The MoneySavingExpert.com founder hosted a pensions special of his Martin Lewis Money Show Live on ITV this evening
Martin Lewis has revealed the “rule of thumb” for how much you should really be saving for your retirement.
The MoneySavingExpert.com founder hosted a pensions special of his Martin Lewis Money Show Live on ITV where he answered questions about retirement.
One viewer, called Daryl, emailed in to ask if he was putting enough money away in his pension. He said: “Is there a good rule of thumb to pay into pensions?
“Whilst I want to put more into my pension, I don’t want it to impact my quality of life in the here and now. Is doing 15% contributions as someone in my mid-30s enough?”
Martin explained that the “rule of thumb” is to halve the age when you started paying in – but explained that few people do this in reality. This relates to private and workplace pensions, not the state pension.
He said: “I think you’re doing really well… way more than most people. Let me give you the rule of thumb that scares the pants off everybody.
“Take the age when you start putting into your pension – so in your case, we’ll say 30 – and halve it, that’s 15. That’s how much of your income you want going in for the rest of your life for a decent retirement.
“Very few people ever get that. The reason for using that rule of thumb, is to indicate the earlier you start, the better a retirement you’re going to have.
“Of course, you’ll also get the state pension depending on your National Insurance contributions.”
According to the Pensions and Lifetime Savings Association (PLSA) the cost of a minimum retirement living standard for a one-person household is £13,400 a year.
For a two-person household, it is £21,600 a year. For a moderate lifestyle, a single person would need £31,700 a year, while two people would need £43,900 a year.
For a comfortable retirement, a single person would need £43,900 a year and a two-person household would need £60,600 a year.
The earliest age you can access your private or workplace pension is currently 55 – but this will rise to 57 from April 2028.
Meanwhile, the state pension age for men and women is currently 66 – but this is rising to 67 and eventually 68.
