What pension payments will I need to make to retire comfortably?
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What pension payments will I need to make to retire comfortably?

The monthly pension payments you will need to make to afford yourself a comfortable retirement will primarily depend on how far you are from retirement, the lifestyle in retirement that will make you comfortable, and the performance of the funds you invest in.

The earlier you start the lower the pension payments you will need to make to gain a decent standard of living in retirement. The table below is often used as a general guide to the contributions, as a % of your salary, that you should be making depending on the age that start contributing regularly:

Age 25: 10-15%
Age 30: 12-17%
Age 35: 15-20%
Age 40: 17-24%
Age 45: 23-30%
Age 50: 32-45%
Age 55: 50-70%

A comfortable retirement means very different things to different people though. Retirement should not mean stagnation and boredom. It will probably be the first time since you were a teenager, or ever, that you will have the time to do the things you want to do, or go where you want to go. You may want to retire to the sun, sail round the world, holiday frequently, visit family around the world, or even just go to the pub more often. All of these things cost money. So if you dont want to have a frustrated retirement you need to work out how much money you will need, or these reasonable dreams will remain day dreams when you retire.

The performance of your accumulating pension payments will make a large difference to the final value of your pension pot. Your pension payments should a be growing year on year to create a compound interest effect. This is the main factor in your retirement that you will probably not control. You should tap into the expertise from a financial adviser to help make sure you get your payments going into the right investments.

It is worth noting that if you have other assets and investments outside of your pension, it may be possible to have reduced pension payments. It is good to have your investments spread between different asset classes and investment vehicles as it mitigates against the risks inherent in having all your money invested in one geographical area or limited sectors.