Spence & Partners latest blog for Pension Funds Online –
A recent study undertaken by the National Employment Savings Trust (NEST) states that the “comfort” pension level is at least £15,000 p.a. (apparently this figure stands however many people there are in a household) but there is no happiness benefit above £40,000 p.a.
The report went on to say that it found that wellbeing jumps significantly once the income moves into the £15,000 to £20,000p.a.range.
These figures in turn will help to give people a more accurate idea of how much they need to save. A 22 year old earning £20,600 would only need to make the minimum pension contribution to get close to the £15,000 figure taking into account the state pension they would receive (expected to be at least £7500p.a. from April 2016). Unsurprisingly, the older a person is the more they would have to save.
However, enough of statistics for a moment, and in any case as is widely quoted there are lies, damned lies and statistics! I for one am always a little sceptical about this kind of information and for me, it is far to generalised to be that believable.
Having said that, any study that is going to promote savings must be applauded. It is vitally important that individuals start saving at the earliest opportunity and I am a strong advocate of compulsory saving from the day you start work. As the old saying goes ‘what you have never had you, never miss’ and if 5% was put straight into a savings plan then you are on the straight and narrow from a young age.
Surely that is a better approach than trying to work out what you could stop doing in order to save some money. 10 years ago it was always the money you could save if you stopped smoking; in the recent study this has now changed to a takeaway which is perhaps a sign of the times!
There you have it then, no takeaways and you will have a pot of money in your pension scheme. Whatever method is chosen, people just need to save more at a younger age and form that habit which will serve everyone well when they get old. An income can then be had which will be of an individuals choosing and will hopefully be enough to make you happy.
Now, what did I do with all those takeaway menus?……..