employers contribution works out at 8% + NI savings (around 8.5%). As of this year, I will be putting in just over £10800 into my pension each year. I also have another pension with NEST that is on the Sharia Fund and sits at around £22k, and a defined benefit pension that is valued at £2400 per year (as of 2010) but I have queried this as there should be an annual increase even on a deferred pension pot according to the documentation. My question is, how much should I aim to be claiming each year in terms of a pension? I am aiming for £52k a year total pension, including state. I appreciate there will be tax on this, but the question is - is this way too much to be looking at? I want us to have a comfortable retirement, and the plan is to have 5yrs minimum mortgage free to be banking up savings pre-retirement. Also, there is generally an annual increase at my employers or around or just more than inflation. Increases have been 5.66% average over three years, but 3.5% average over the last 2 years. I am planning on seeing a 3% average pay increase each year, and aim over the next few years to increase contributions up to 10% my end. I think I need a sense check.
“You want 52k a year. Let’s assume the state pension is unchanged at 12k a year. Let’s take off 2k for your DB pension. It’s easier to account for it here than it is to estimate a monetary value for it. It will almost certainly increase inline with inflation. So you need to have an income from other sources of 38k a year. The most common rule of thumb is that a safe withdrawal rate from a pension is about 4% a year. You can get way more sophisticated about it but that will get you in the right ballpark. So 38 / 0.04 = 950k in pension assets on retirement, at current prices. Your employer contributes 5.25k a year. You contribute 10.5k a year. I assume this does not change. You have 22k in current investments I assume your investments grow by 4% above inflation a year. I will spare you the maths but you are looking at achieving 770k on retirement in your current trajectory. Your planned 5 years of mortgage-free earning will help but will probably not solve that gap. You can ”