How much should you save for retirement? The answer is that it depends on the person. One person can seek a retirement full of travel, while another wants something quite more tricky.
This brings challenges when it comes to determining the pension policy and is a problem that the government will have to cope with as it is prepared to announce the second phase of its retirement review, which will focus on adequacy. This is a work that will inform the thinking around the state pension, as well as in the workplace and private provisions for years to come.
Setting too high goals may mean that the more profitable wins are potentially transferred to their pension and risk fighting financially today. They can even delay them to save completely. Putting the tape too low risks higher workers passing through life, thinking that they have done enough and then get a nasty shock.
The Hargreaves Lansdown savings and stability barrometer examines four key adequacy measures to see who can help people cope if they save enough.
These include the so -called “pounds and pens” that seek to put a real figure for what pensioners need to achieve the adequacy of the pension. Pounds and Pensa measures include a referent to the Pension Pensions of the Life Foundation, which determines the level of income to meet the basic daily retirement needs for single and related households.
This can be seen as the absolute minimum that someone has to save for retirement and set a goal for pension contributions, or as a percentage of salary (12%) or a minimum sum of money (2950 British pounds for a full -time housing employee).
Read more: Basic questions to ask yourself to plan a comfortable retirement
Hargreaves Lansdown also appreciated the minimum, moderate and comfortable vital standard life savings association (Plsa) for single and related household income.
The study examined the so -called relative measures, such as targeted replacement rates that determine the level of retirement income on the basis of profit before retirement. For example, they may say that someone has to save enough to cover two -thirds of their salary before retirement.
A specially designed current retirement cost measure has also been used. This determines the level of retirement income using the current retirement costs under a group of income, the status of the relationship and the status of hiring.
The analysis of these measures, discovered with the help of pounds and pens, may not reflect the current standard of living of the higher workers, so it can fall asleep them into a false sense of security. They can also give the impression that the more profitable ones are lagging behind when they do not really need to achieve higher goals to maintain their current lifestyle.