To analyse what the average person should do to achieve their retirement goals, Mr Norton used the example of a 25-year-old earning £25,000 each year, who aims to retire at age 68, when he says their salary could be more like £60,000 in today’s terms.
Using his calculations, this person would need to retain £45,000 – around 75 percent of that final pre-retirement income – to maintain the same standard of living.
This would mean their pension would need to be worth around £507,000 when they retire.
So, how much would they need to put away in a pension?
“Let’s assume that their contributions (including their employer’s) total 12.5 percent of their salary or around £260 a month and that they build steadily in line with their projected income to about £625 per month,” he began.
“In addition to the mandatory eight percent that is automatically paid into their workplace scheme, this person diverts a further 4.5 percent of their salary into a pension scheme.