How much money you need to fund a comfortable retirement is the question most of us would like answered.
After all, having a definite figure to aim for would make saving a lot easier.
But we are all different.
Some of us will live longer than others, some of us will have a more extravagant lifestyle and most of us would like just enough not to have any money worries however long we live.
Imagining what your life will be like in five, 10 or 20 years from now is difficult.
Plugging the funding gap
How much you need to save depends on your age and how much you feel you will spend. The younger you are the longer you have to build a pension pot and the less you will have to put aside each month.
You also need to think about how much inflation will eat into your savings. The average cost of living increase is around 2.5% a year and you must take this into account.
The state pension will also help, but when this starts paying may not align with when you want to give up work, leaving a funding gap.
If you have a partner who is several years younger, they will not draw their state pension until later than you. If you want to retire at the same age, this will create a funding gap as well.
Investment growth also plays a part in how much you might have for retirement.
Make decisions that are likely to pay off
If you put the cash in the bank, then the interest is low, probably no more than 1% or 2%.
Putting the same money into an ISA or pension will offer a higher return, providing you pick the right investments. The yield is likely to be nearer 5% to 10%, but that’s before considering inflation.
Health is important as well. If you suffer ill-health, you may want to retire earlier, giving you less time to save.
The upshot is your retirement income depends on a number of variables and you cannot predict the outcome.
All you can do is make an educated guess of what the future may hold and make some sensible spending decisions now that are likely to pay off later.