Pensions are considered to be a confusing topic by some. Tonight, Martin Lewis, who is the founder of Money Saving Expert, was on hand to share some insight on the matter.
This included giving a tip on how to work out how much people should be paying into their pension for their retirement.
Martin explained he is often asked how much a person should save towards their old age.
“So let me give you the rough rule of thumb,” he said.
The financial journalist and campaigner used the ages of three famous faces – Dina Asher-Smith, 25, Rochelle Humes, 31, and Ben Shephard, 46 – to illustrate his suggestion.
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Using them as examples, and stating he didn’t know whether they had their own pensions or not, Martin said there is a rough calculation a person can do.
“The rule of thumb is to get roughly two thirds of your final salary each year in retirement, you’d need to take the age you start contributing to your pension,” he said.
“Halve it, and put that percentage of your salary in for the rest of your life.”
Putting the calculation into practice, Angellica crunched the numbers for a person beginning pension contributions at the age of 25.
The presenter pointed out half of 25 is 12.5, to which Martin replied: “So 12 and a half percent for the rest of her life.”
For someone who is 31-years-old and beginning to start pension contributions now, the figure they would need to pay in under this guide would be 16.5 percent for the rest of their life.
For someone aged 46, it would be 23 percent for the rest of their life, the Money Saving Expert suggested.
“I know what you’re thinking. You’re doing that equation for yourself and you’re saying there is absolutely no way I could afford that. And you’re right. Very few people do.
“But the real message I want you to get out of that is the earlier you start contributing to your pension, the better.
“The less of your salary you have to put in.
“If you know a 20/21-year-old, tell them, ‘Get money in your pension now.'”
“Even £10 or £20 a month – because it’s got time to compound and that will make you a much better retirement.”
Some may want to work out how much the lifestyle they want in retirement will cost.
The Pensions and Lifetime Savings Association (PLSA) launched its UK Retirement Living Standards in 2019.
They are pitched at three different levels – minimum, moderate and comfortable – and there are different amounts for both a single person or a couple.
The Martin Lewis Money Show Live airs Thursdays at 8.30pm on ITV.