Best way to get on track in saving/pension?

You've not given a lot of information so lets assume the following

  • You earn £20k.
  • You pay in 15% of your pre tax salary into your pension.
  • Your employer pays in 1%.
  • You aim to retire at 65.
  • Average Equity return is 6.5%, Inflation is 3%. Your salary scales with inflation (No real terms pay rises).
  • You invest in a 100% equity portfolio which achieves market.

The result?

  • Your take home drops by £200pm but £266.66pm goes into your pension (both in todays money terms).
  • In total you pay £176,249.09 into the pension (Not Inflation adjusted).
  • In total your pension contains £342,629.67 (Not Inflation Adjusted)
  • After inflation your pension contains £133,055.79 in todays money (when adjusted for inflation).

This would get you an annuity of around £4000pa (todays money, assuming you are in reasonable health living in south east London, rising with inflation, single and no provisions to provide for others after you die). I think its important not to underestimate just how big of a difference that amount of money will likely make to your life.

This is also assuming absolutely no career progression, you retire at 65 and that you earn £20kpa. Increasing any of those makes a notable difference.

/r/UKPersonalFinance Thread