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Are you eating your pension?

Research from Open Table showed that we’re spending over £4,000 on dining out each year. The average British person is eating out 1.5 times per week and spends up to £53 per meal. Those in their 30s are also likely to prioritise quality, and we all know that eating out at high quality restaurants doesn’t come cheap.

You probably know the cost of a meal at a good restaurant, but do you know how much you should be putting aside for your pension? And more to the point, are you doing it? That £80 we spend on eating out each week, without really thinking about it, is pretty much all you need to be putting aside for a comfortable retirement.

What you should be saving for your pension

The average London salary before tax is £34,473. That’s often cited as the benchmark for an annual income for retirement and would put £26,608.84 in your bank account each year.

Most of us assume we’ll have paid off our mortgage by retirement, so that equates to a few nice holidays a year and we would probably be able to eat out more than 1.5 times a week.

Assuming the investments for your pension achieve 5% per year on average (quite conservative) and you save for your pension for 15 years you might be pleasantly surprised by the amount you need to be saving…

If you start saving in your twenties you’d need to put aside £49.49 each week. If you started eating out 1.5 times every two weeks that’s easily achieved.

If you start in your thirties that would increase to £87.50 each week. Swap your meals out for a budget friendly dinner party and you’re well on your way to a comfortable retirement.

If you don’t think about your pension until your forties you’d need to put aside £165.59 each week. By your fifties things get a little harder as you’d need to invest £366.25 every week.

Budgeting for a better retirement

If you, like 42% of savers in the UK1, are worried about having enough for your retirement a simple budget can help you achieve your goals.

In order to retire on a pre-tax salary of £34,473 you’d need a pension pot of £420,962.30. That sounds like a huge amount of money, but it’s surprisingly simple to get there when you break it down by week.

Do you realise what you’re spending without really thinking about it? If we’re spending £80 a week on eating out, what do you think you’re spending when you add the trips to the pub, the morning coffees, the chocolate bars you don’t remember by the end of the day. There are really simple ways to cut back and save money and by simply budgeting you could have a comfortable retirement.

Making sure you plan for retirement in the best way for you and your family can be difficult. If you need any help, talk to an independent financial adviser and be sure to read our pension guide.