Working out how much you need to save for retirement is a dilemma especially when you are bombarded with seemingly conflicting advice.
Picking the right advice to suit your lifestyle and finances is hard.
But here are four retirement saving myths you really should ignore.
Life’s cheaper when you stop working
That’s the theory, but it’s not necessarily true. Blanket advice like this is no good for everyone.
Yes, you will save money on commuting, lunch, work clothes and the like.
But you will probably replace these expenses with others like travelling, holidays and taking up a hobby.
All this costs money, too.
Plus, you will spend longer at home, so will have extra running costs like heating.
The point is you need to adapt your retirement income to your lifestyle without forgetting to add in a cash buffer for those emergencies that arise from time to time.
Your home and car will need maintaining and appliances will break down and need repair or replacement.
You can’t afford to save
Yes, you can. Saving is a lifestyle choice as a well as a financial one.
Sit down and scrutinise your bank statements for unnecessary spending like subscriptions, buying lunches when you can pack sandwiches and all those coffees from Starbucks.
Trimming your expenses can probably net you around £20 or £30 a week that could go into your pension. Over the years, this mounts up to a tidy sum.
The state pension is a lifeline
Yes, it is, when you get it and if you qualify for the full amount. However, the government only intends the state pension to cover the basics and not to stretch to luxuries.
The state retirement age is already drawing farther away for many – rising to 68 years old by 2039.
Treat the state pension as a bonus rather than a necessity and you will be in control of your own fate.
You need a pension pot of £x to retire
No, you don’t. Your pension pot will be determined by how much you save and for how long.
How much you need depends on your expected lifestyle in retirement and will vary from person to person.
Work out your own likely spending and bills, take away the state pension and multiply by 25 to give a target amount, if you need one.