How To Mind That Gap In Retirement Savings

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Most retirement savers have a gap between the money they have and the amount they think they will need to fund a comfortable retirement.

Unless they are wealthy, it’s likely most savers believe they do not have enough in the bank, investments and their pensions.

But it’s time to stop worrying and take action.

Even if retirement is closing fast, some sensible financial tweaking should be enough to save some more money.

The big question is how much money will you need for retirement?

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Need rather than want

Research by the government and financial firms disagrees, but the rule of thumb is a figure of somewhere between £18,000 and £30,000 a year. This depends on your lifestyle and standard of living and how you intend to spend your time as well as your money in retirement.

Many advisers suggest focus on needs rather than wants.

You need money to pay for housing, food, day to day bills and travel at the very least, plus a sum for clothes, treats and a few luxuries.

Cancel out the expenses you do not want to keep. Do you really need satellite TV, gym membership and subscriptions to clubs and magazines that you don’t use?

Take any savings and put them in the bank rather than fritter them on something else you don’t really want.

Set a retirement date

Don’t forget that the state pension pays almost £6,300 a year, so bridges at least a third of that savings gap. To find out just how much, get a state pension forecast.

Next step is to set a retirement date, count the number of months between now and then and divide your savings gap by the number.

For example, with 90 months left to work and the need to save £15,000, you will need to put an extra £166 a month away.

The aim is to set realistic savings targets.

Don’t forget you need to have some fun now, so don’t concentrate on the future at the expense of living a little today.

If you need some help setting targets, try looking for advice online at web sites like the Money Advice Service

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