Have you given thought to what the sunset years of your life will look like? If your dream is have the freedom to travel and have fun then you might need to take a good hard look at your financial situation today.
It all starts by asking yourself a few simple questions…
What annual income do I need in retirement?
Exactly how much you’ll need for a comfortable retirement will depend largely on your cost of living and lifestyle choices. If you want to enjoy regular holidays abroad or expensive hobbies, you’ll need to save more to boost your pension.
Retirees typically find they need less to live on in retirement because many have lower liabilities having paid off mortgages and no longer supporting a family.
Experts typically suggest you’ll need between half and two-thirds of the salary you earned before retirement to maintain your lifestyle.
Industry estimates for a comfortable retirement commonly range between €25,000 and €30,000 a year.
Factor in holidays and other luxuries
This rises by another €5,000 when allowing for extras such as overseas trips and regular leisure activities.
To generate an annual income of €30,000, a couple would need a pot of €250,000 in today’s money to go with a state pension.
How much do I need to save now?
The answer depends largely on your age, thanks to the power of compound interest.
Calculations show if you start saving into a pension at age 25, you will need to put aside €350 a month to secure an annual income of €26,000 in retirement. This is based on a salary of €35,000 a year, with employer contributions of 4 per cent.
If you put off saving until you are 35, you will need to save around €500 a month, while at 45 this figure jumps to €800.
If you’ve left retirement saving until you are 55, you will need to put away €1,700 a month.
If this article has given you a wake up call then use our free calculators to assess your current situation or contact us below for a free consultation.
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