We’re very pessimistic about how long we’re going to live. Apparently we live on average seven years longer than we expect. While this is generally good news, it can cause problems in later life. The problem’s not going away – we’re living longer and that means we’re going to need to save more or work longer.
So how much should you be saving?
Well we can start with the minimum contributions that the Government require for you to be auto-enrolled. You’ll pay 4% of your wages between £5000 and £43,000 )with the Government topping up your savings by 25% (unless you don’t pay tax and are in a net pay scheme when that goes up to 5%).
If you don’t do percentages, if you’re on average wages, you’ll be paying in around £1000 pa into a pension (around £80 per month) and it will be costing you around £750 pa (about £60 pm ).
That’s your starter for ten, but how much you choose to save is up to you. We don’t want to see any AgeWage customers opting-out of free money – if you’re on average wages you’ll get as much again from your boss. But you may have some spare cash you want to top-up your pension with. You can do this by asking payroll to put up your contributions or put more money in as a lump sum.
Can AgeWage help?
Trying to accurately work out how much to pay in is very hard, especially if you are a youngster, there’s so much that can change – including your need for money in retirement, the investment return you actually get on your money and of course the spare cash you have when you are taking decisions.
But if you want a rough rule of thumb….
“Take the age you start your pension and halve it. Put this % of your pre-tax salary aside each year until you retire”.
AgeWage likes to keep things simple!