How do I know if I am saving enough for the future? Recently a new potential client asked me whether saving 20 percent of their income was sufficient. Wow, that’s not a question that I get asked every day, if at all ever. Nevertheless, it is an important question, that we should all be thinking about, unless we are planning on working until we die. I am not sure that there are many of us who want to do that if we are honest. At the very least, we’d like to slow down at some point.

The answer, of course, depends on our own individual situation, where we want to get to, what we are planning for, how long you will be savings need to last for and when we would actually like to stop working, just to mention a few questions that we need to try and answer.

The reality is that no matter how much we are saving now, we probably should be saving more. The problem is that spending money today is generally for more fun that thinking about spending money in the future. All savings is in reality, is deferred spending or the deferred ability to spend. If we save more and we can’t spend it, we can be more generous later on. I’ve never actually come across anyone that was unhappy that they have too much savings.

So, how do you know if you are saving enough each month?

Most of us will be saving/investing a percentage or an amount of our regular income into some type of retirement plan or strategy. The simple truth, is that if it’s not a little painful to start with at least, you are probably not saving enough. If it is comfortable, then you are probably not saving enough.

There are three simple questions to consider when working out whether you are saving enough.


  1. How much do I need when I retire?
  2. When do I want to retire?
  3. Can I afford not to save for the future?

Assuming that you will be mortgage and debt free in retirement, you probably don’t need as much income as you are spending today. Once you know what your annual income need is, you can quickly work out what total amount of savings you need to live comfortably in retirement, by multiplying that figure by 25.

So, the question we all need to answer, is this. “Will the amount I am currently saving each month, get me to the amount I need to retire?” For most of us, we are probably not doing enough. The amount is different for all of us and 20% may be about right for most people. Some may be closer to their target and others may be a bit behind, but 20% is a pretty good starting point.

Action call

Are your retirement plans on track? Do you know what your number is?

Now may be the time to re-evaluate where you are on your journey to retirement. Planning for your retirement may just be what you need to put on your to do list for the coming year ahead.

If you would like to talk to about financial planning, please get in touch for a no-obligation meeting. Go to our website and contact us via our “Get in touch” form on our home page or Contact Martin Dodd on 01902 742221.

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It is advisable to take advice from a professional financial adviser when making major financial planning decisions.

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This article has been prepared in good faith and based on Midlands Investment Agency’s understanding of the law and interpretation thereof at the time of creation. The contents should not be regarded as specific advice and we always recommend that specific advice is sort from a qualified professional. No responsibility can be accepted by Martin Dodd or Midlands Investment Agency Ltd., for any loss that may occur by a person acting or refraining from acting on the basis of this article.

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