How much should we be saving for retirement?

Retirement for many feels like a lifetime away. After all, in the UK the retirement age currently is 68 for most of us. That means for me, I can’t retire until 2053 officially. Just writing that down makes me realise just how far away that actually is.

But what about those who want to retire earlier?

If like us you are looking to retire early, you may be looking for ways to make this achievable. Before you can make an action plan though, working out how much you actually need to retire is where you need to begin. It may seem a little overwhelming as to how much you will need for retirement. but this calculator is perfect for giving you that starting figure you need to be saving for retirement.

Once you have this, now the planning and fun begin. Before I began our journey for debt free and early retirement, I always used to not worry about tomorrow, what was coming and what our plans were. We are young, we have time I used to tell myself. Then I started to look a little further into it and soon realised that if we started sooner, there was actually a chance we could retire sooner and enjoy life a bit more.

Pensions are something that I don’t really understand much about, there is even a pension gender gap too. If you are unsure of pensions, where you are and where you are going with it, you should always seek professional advice. It will pay off in the long run if you are able to get some advice.

Saving for retirement, things to consider

• Retirement age – What age do you want to retire? Are you planning to retire at your state retirement age or would you be looking to retire sooner? This really has to be your starting point as you will be able to work backwards in everything else from this age.
• Where do you want to retire – For us, our retirement plan is always to retire and downsize. Selling our home and moving north to a more relaxed area is all in our plan. Not only due to the peace we should get but also because our money will go further if we move north. Also, the living costs are less the further north we go.
• What will your retirement look like? – Do you want to retire by the sea or plan to travel the world? Every decision you make will have an impact on how much you need to be saving. Think about the sort of retirement you are looking for. Once you have this you will be able to calculate a little better how much it is going to cost you.

Everyone’s plans for retirement is different? Some want to be surrounded by family, whereas others have plans for retirement villages and a chilled out life. No matter what you pick, just make sure that it is what you want. After all, we wait most of our life for our retirement so we don’t want to miss the chance to enjoy every second of it.

What next?

So, you have your planned retirement age and you have a vision of your retirement. With this, you will be able to calculate your living costs roughly. Now you need to work backwards.

Looking at the average life expectancy, you will be able to see what your expected years in retirement are. Now, this may seem a bit morbid but you don’t want to get into your 70’s or 80’s and be running out of cash.

Once you know this, work out how much you should have saved away. Obviously, if you have been paying into a pension, you will have this to take into account, however, I am dubious as to how much pension will be left by the time we retire. With this in mind, I will be doing what I can to save extra money where I can.