Saving for retirement can be tricky, especially if you’re on a low income. Just because you have a job, it doesn’t mean that you have any spare money to put aside. Indeed, according to Cashlady, NHS are the number one customers of short-term loans.
If you’re struggling to make ends meet, saving for retirement is often very low down on the list of financial priorities. But what should you be aiming for when it comes to saving for retirement? And how much is enough? We take a closer look…
Exactly how much will you need to live on when you retire?
A survey by Which? revealed that retirees seemed to spend around £2,200 per month, per household. This amount included non-essential expenses, like eating out or going on holiday within Europe.
Unsurprisingly, those who holidayed farther afield or bought a new car every five years, needed more money in retirement.
You may need less than you think…
According to Which?, you may only need between around half and two thirds of the salary you had just before you stopped working, after tax.
This is due to the fact that when you retire, you may have finished bringing up any children and you won’t have to pay out for the transport costs associated with getting to and from work.
Plus, if you have your own home, you may have paid off your mortgage by this point in your life.
Of course, this varies from household to household.
It all comes down to the lifestyle that you want
The definition of “comfortable” is subjective. What you may imagine to be a comfortable retirement, others may think is luxurious or not nearly comfortable enough.
This means that the exact amount you will need to save for a comfortable retirement, will vary due to how you envision your lifestyle when you are retired.
Are you someone who would rather stay at home than travel the world? Do you like eating out at least 3 times per week? All of these things and more will come into play when calculating how much you need to maintain your lifestyle.
Look at your spending patterns today and consider what you would spend less on (commuting, for example) and what you would spend more on (maybe travelling) when you retire. This way, you can get an idea of what you may need.
This useful pension calculator from the Money Advice Service is a good place to start.
Don’t forget the State Pension. You can use the government’s website to find out how much you could get.
Act now to save for your retirement
The younger you are when you start saving for your retirement, the more time you have to grow your pension pot.
However, how much you can afford to put aside and how much you should be putting aside if you want a comfortable retirement, are often two different things. Work out what you are able to put into your pension each month in order to work towards the retirement that you want.
you mentioned NHS employers originally but think you meant employees?