Martin Lewis explains how much money is required for a ‘decent retirement.’
MARTIN LEWIS proposed a method for assisting people in planning for a “decent retirement.”
Although most retirement calculations are based on assumptions, the money expert suggested a method that can be used as a target so people know how much they should be saving in their pensions at each age on his Ask Martin podcast from BBC 5Live.
Zoe Edwards was perplexed because all pension calculators gave her different results, and she didn’t know if she was on track for the retirement lifestyle she desired.
Martin, on the other hand, explained that even if he knew the type of retirement lifestyle she desired, it would be difficult to give her a firm answer, and there isn’t one.
“Unless you have an old final salary pension or a standard pension in a pension tax vehicle, your money is invested,” he said.
“How much money you put in and how well the investment performs are the two most important factors.”
He did say, however, that the amount of money needed in a pension for a “decent retirement” should be calculated based on one’s age.
He cautioned that the calculation he provides may not be accurate for everyone, but it does provide a good target for people to strive for.
“A decent retirement is about two-thirds of your salary,” the money-saving expert continued.
Consider your age when you first began saving for your retirement.
“Let’s say someone is 30 years old – divide that by half to get 15.”
Then you should aim to save 15% of your annual salary for the rest of your life.”
Despite the fact that this may appear impossible to some, he mentioned workplace pensions and how they contribute to retirement and match the amount put in by the employee.
The minimum amount that someone contributes to a workplace pension scheme is 4%, and they receive 1% tax relief from the government and an additional 3% from their employer.
He stated, “This is already going in at 8%.”
“The bigger message you should get from this is the earlier you start, the better,” Mr Lewis continued.
“There are calculators out there,” says the narrator.
“Brinkwire News in Condensed Form.”