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No retirement savings? Here’s what I’d do right now!

Paul Summers — Tue, 29 Sep 2020 06:42:41 +0000

With bills to pay, it’s remarkably easy to forget about saving for retirement. This becomes even easier when there’s a pandemic in town. Even in more normal times, a lot of people don’t begin setting some money aside until later in life. Some don’t save anything at all.

This is a big problem for anyone expecting a certain lifestyle in their golden years. After all, the new State Pension pays out just £175.30 per week, or £9115.60 per year.

The good news, however, is it’s never too late to begin. Here’s what to do.

How to get saving for retirement

The best way of saving for your retirement is via a pension. If you’re not currently enrolled in your employer’s scheme (many people will be, thanks to auto-enrollment), you need to get involved as soon as possible. The great thing about a workplace pension is that your employer also makes contributions, helping your pot to grow faster.

Now, doing the above will get you started. But it still might not be enough to give you the life that you want. Moreover, those who are self-employed won’t be able to take advantage, meaning they’ll definitely need to take the bull by the horns (albeit perhaps after consulting a financial advisor).

Get a SIPP

Opening a Self-Invested Personal Pension (SIPP) is something everyone with one eye on retirement should consider. Unlike its workplace equivalent, this account puts you in full control of your savings. This, of course, isn’t the only benefit.

Like the Stocks and Shares ISA, the SIPP allows you to avoid paying any capital gains tax on the profits you make from your investments. Dividends aren’t taxed either. The only snag is that SIPP holders will need to pay tax when they start withdrawing their money.

But there’s more. Any contributions made to a SIPP qualify for tax relief at your normal rate. So, a basic rate taxpayer (20%) depositing £200 into their account, for example, will receive an extra £50 to invest from the government. This is patently a good thing since the more you have to invest, the more you can take advantage of compound growth.

Another advantage of the SIPP is that you can contribute up to £40,000 per year — the maximum ISA contribution. This being the case, a SIPP could theoretically get you to your financial goals a little sooner. That’s handy for someone building a retirement nest egg from scratch.

What next?

Having opened a SIPP, the account holder needs to decide what to fill it with. This will depend on a number of factors, particularly their age and risk tolerance.

Younger SIPP holders may want to gravitate toward riskier investments like growth and/or small-cap stocks. After all, they have many years to go before needing to access their funds and can endure some volatility. Older investors, while still having exposure to equities through funds, may want to introduce traditionally less risky assets, like bonds, into their portfolios.

Regardless of your strategy, the numbers can be truly impressive. Someone who’s able to put £200 (or £250 after tax relief) to work every month for, say, 30 years will reap massive rewards. Ignoring costs, a not-unreasonable annual return of 8% would give £340,000!

Don’t delay — get a savings plan together. In a few years, or decades, you’ll be glad you did.

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Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

How I’m planning to double my State Pension with this simple trick

Rupert Hargreaves — Sat, 31 Aug 2019 07:00:27 +0000

According to a survey from consumer magazine Which? most retirees believe they cannot survive on the State Pension alone.

At the time of writing, the current full new State Pension is £168.60 a weekm or £8,767.20 a year. That’s around half of what most future retirees believe they will need to live on in retirement.

The good news is, it’s relatively easy to boost your pension pot. All you need to do is stick to a defined saving and investing plan.

Building the pot

Unfortunately, it isn’t possible to double your State Pension overnight without any work. I estimate a saver will need to put away around £220,000 to have enough to double their State Pension income in retirement.

The best strategy to reach this target is to invest. Over the past 10 years, the FTSE 250 has produced an average annual return for investors around 10%, including dividends. At this rate, I calculate that it would take a saver 30 years, saving £100 a month, to hit that £220,000 target.

If you don’t have three decades to save, you can still hit this target. You will just have to put away more money every month. If you only have 20 years to go until retirement, saving £300 a month will get you to the £220,000 pension target, assuming an average annual return of 10%. If you only have 10 years to go, I calculate a deposit of £1,100 a month will be required at this rate of return.

These figures are just back-of-the-envelope calculations and exclude costs and charges. They also exclude taxes and tax benefits, which are available if you invest through a SIPP.

Tax benefits

Within a SIPP investment, you’re entitled to tax relief up to £40,000 a year at your marginal tax rate. So, if a basic rate taxpayer wants to add £100 to their pension, all they need to do is deposit £80 and the government will add another £20 on top.

This means if you have 30 years to go until you want to retire, you only need to put away £80 a month, excluding the tax benefit, to hit the £220,000 savings target. If you have 20 years to go, the £300 a month saving required will be just £240 a month, and £880 for the 10-year saver.

The bottom line

So, that’s the simple trick I’m using to double my State Pension. Investing in a SIPP is a great way to accelerate the growth of your pension pot.

The 20% tax benefit means you’re immediately up on your initial investment and don’t need to put away as much as you would if this bonus didn’t exist. On top of this, the stock market is a great way to rapidly grow your wealth over the long term without having to lift a finger.

With high-single and double-digit annual returns offer from some of the biggest companies in the country, in my opinion, investing in the market is a no-brainer if you want to improve your income in retirement.

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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

How I’d avoid a rising State Pension age

Rupert Hargreaves — Sun, 25 Aug 2019 09:15:00 +0000

Last week the Centre for Social Justice put out a report suggesting that the State Pension age should rise to 70 by 2028 and 75 by 2030.

The idea is that, by increasing the State Pension age, more people will have to work for longer, which would boost the economy.

This report has attracted a considerable amount of criticism, and so far, there’s been no further comment from the government on its findings.

However, the age at which you can get your hands on the State Pension has already been slowly rising over the past few years.

Rising age

Currently, the State Pension age is set to increase to 67 for men and women by 2028, and to 68 between 2044 and 2046. There are plans in the pipeline for it to rise even faster, hitting 68 between 2037 and 2039.

While this may not be palatable to some people, the fact of the matter is we are living longer, which means more and more people are eligible for the State Pension for longer. Sooner or later, something will have to give, and it is highly likely the age at which you are entitled to receive a State Pension will have to increase.

With this being the case, I have started to prepare my finances for a rising State Pension age, and I think you should do the same.

A private alternative

The best method, in my opinion, is to set up your own private pension. The good news is that over the past few decades, the government has introduced a range of tax-efficient products to help you do just that and make it easy for you to save for retirement.

By far the best product to use is the SIPP. As well as the fact that any profits or losses on investments made in a SIPP wrapper are tax-free, investors also receive tax benefits for contributing. Any money you provide will be topped up by 20% by the taxman and any higher or additional rate taxpayers can claim back a further 20% or 25% respectively.

Investing your money is the best way to make sure that you have plenty of funds available when you decide to retire.

The best investments for your portfolio will depend on when you want to retire. If you have at least 10 years to go, then equities are the best option.

For example, a low-cost FTSE 100 tracker fund could give you an average annual return of 8%, based on the index’s performance over the past decade. Other investments offer higher levels of return if you are willing to take on more risk.

Risk vs reward

Small-caps, for example, could give returns of 12% per annum, although they are more volatile and may not be suitable for every investor.

However, if you do think you can stomach the volatility of small-caps, they could help transform your finances. I calculate over 20 years, assuming an average annual rate of return of 12%, a deposit of just £500 a month would yield a total pension pot of £499,573.

If you include tax relief on this £500 monthly contribution, the total gain could be closer to £600,000. This substantial pension pot would help you avoid the rising State Pension age entirely.

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Why I think you need £250,000+ to live comfortably on the State Pension

Rupert Hargreaves — Sun, 11 Aug 2019 07:22:30 +0000

If you think the State Pension will be enough to allow you to live comfortably in retirement, you could be in for a big shock.

A recent study of several thousand potential pensioners showed that most people do not understand how much money they are entitled to in retirement.

Furthermore, most respondents indicated that the level of the State Pension is not enough to sustain their current lifestyle in retirement.

Not enough

Most retirees are entitled to the new State Pension of £168.60 of a week or £8,767.20 a year. The actual amount you will receive will vary due to things like your National Insurance contribution record and whether or not you are entitled to other allowances and reliefs. Nonetheless, the general consensus among retirees seems to be that this meagre income is not enough to live on comfortably in retirement.

Indeed, according to some surveys, most retirees and future retirees believe they will need a pension of least £20,000 to £25,000 a year to be comfortable. That’s substantially more than the level of income offered by the state.

A £250,000 pension pot

After taking all of the above into account, I think you need pension savings of at least £250,000 or more to be able to live comfortably on the State Pension. According to my calculations, to generate an income of £20,000 a year, you will need to have just over £200,000 saved by the time you come to retire.

Assuming a retirement age of 68 and an average life expectancy of nearly 90, this pension pot should enough to provide you with an annual income of around £11,233, which, when topped up with the yearly State Pension, will give you an annual income of £20,000.

To achieve an annual income of £25,000, I calculate a saver will need to have to put away £298,000 by the time they come to retire. This pot will be enough to give an annual income of £16,233 from the private pension, topped up with £8,767 from the State Pension to provide an overall yearly income in retirement of £25,000.

Time to get saving

Reaching nearly £300,000 in pension savings might seem like a daunting prospect, but if you get started early, it is relatively straightforward to hit this target.

And the best way to make sure you reach the target is to invest your money. Indeed, if you don’t invest, you’re putting yourself at a severe disadvantage because stocks have generated returns around five times higher than cash over the past few decades.

Over the past decade, the FTSE 100 has generated an average annual return of around 8% per annum, that’s including dividends paid to investors. On this basis, if you invest your money in a low-cost FTSE 100 tracker fund, I calculate you will need to save roughly £747 a month (including management fees of 1% p.a.) for 20 years to hit the £300,000 savings target.

The sooner you start saving for this target, the better. Assuming an average annual return of 8% for three decades, you only need to put away £375 month if you want to achieve the £300,000 savings target.

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The State Pension forecast: what you need to know

Rupert Hargreaves — Sun, 04 Aug 2019 07:45:36 +0000

According to a recent survey, approximately 50% of future retirees are unsure of how pensions work, how much money they will receive in retirement, and how often. What’s more, nearly two-thirds of respondents said they didn’t know at what age they would be able to access their pension pot.

When asked if they thought the current full basic UK State Pension was enough to live off, almost 90% of respondents said they didn’t think so. Some 46% also said they didn’t think this amount would be enough to cover their monthly outgoings.

Fortunately, the State Pension is forecast to increase in the years ahead. But it’s only set to increase in line with the cost of living. The State Pension age is also going to increase over the next few decades. At the time of writing, that age is gradually increasing for men and women and will reach 67 by 2028.

Guaranteed growth

The State Pension increases every year under the triple-lock guarantee. This ensures it will rise every year by inflation, by 2.5% or average earnings, whichever is higher.

On that basis, it’s guaranteed to increase by at least 2.5% every year for the foreseeable future. At the beginning of April, the New State Pension increase by 2.6% to £168.60 for the 2019/20 tax year. The old Basic State Pension is £129.20 per week.

Based on these figures, according to my calculations, assuming the government doesn’t change the triple-lock in 10 years, the New State Pension will be £215.82 a week. By 2039, pensioners will be entitled to £276.27 a week, according to my numbers.

Start saving for the future

If you are one of the people who doesn’t think this level will be enough to cover your expenses in retirement, then now’s the time to take action. Your best option is to start saving yourself to prepare for the future. Luckily, there are plenty of different options available to savers today. Almost all of them have tax benefits.

My favourite is the Self Invested Personal Pension (SIPP). Not only are SIPP funds protected from capital gains and income tax, but the government also gives you a tax bonus for investing. For basic rate taxpayers, every £80 you contribute, the government will provide you with an extra £20, helping you kickstart your savings journey.

How much you need to contribute in total really depends on the quality of life you want in retirement. For an average annual income of £25,000 a year after retirement (excluding State Pension income) I calculate you will need to put away £625,000. That might seem like a lot, but I calculate a deposit a £360 a month (£450 including the government top-up for 30 years) invested in a low-cost FTSE 100 tracker (with an average annual return of 8%) would get you to this target.

If you’re happy taking on more risk, you could also buy a FTSE 250 tracker, or a basket of dividend stocks such as BP, Vodafone and BT.

So, if you’re worried about what the future holds for your State Pension, the best way to prevent any negative surprises is to start saving and investing your money today.

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The simple trick I’m using to beat the State Pension

Rupert Hargreaves — Sat, 27 Jul 2019 08:44:34 +0000

The full new State Pension is £168.60 per week or £8,767.20 a year, a level that is designed to give us a basic income in retirement. However, according to a range of surveys, most retirees believe that this token amount isn’t enough to survive on in old age.

And if you are worried about your pension, the best thing you can do today is set up your own pension fund. If you have your own savings set aside, you can dictate your future. You do not have to rely on the state to give you an income when you decide to exit the workforce.

And there’s a straightforward trick that I’m using today to make sure I have enough money to retire comfortably when the time comes.

Tax benefits

My simple trick has two parts. The first is opening a Self Invested Personal Pension (SIPP).

SIPPs are, in my opinion, the best way to save for the future. Not only are any capital gains or income received on assets inside a SIPP tax-free, but you also get tax benefits when you deposit money.

Investors will receive income tax relief base on their marginal tax rate. So, any money invested will be topped up by 20% by the taxman for basic rate taxpayers, and higher or additional-rate taxpayers can claim back a further 20% or 25% respectively. Every UK resident under 75 can add money to a pension and get tax relief, even non-earners, although tax relief is limited to 100% of your annual earnings. You can pay in a maximum of £40,000 annually into your SIPP.

To make a gross pension contribution of £40,000, you only need to pay £32,000. On top of this, the government will add 20% basic tax relief of £8,000. If you’re a higher rate taxpayer, you could be entitled to extra tax relief as well (claimed back through self-assessment).

So, contributing money to my SIPP is the first stage of my State Pension-beating trick. The next step is to invest the money I contribute.

Time to start investing

I currently use a straightforward investment strategy for my pension. Every month I invest the same amount in a low-cost index tracker fund. Research shows that UK stocks have returned around 5% a year after inflation for the past 100 years, which is a perfectly acceptable return for long-term investors.

The most important thing you can do when saving for the future is to make sure you have a regular savings plan in place. Picking stocks is not as important as making sure you are contributing every month, and that’s the primary aim of my current strategy. I know that the index will produce a steady return over the long term.

All I need to worry about is making sure I’m putting enough money away every month to meet my retirement target. I’m currently saving around £1,000 a month, which after the government contribution, means I’m adding £15,000 to my SIPP every year. Assuming my savings grow at an inflation-adjusted rate of 5% per annum for the next three decades, I estimate I will be able to retire with a pension pot of more than £1m.

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Worried about your State Pension retirement income? 3 things I’d do right away

Kevin Godbold — Mon, 22 Jul 2019 07:24:24 +0000

With the new State Pension currently delivering a maximum of £168.60 per week, it’s a reasonable stance to be worried about your income in retirement if that’s all you will have.

The monthly figure works out at just £730.60 and it’s only around £8,767 each year. Peanuts, right? But it could be even worse because the actual amount you get depends on your National Insurance record.

Through no fault of your own, you could easily have an incomplete record of National Insurance payments. It only takes a few years out of the workforce, or a period of part-time working to tarnish your National Insurance record, which could lower the figure you eventually get in State Pension payments.

Admittedly, you may be able to get National Insurance credits in some years if you can’t pay National Insurance. For example, when you’re claiming benefits because you’re ill or unemployed. Such credits can help to fill gaps in your National Insurance record, but I don’t believe the government shouts from the rooftops about the availability of these credits, and some folks could miss out.

If you do retire on a reduced State Pension, you may qualify for Pension Credits designed to bring your pension up to a level high enough to keep you out of abject poverty. But the rules are complicated, and who knows for how long such benefits will endure given the dire shortfalls in the government’s coffers?

Don’t leave your State Pension outcome to chance. Here are three things I’d do right away.

Check your eligibility

It’s easier than ever to find out where you stand with the State Pension right now. The government has done a good job of putting all the information online and you can get a State Pension estimate and a breakdown of your National Insurance record by clicking on this link.

Work out how much you need to save

I’m assuming that you’re already on the same page as me in realising that even if you get the full State Pension it won’t be enough to give you a happy and fulfilling financial retirement.

The only way out of the pension poverty trap is to build up an additional pot of money you can use to supplement your State Pension. But how much should you be saving? One rule of thumb I like says we should halve the age that we are when we begin saving for retirement and save at least that percentage of our pre-tax salaries every year until we retire.

At age 30, for example, we should, therefore, save 15% of our pre-tax salaries every year. So, if you are on, say £20,000 a year, save £3,000, which works out at £250 a month.

Find a decent investment vehicle

It’s no good squirrelling your monthly savings away in a low-interest cash savings account. You can get better returns by investing in shares or share-backed investments. And it’s important to pick an investment vehicle with tax benefits too, such as a Workplace Pension, Self-Invested Personal Pension or a Stocks and Shares Individual Savings Account (ISA).

Stay tuned to The Motley Fool for more information on the subject of investing for retirement.

The post Worried about your State Pension retirement income? 3 things I’d do right away appeared first on The Twelfth Magpie.

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Kevin Godbold has no position in any share mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Worried about your State Pension? Here are 3 moves I’d make today

Rupert Hargreaves — Sat, 22 Jun 2019 06:00:05 +0000

It is estimated that millions of people across the UK are worried about their pension prospects. If you are one of these people, now could be the time to take action, and with this in mind, today I’m going to outline the moves I would make to maximise my State Pension entitlement and secure my finances for the future.

1. Fill in the gaps

The new full State Pension is £168.60 per week, although the actual amount you will receive depends on your National Insurance record when you reach retirement.

According to the government’s literature, you need at least 10 qualifying years on your National Insurance record to get any new State Pension, with at least 35 qualifying years required if you do not have a National Insurance record before 6 April 2016.

If you do have any gaps in your National Insurance record, one of the best investments you can make is a voluntary contribution to fill in any missed years. It costs £780 to buy one year of contributions, considering the fact that this could translate into several thousand pounds worth of extra income in retirement, it is a terrific deal.

Anyone who has a gap in their National Insurance record from 2006/07 to 2015/16 has until April 5 2023 to fill those gaps to receive the new State Pension. Weighing up the cost versus the benefit of this, I think it is certainly worth checking out this option if you have any gaps in your contribution record.

2. Look for benefits

As well as filling in your National Insurance contribution record, there are several benefits you can claim when you reach State Pension age.

For example, Pension Credit can be claimed once you (or your partner) have reached Pension Credit age. This entitles claimants to a guaranteed minimum level of weekly income, as well as a number of other benefits, such as council tax relief, the possibility for cold weather payments (as well as the winter fuel allowance) and some claimants might be eligible for help with mortgage interest, ground rent and service charges. These benefits could potentially add up to several hundred pounds a a year of extra income.

Retirees who qualify for Pension Credit can also apply for Savings Credit, which is worth £15.35 a week for a couple over the State Pension age.

3. Start saving

One of the easiest things you can do to improve your level of income in retirement is to start saving now.

Over the years, the government has introduced a range of savings products and tax reliefs designed to make it easier for people to save for retirement, and today there are hundreds of products out there on the market.

One of the best products is the Self Invested Personal Pension or SIPP. For every £1 invested in a SIPP, the government will provide a top-up of 20% so, if you want to save £100, you only need to put away £80, and the government will add £20 on top.

Over the long-term, these savings can add up. According to my calculations, just £250 a month saved in a SIPP (£200 of personal contributions and a government top-up of £50) could grow to be worth as much as £103,000 over 20 years based on an annual interest rate of 5%.

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Warning: Research shows the State Pension isn’t enough to live off

Rupert Hargreaves — Sat, 01 Jun 2019 11:19:33 +0000

At the end of April, consumer magazine Which? published the results of a survey the group carried out in 2018 about the spending habits of its retired readers. The findings of the study contain some worrying information for future retirees.

The State Pension is not enough

The survey reported that the average monthly spend of the several thousand retired couples who took part was £2,200 a month, or around £26,000 a year. This total includes the “basic areas of expenditure” such as food, housing costs and bills as well as “some luxuries,” which provides for “European holidays” and eating out. Stripping out these luxuries, the basic costs alone amounted to £17,000 on average according to the survey.

The shocking fact is, the current basic State Pension comes nowhere near to meeting this figure. At the time of writing, the current full weekly State Pension is £168.60 (the actual rate you’re entitled to will vary depending on age, National Insurance Record and other factors) or a maximum of £8,767.20 a year for an individual.

In April 2018, the average rate of State Pension for a man qualifying after April 2016 was £151.84 and £143.85 for a woman giving a combined £15,375, which is £1,625 a year less than Which? readers think is an acceptable level of income to live off in retirement.

These numbers show clearly that the State Pension isn’t going to be enough for most retirees to survive in retirement. However, the good news is that it’s relatively easy to fill in this gap with your own savings.

Saving for the future

According to my calculations, to fill the gap between State Pension income and what is required to live comfortably, people will require savings of £43,000 by the time they decide to leave the workforce.

To arrive at this figure I’ve used the multiply by 25 rule which is a shortcut to figure out how much money you’ll need to save for your retirement. As the name of the rule suggests, you take your annual expenses figure (£1,700 in this case) and times by 25.

The sooner you start saving, the easier it will be to hit this target. For example, according to my calculations, a saver with 10 years to go until retirement, will need to put away £300 a month to build the required amount.

The best way to grow these funds is to invest your money, and you don’t even need to take much risk to achieve a comfortable level of retirement income. In the example above, I’ve factored in an average investment return of 5% per annum, which is around 2% below the annual rate of return the FTSE 100 has produced over the past decade.

If you have 20 years to go until you hit retirement age, then, according to my calculations, you only need to put away £110 a month to build the required amount, that is once again assuming an interest rate of 5% per annum. Savers with three decades to go until retirement age only need to put away £60 a month to build an adequate savings fund.

The bottom line

So there we have it. The survey shows that the State Pension is not enough for the average retiree to live on comfortably. However, by investing just a small amount every month, you can build a pension pot that will set you free from State Pension worries.

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How I plan to beat the State Pension with £50 per month

Rupert Hargreaves — Sun, 12 May 2019 07:30:55 +0000

The full new State Pension is £168.60 per week, or £8,767.20 a year. This alone isn’t enough for most retirees to live off. So I’m planning to beat the State Pension by putting aside my own funds. Today, I’m going to explain why I believe just £50 will be enough.

Tax benefits

£50 a month, or £600 a year, might not seem like a huge sum at first, but thanks to the power of compound interest, this manageable pension deposit will grow into a healthy retirement cushion over the long term.

The first part of my pension savings plan is to open a self-invested personal pension, or SIPP. The great thing about SIPPs is that for every £1 you deposit, the government will add an extra 20% for basic rate taxpayers. This means the government will add £150 a year to my £600 yearly deposit, so the total amount I am putting away is £750 a year.

The other great thing about SIPPs is that as well as the government pension top-up, they also have tax benefits. Any income, or capital gains, generated inside a SIPP wrapper doesn’t attract tax until the funds are withdrawn, making this the perfect vehicle to grow your wealth over time.

Saving for the future

The best way to make sure you have enough money to beat the State Pension when you decide to quit the workforce is to invest your savings. By investing your money, you can generate much higher returns over the long term than just sticking with cash.

The best cash savings account on the market today offers an interest rate of only 1.5%, which is below the rate of inflation, implying that if you leave your money in cash, it won’t actually increase in value. All your hard savings work will be for nothing.

By comparison, over the past few decades, the FTSE 250 has produced an average annual return for investors in the region of 9%. It’s straightforward to achieve this return yourself by investing in a low-cost FTSE 250 tracker fund.

Putting it all together

According to my calculations, if I invest £62.50 a month (my regular monthly contribution of £50 combined with the government top up) over 10 years with an average annual rate of return 9%, this small monthly contribution will grow to be worth £12,100.

Two decades of saving £62.50 a month will leave a pension pot of £41,200, according to my calculations and, saving and investing for 40 years will leave me with a pension pot of £281,000. That’s enough to give me an annual income of around £11,500 in retirement, according to my number crunching.

This might not seem like much first. But when combined with the State Pension which, for the sake of simplicity I’m assuming will remain at its current rate, should give me an average annual income in retirement of just over £20,000 per annum.

The bottom line

So that’s how I plan to beat the State Pension with just £50 a month. No matter how many years you have to go until retirement, these principles still apply.

You might have put away a bit more every month, but by using the power of compound interest, and making the most of the tax benefits available, it’s relatively straightforward to beat the State Pension and achieve a comfortable level of income in retirement.

The post How I plan to beat the State Pension with £50 per month appeared first on The Twelfth Magpie.

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Rupert Hargreaves owns no share mentioned. Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.