Are Pension Saving Targets Unrealistic?

A savings target of twice your income by the age of 35 is achievable for some people but unrealistic for many others

John Rekenthaler 31 May, 2018 | 2:19PM

UK commuters

A Fidelity chart suggesting that people should have hold twice their annual salaries in retirement savings by age 35 set Twitter alight this month. Many younger people were incredulous: is such a thing even feasible? It is: savers must put aside 15% of their pre-tax salary every year and with some friendly market conditions, no miracles need occur.

When calculating required contribution rates for future investment sums, the key item is the rate of return. Over long periods of time, even modest differences in return assumptions will create large disagreements. However, the effect is modest for this exercise, because the time horizon is only 10 years.

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John Rekenthaler

John Rekenthaler  John Rekenthaler is vice president of research for Morningstar.

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