Pension Saving Targets by Age

D

DublinHead54

Registered User
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Hi,

Has anybody come across a calculator that outlines how much pension savings you should have by age (30,35,40 etc) to achieve a desire income? This would have to account for inflation and make some basic returns assumptions.
 
Irish Life do one.
I always tell people its 2M is the goal to fund.
After that you can relax.
My wealth manager is RBC, and they see such pension fund amounts on a daily basis.
 
fistophobia said:
Private sector, company scheme.
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I meant, in what capacity are you giving that advice?
fistophobia said:
Basis... you need more than you think.
+10% on everything.
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Yes, but suggesting that €2M is a useful or even achievable target in general seems crazy to me. Obviously any individual's pension amount is going to depend on their income throughout their working life and many will never come close to accumulating a fund that size.

Also, even if RBC is dealing with such pension pots on a daily basis as you claim, I suspect that a fund that size would be the exception rather than the rule in general.
 
When you consider the average wage and an average house price of 300000k, over a 40 year career, one would need to accumulate 57k a year. With all the compound interests and tax advantage in the world, that is probably more the exception than the rule. I think I read somewhere that the average pot was 90k, not that it is enough.
I find the 2M figure quite unhelpful. As much as everyone needs to prepare their future, it is totally unrealistic for most. I just think it can discourage people to even trying.
 
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LDFerguson said:

Pension Calculator - pensionsauthority

www.pensionsauthority.ie www.pensionsauthority.ie
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I've used this but don't think it is great which is just my personal opinion in terms of what I am looking for.

Example..... I want an income of 40k in retirement (self funded ~28k net of state pension). That requires a pension of x Eur e.g. 1,000,000. I want to then create a table that shows what my pot needs to be each year per the below.

This would help when doing financial health checks etc.

AgePot
200
2550,000
3075,000
35150,000
 
azerty said:
As much as everyone needs to prepare their future, it is totally unrealistic for most. I just think it can discourage people to even trying.
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Exactly, the reason most people just switch off when talking about pensions and feel there is no point in even trying. The numbers bandied about are silly at times and make people feel that pensions aren't for them, and only for the wealthy.

With regard pensions, everything and anything helps, no matter how small - almost impossible to get that across to people.
 
DublinHead54 said:
I've used this but don't think it is great which is just my personal opinion in terms of what I am looking for.

Example..... I want an income of 40k in retirement (self funded ~28k net of state pension). That requires a pension of x Eur e.g. 1,000,000. I want to then create a table that shows what my pot needs to be each year per the below.

This would help when doing financial health checks etc.

AgePot
200
2550,000
3075,000
35150,000
Click to expand...
But why bother with that?
As mentioned above, any contribution to a pension is better than none.
And once you own your own home and don't have any expensive debts the next rule of thumb is to aim to maximise your pension contributions up to your age related tax relief limit if possible.
Obviously it's also assumed that your pension is invested appropriately - most likely mostly or all equities (arguably even approaching or in retirement/ARF - but some will baulk at and disagree with that :) ).
 
ClubMan said:
But why bother with that?
As mentioned above, any contribution to a pension is better than none.
And once you own your own home and don't have any expensive debts the next rule of thumb is to aim to maximise your pension contributions up to your age related tax relief limit if possible.
Obviously it's also assumed that your pension is invested appropriately - most likely mostly or all equities (arguably even approaching or in retirement/ARF - but some will baulk at and disagree with that :) ).
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To allow for better planning, which might just be overkill on my part.

I've saved into a pension since I started working at 20, 15 years later I've amassed a pot of 150k or so, but when I use a pension calculator it looks like I have not been saving enough.

I am at the point in my life where I have some excess cash to pay off mortgage or invest in AVCs and it is looking like investing in pension over Mortgage is more beneficial.

I am trying to ascertain a rough guide of targets to bridge the gap between now and retirement age.
 
I like your mindset here @DublinHead54

Id be keen to see something like this i e pot at age to achieve certain fund at certain retire age.

So if i want to retire at 50 with a pot if €1m, how much do i need in pot at age 40? Its all hypothetical of course and subject to assumtions but would serve as a handy guide.
 
Any such calculator is going to have to make a number of assumptions which will have a large impact on their final position. The Pensions Authority one linked above assumes high fees and low returns, which don't make for very reassuring final numbers.

There is a post here with a calculator I threw together in Excel. Again, it has some very rough assumptions, but at least you can edit them yourself based on your own circumstances and expected returns.
 
if you had a pension pot of 1m at age 50, retired, and wanted 40k annual income would that be sustainable? i.e would your pot survive until, say 90 yrs old? given assumed growth of 4% per annum.
 
jim said:
if you had a pension pot of 1m at age 50, retired, and wanted 40k annual income would that be sustainable? i.e would your pot survive until, say 90 yrs old? given assumed growth of 4% per annum.
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It'd be very risky. The 4% rule comes from a study which showed that when backtested between 1926 and 1976, someone's retirement pot never ran out over a 33 year period. Someone retiring at 50 with today's life expectancy and tomorrow's market returns may not be so lucky. There's any number of articles online about why a 2 or 3% withdrawal rate may be more appropriate.
 
jim said:
if you had a pension pot of 1m at age 50, retired, and wanted 40k annual income would that be sustainable? i.e would your pot survive until, say 90 yrs old? given assumed growth of 4% per annum.
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No because the chances of you obtaining a growth rate of 4% are extremely slip. I spent over three decades in Swiss banking and I was very involved in performance attribution and measurement... and from what I have seen most will not achieve those levels and many that think they do, do so because the fail to measure return correctly.
 
Jim2007 said:
fail to measure return Care to elaborate? Do you mean adjust return for inflation and for fees?

Would a pot of 1m with an assumed growth rate of 4% after fees and inflation survive 40 years?emphasis on assumed.
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