How much retirement money should I have at 50?

How much retirement money should I have at 50?

The first thing to say is that there’s not one figure you should have saved up for your retirement by the time you’re 50. Why? Because everyone’s different and the amount you’ll need depends on your circumstances and your individual needs in retirement.

Is there a rough amount I should aim for though?

One option is to save about 10-times your average lifetime salary by the time you retire. Another is to save around 12.5% of your monthly salary, which can add up to a tidy sum over your working life. Of course, these are only suggestions and they might not be right for your needs. Obviously, the more you have in your pension pot, the more comfortable you’ll be in retirement.

Be realistic…

You’ve probably got a good idea of how much income you’d like to receive every year once you’re retired. However, it’s important to be realistic and understand the amount you’re guaranteed to get based on your current pot and growth projections. If the two figures are massively different, you need to try and put more away or change your expectations a bit.

… you might not need as much as you think

Lots of people think they’ll need more in retirement than they actually do. As a rule of thumb, you probably need between 50-70% of your salary amount to live comfortably. This because you’ll have expenses you won’t pay once you’re retired, like work travel costs, pension contributions and (hopefully) mortgage and debt repayments. Children will no longer be dependent on you and your household bills will generally be cheaper.

What about extra expenses?

One of the perks of retiring is that you can do things you couldn’t when you were working, such as travelling. You’ll need to factor in holiday costs, particularly if you’re planning more than one trip overseas per year. There’s also the other big expenses to think about too, such as home improvements or repairs, helping children out and occasional medical bills.

The cost of living is also likely to be higher than it is now when you retire, so you’ll need to take that into account.

How you take your retirement income will make a difference too

When you come to retire, there’s a number of different ways of taking your pension income. Buying an annuity, for example, can help your income last for your retirement, but means you could get less every month than with a drawdown.

You can also keep more in your pot to give you a monthly income by not taking all of, or delaying when you take, your tax free lumpsum.

Don’t forget your other income sources

Savings and investments can give your retirement income a healthy boost or help you with additional expenses, both planned and unplanned. You’ll also get a state pension too – to see when you’ll qualify for yours and how much you’re entitled to, check the government website here.