My Pension Expert recently devised age-based guidelines for retirement savings which include a number of savings targets to galvanize
individuals into taking the plunge and to plan more responsibly for their future.
How much should you aim to save for your retirement?
Ideally you should have started saving by the age of twenty-five. At this age you should start by saving approximately six percent of your salary. The percentage of your annual wage saved should be increased by one percent year on year until you are putting twelve percent a year into your pension pot.
Utilising this rule of thumb, experts say that provided you have invested continually from when you began the process ten years previously, you will have accumulated the equivalent of your salary for one year at the age of thirty-five.
By the age of forty – a mere five years later – you will have accumulated savings of twice your annual salary; by fifty, the amount in your pension pot should be four times your salary; by fifty-five, it will be five times and so on, until finally you achieve your ultimate goal at retirement age – the grand old age of sixty-six – eight times your salary.
It must be stressed however that these guidelines are just that – guidelines. Savings targets such as these merely provide a basis for action – a rule of thumb. They are meant to engage young consumers to start planning. However, what the figures show is that saving for retirement need not be an up-hill struggle and is very much achievable. Plus, it may well be argued that laying out targets for oneself is half the battle.
The fact is that most people are not on track to saving that ultimate 8 x salary dream – in fact most of us are used to spending our entire salary, with many complaining that saving is a luxury and that they are only barely scraping by as it is.
If saving for retirement seems unrealistic in your twenties, just think how hard it will be to start in your thirties, forties or fifties! Once you start saving that six percent and get into to the habit of saving, you will no doubt find it easier than you thought it would be. If you start saving NOW, you will see the interest being earned and your savings growing to previously unprecedented levels.
This is a featured post on behalf of mypensionexpert.co.uk.