How Much to Save for a Retirement Salary of £50,000?

FUTURE PROOF: How much retirement income do you need to live comfortably? Young professionals are aiming for a pension pot that delivers a punchy £50,000 a year

Emma Wall 25 June, 2014 | 4:52PM

How much annual income do you require to live comfortably in retirement? £15,000? £25,000? What about £50,000?

According the latest BlackRock Global Investor Pulse Survey, £50,000 is exactly the retirement aim of young professionals today. And they are probably the first generation for whom this kind of pension income is in reach. Thanks to auto-enrolment, more 25-34 year olds will begin saving for retirement than ever before, previously being a financial priority of those much later in their working life. With life expectancy increasing, this generation will also need to work longer than ever before – extending the number of years they are exposed to high risk, high growth assets.

Recent pensions regulation will also help them secure their goal. Now that it is no longer compulsory to purchase an annuity at retirement, the way that pension funds are run is expected to adapt. Currently pension funds “lifestyle” their members, meaning that as they approach retirement, savers are switched out of high risk assets into the sort of holdings found within an annuity portfolio – such as gilts, in order to smooth the transition when then use their pension pot to buy an annuity.

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About Author

Emma Wall  is former Senior International Editor for Morningstar

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