Will you outlive your savings?

Retirement planning has never been more important than in the world we currently live. As healthcare has improved over the decades, so too has our life expectancy. This has led to pressure on government pension schemes and the effective abolition of final salary pensions.

50 years ago, a worker could be expected to live for a decade or so in retirement before passing away. Now we see this number increase two, three, four-fold or more. Indeed, it may not be uncommon in the future for a person to live for as long in retirement as they have worked for in their entire lives.

The cost for so many years in retirement is significant and, for many, the days of their government and company pensions covering their needs is long gone. Additional funding is normally required and can come in the form of savings, investments, property etc.Whether you are close to retirement or have time on your side, MWC Group can help you calculate what is required and help you make a plan to get there.

Beware the cost of delay

Unfortunately, when calculating how much wealth we need to build for later life, it may sometimes seem like an impossible task. However challenging, given good savings discipline and plenty time to invest, such heady goals can be met.

It is sometimes difficult to understand the power of compound interest until it is too late.

There is an old saying which goes “it’s the time in the market, not the timing of the market which counts”. This is the bedrock of investing. There will always be issues of concern when it comes to financial markets. However, given enough time, markets generally head higher and provide excellent investment returns over time.

The problem for many is that they leave it too late. What exactly would happen if you delayed saving for retirement by 5, 10 or 15 years? Assuming 5% per annum in growth (higher growth would provide even more extreme results).

Assumed pension pot target: EUR 1,000,000

Years to retirementMonthly saving requiredTotal savedAmount saved% by investing early
35 yearsEUR 879 per monthEUR 369,180EUR 0
30 yearsEUR 1,195 per monthEUR 430,050EUR 60,870+14%
25 yearsEUR 1,663 per monthEUR 498,850EUR 129,670+26%
20 yearsEUR 2,400 per monthEUR 575,880EUR 206,700+36%
Monthly saving requiredYears to retirementTotal savedAmount saved% by investing early
EUR 879 per month35 yearsEUR 369,180EUR 0
EUR 1,195 per month30 yearsEUR 430,050EUR 60,8700.14
EUR 1,663 per month25 yearsEUR 498,850EUR 129,6700.26
EUR 2,400 per month20 yearsEUR 575,880EUR 206,7000.36