Important information: investment values and income from investments can go down as well as up, so you may get back less than you invest.
Am I putting enough away for my pension? This is the one thing that everyone who plans for retirement wants to know, whatever stage in their career they have reached.
We answered the question in an article entitled How much should you have saved by 30, 40, 50 & 60? but, on the principle that a picture paints a thousand words, we think it would help savers to see the conclusions presented in graphical form.
And the graph will help you if you are, say, 35, 45 or 55 – midway between the figures we published for those who had reached ‘milestone’ birthdays.
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Those figures were as follows:
At age 30: aim to have saved £30,000 (1x a salary of £30,000)
At age 40: aim to have saved £100,000 (2x a salary of £50,000)
At age 50: aim to have saved £240,000 (4x a salary of £60,000)
At age 60: aim to have saved £360,000 (6x a salary of £60,000)
The graph below includes those four ages but connects them together in a smooth line that will show you, if you hover over it with your mouse, the savings target for any age up to 65.
How we arrived at these savings targets
Details of the methodology behind the four ‘milestone’ savings targets are set out in a Fidelity paper entitled Retirement Savings Guidelines. But in summary, it calculated the savings needed at different ages to put people on course for a retirement income sufficient, when added to the State Pension, to maintain their pre-retirement standard of living (that retirement income incidentally is lower than their final in-work salary because of factors such as tax and changing spending needs). Savings were assumed to grow in line with historical investment returns. The savings targets include money held outside pensions, such as in ISAs.
That paper produced the four ‘milestone’ targets for multiples of salary, to which we added the assumptions about salaries at those ages outlined above (£30,000 at age 30, etc). We then used ChatGPT to calculate a smooth curve passing through all four age points, checked that the original figures were reproduced correctly and rounded the intervening values to the nearest £500. All figures on the graph, whether from those four data points or not, are of course indicative and approximate, as no system can capture the variety of needs of actual savers, and there are in any case the unknowns of investment returns, inflation and longevity.
Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. Eligibility to invest in an ISA or SIPP and tax treatment depends on individual circumstances and all tax rules may change in the future. Withdrawals from a pension product will not be possible until you reach age 55 (57 from 2028). This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.
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