Date: Sun, 17 Jun 2007 20:53:41 +0100
From: GSV Three Minds in a Can 
Newsgroups: uk.finance
Subject: Re: Pensions - I know nothing
Bytes: 2888

Bitstring , from the 
wonderful person Tyno Gendo  said
>Hi all,
>
>Firstly, I am completely dumb when it comes to most finances so excuse 
>my complete lack of knowledge.
>
>I have a pension fund in which I have about 15,000pounds currently and
>I'm 33.  I understand you buy an annuity at the end of your pension 
>fund term, but I'm wanting to know, what's the average sort of funds 
>you should aim to have to live comfortably at retirement???
>
>I obviously have a long time to save yet (hopefully) but at the moment 
>I'm on a low income so can't put anything into my pension.
>
>What exactly _is_ a normal average 'comfortable' retiring fund size?
>
>Maybe look to bring in at least 18,000per annum in today's world.

Ah, but for how long? If you start collecting 18k at 65, and plan to die 
at 85, that's about 360k (20*18). Ok, there is some growth, but you 
really need to strip out inflation,  since if 18k is enough at 65, it 
sure won't be 20 years later. =Safe= growth over inflation is currently 
only about 2%, so to a  rough first approximation you can almost ignore 
it.

If medical technology should improve radically, such that you never die, 
you'd need to generate the 18k by that 2% 'over inflation' return on 
your pot (since you could never spend the capital) - you'd need £900k to 
do that. Large scary numbers, yes!?

I continue to be amazed that some folks (not you) think they can put in 
5% of their salary each year for 40 years, and then draw 66% of their 
salary for 20 or 30 years .. like pensions are a magic cornucopia or 
something.

Oh, and that's 18k before tax. Rather less after Gorgon has got his 
sticky mitts on it. You should probably be aiming for 24k or more if you 
want some peace of mind.

-- 
GSV   Three Minds in a Can
8,963 Km walked. 1,746Km PROWs surveyed. 31.7% complete.