Scroll through to find out more about Gary and his plan's for retirement. With retirement on the horizon you'll see what his current contributions will mean for him when he does reach retirement and if he's on track to reach the suggested level of savings he might need. The following is based on a number of assumptions including future fund performance, salary growth and future inflation. To the extent that future market conditions do not match those assumptions, the position will be different in practice.
What does this mean for Gary?
Based on his circumstances, even assuming a full state pension, Gary is not on track to receive the target level of income of £14,000 (70% of £20,000 salary) that he may require. Gary therefore needs to take action now and the sooner he makes changes the more likely it is he can have a comfortable retirement.
What can Gary do?
Gary should check any other sources of retirement savings he has and take account of these when considering the target level of retirement income. If there still looks to be a shortfall, Gary could consider increasing his contributions or delaying his retirement. To illustrate this, if Gary were to increase his contributions by just 1% (from 3% to 4% p.a.) his fund value could increase to £96,100 at his expected retirement date. This would give his annual projected retirement income of £4,800 per year, around an 11% increase for a 1% increase in contributions.
Important Note
These figures are intended for illustration only and the level of income you need will vary depending on your circumstances. You should take independent financial advice if you are unsure. Most people will qualify for a state pension in addition to any workplace or personal pension savings. The full state pension is currently worth around £11,502 per year. More information on the state pension can be found at www.gov.uk/check-state-pension