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Retirement -- or how a bit of maths can reduce a lot of anxiety

Having spoken in depth to women across the age and socio-economic spectrum, one theme stands out. Many of us are really worried about whether we'll have enough to live off when we retire. And the stats tend to feed this worry. A recent Scottish Widows report highlighted that the average women's pension pot is a third the size of a man's. A couple of year's ago St James' Place put a figure on that average size at £56k vs. £150k for a man.

So how much do we need at retirement? The disappointing answer is "it depends". The rule of thumb is if we save 10* our annual income by the age of 68 we should have a standard of living that is materially similar to that pre-retirement. Fidelity suggests we should aim to save 13% of our salaries per year (before tax) to achieve this standard of living. But this depends at what age we start contributing. Another suggestion: take the age you start your pension and halve it. Then put this % of your pre-tax salary into your pension each year until you retire. So if you started your pension at 32 that would be 16% etc.


The slightly worrying statistic is that minimum pensions contributions for workplace pensions are 8% (made up of employer and employee contributions). This suggests that we should all be putting a little extra to one side to make up any potential shortfall in retirement.

Further tips include:

  • Reduce the risk in your pension portfolio as you get closer to retirement. This often involves reducing exposure to shares. Do you even know how much risk exposure you have in your pension portfolio?!

  • Don't forget your emergency cash when you're retiring. In retirement an emergency cash fund is as important if not more so vs. pre-retirement as the unexpected crop up.

  • Make sure your workplace pension is covered off. Many are quite generous, and your employer is topping up. Double check what you and your employer are contributing. You may be surprised.

  • Educate yourself on how your pension is being invested.

  • Consolidate your pensions. If you have a number of different pensions from moving jobs, you will be paying several sets of admin fees (which can really add up over a long period of time). Moving them all to a single pension saves these fees.

  • And finally why not envisage getting some part-time work in retirement? It will add to your income and could give you life satisfaction. Win-Win.

Suitably confused?


If you'd like to mess around with the numbers you can find the Money Advice Service pension calculator here.

Or get in touch for your free personal financial summary and we'll work it all out for you.