A pension on £10 a day

The simple pension question 'How much will I get?' is rarely answered succinctly.

If you save £3650 a year for 40 years, you will end up with £250 000 (assuming 2.5% interest rate).

£10 a day gets you £10 000 a year at 65

How reasonable are these assumptions? The cost for the same product in 2050 is unknown - if interest rates rise you could retire earlier. If lifespan increases you might have to wait until you are 69 to get the same pension. But right now a 65year old man can get an index-linked £10000 a year for £250 000.

Interest rates? The vanilla benchmarks are 1% for safe and 4% for risky assets. - gets you to 2.5% for 50/50 mix. And 40 years will take you from 25-65. So not completely unreasonable. By the way this a 'real return' benchmark. Your '£250 000' in 2050 will be worth £250 000 in todays money - even though the cheque might actually say '£1million'.

Given UK median income of around £25000 then the savings rate is about two months income per year.

So stashing £300 a month into an ISA can be a simple sensible option. There are far more complex options available - but they are not necessarily any better.