Pension Contributions

What pension contributions should I be making? – Pensionfinder

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    What pension contributions should I be making?

    The pension contributions you will require for retirement depends largely on two factors.
    1. How much income do you want to retire on?

    2. How old are you?

    Generally the aim at retirement is to have an income of 70% of final salary. With the state pension falling so far short of this mark it is necessary for most people to consider contributing to a pension during their working life. To know how much to contribute you need to be honest with yourself- do some soul-searching- and answer some questions. You need to work out What income do you need when you retire? What lifestyle will you want? Are you willing to make sacrifices now to ensure you obtain the standard of living you desire?

    Established wisdom suggests that people will tend to need to invest 5-10% more of their income for every 5 years they delay the beginning of their pension contributions. This is well illustrated by the table below:

    General Advice on Required Pension Contributions

    Age 25: 10-15%
    Age 30: 12-17%
    Age 35: 15-20%
    Age 40: 17-24%
    Age 45: 23-30%
    Age 50: 32-45%
    Age 55: 50-70%

    The best advice is to work back though. Speak to your financial advisor about the process of discovering what pension pot you will require, and what you will need to do to get it. Get excited about the process, as you are taking control of your future, and are securing a lifestyle you deserve in retirement.