13th February 2018
According to Which?, the average retired couple require £18,000 per year, to cover their basic living and household essentials which includes food, bills and housing payments – whether this is a mortgage or rent. Optional extras which include anything from regular leisure activities such as cinema and gym memberships up to regular vacations and trips away bring the annual total up to around £26,000. The overall total amount required for a couple to live comfortably, alongside their state pension amounts to a total pot worth of around £210,000.
Breaking down this amount into monthly savings, from the age of 20, a couple should aim to set aside around £100 to £130 per month, with this almost doubling if they fail to save before the age of 30. Therefore, saving as early as possible can ensure that you don’t need to go without at an earlier age in order to survive post-retirement, saving incrementally.
It is important that you are able to calculate exactly how much you require to live, this can vary drastically from one lifestyle to another, and from one area of the UK to another. Looking through monthly bills and payments will allow you to calculate your future payments, including taking into account when your mortgage is due to be fully paid off, if you rent or if you live in a home that you already fully own.
Calculating this alongside the state pension and any other sources of income you may have and intend to continue, even potentially after retirement, can allow you to relieve some pressure on how much you need to save, monthly and yearly.
Finally, national insurance contributions must be made for at least 35 years in order to claim a full state pension. This is not based on the amount you have paid in, but the length of time that you have paid, in order to gain enough credits to qualify. Should you find that you do not have at least 35 years worth of contributions, you may need to calculate how much saving you need to do in order to bridge these gaps.
If you find yourself with considerable excess, investing could be a good way to boost how hard your money is working for you. When it comes to choosing how to invest your money, whether this is on the stock market of through p2p lending, it is important to consult with a financial planner to discuss how to most effectively distribute your capital and which routes will meet your requirements. All investments come with risk, so reading up on various routes into the industry or ways to invest that will best suit the amount of risk you are prepared to undertake, is critical.