If you are just starting to think about retirement planning, or perhaps if you are actually approaching retirement age, you may well be wondering how much money you will actually need to put aside to fund your retirement.

Unfortunately, there is no simple answer to this question as it varies for every person. As a rule of thumb, you should try to put away as much as you can afford to, but to give you an idea, let’s look at the facts and figures shall we?

Ok, firstly you need to decide what you actually want out of retirement – how you want to live and how hard you are prepared to work for that goal.

When you retire, your living costs should go down; you will probably have paid off your mortgage by then, and you won’t need to drive to work every day, so fuel costs will be reduced.

Equally though, you may want to travel, you might want to do more with your grandchildren. At the very least, you are likely to spend more on outings, simply because you have the time to spare.

Once you have an idea how you want your retirement to be, you can at least work out an estimate of what monthly income you will need. Now, you can use an annuity calculator or a pension calculator to get an idea of what sort of investment will be required.

Other Factors To Consider

Of course, how much you need will also depend on other factors, such as when you want to retire. If you plan to retire at 60 then you will have 5 years more to fund than someone who retires at 65, and you will also have 5 years less to save.

Your life expectancy will also have a bearing of course, if you are pretty healthy, you might live longer than a smoker for instance, and so, you will have to make your money go further.

Many retirees move abroad for retirement, this can be an excellent way to make your pension go further, especially if you can move to a country where living costs are cheaper. Keep in mind that you will likely want to come home regularly to see your family though – the costs can all add up.

Summary

The key to pension planning is exactly that: Planning. Think carefully about what sort of retirement you want to have will go a long way to helping you achieve it.