Obviously there’s a separate issue in the country where we have an income level where it’s not possible for someone to cover their basic living costs. Let alone a pension. That’s not right and needs fixing.
However 500k is reasonably achievable without having a massive salary or generous pension scheme.
By law we currently have to contribute a minimum total of 8% to our workplace pension. 5% from the employee and 3% from the employer. Someone on the UK average salary of £34k would see £227 go into their pot each month.
That’s made up of:
£142 from the employee
(of which £28 is in the form of tax relief)
£85 from the employer.
If you take a contribution of £227 a month for 40 years and apply average growth of 6% someone would be sat on a pot of about £405k
That’s for the required minimum contribution. The employee has put in just shy of £55k of their own cash. If you contribute another £40 a month you’d be knocking on the door of £500k.
Change it to a 30 year plan and you’d have to save roughly double the monthly total.
Aswell as the issue of people who are at an income level way below what is needed to live is another issue whereby people who could quite easily provide themselves with a reasonable pot in retirement simply don’t, opt out, leave it too late etc.
There a plenty of reasons for this but think a big one is the amount of misunderstanding surrounding pensions in this country.
My workings are slightly fag packet just incase anyone whips out an abacus and starts pulling them to bits