Size matters. How big should your nest egg be?

Here at mynestegg, we’re all about helping you build your nest egg. We’ll help you save for a happy retirement with a private pension. And we’ll help you put aside money for a wedding, house deposit or rainy day with an ISA.

But there’s no such thing as a one-size-fits-all nest egg. A nest egg for a pension pot will be a different size to an ISA pot for a wedding. It all depends on what you’re going to be spending and why.

One thing’s for sure though - when it comes to your nest egg, size matters.

Pension pot size matters - is £500k a good pension pot?

The most visited page on our site is our retirement calculator. Why? Because people don’t know how much they’ll need to save for their retirement. It’s easy to make a vague statement - enough to be comfortable, enough to get by, enough to have fun - but you can’t pop “enough money for two weeks in the sun and three city breaks a year” into a pension calculator, can you?

Instead, you need to look at cold, hard figures. You need to ask questions like is £500k a good pension pot size? What would that give me each year?

Let’s look at the type of retirement you want. 

If you want to live comfortably, then there are some industry-recognised numbers to bear in mind.

At the minimum, you’ll want £14,400 per year if you’re single, or £22,400 for a couple.

If you want a moderately comfortable retirement - a foreign holiday here or there, the chance to eat out a few times a month - it’s recommended that you have at least £31,300 per year income for a single person (rising to £43,100 for a couple).

And if you’re looking for a comfortable retirement - foreign trips and mini-breaks, enough spare income to be spontaneous and generous to friends and family - then you’re looking at an annual income of £43,100 for a single person or £59,000 for a cohabiting couple. 

Add in the state pension, and according to our pension calculator, a pot of £500,000 gives you an annual income of around £30,000 per year - nearly enough for that moderate income. 

If you’re happy with moderate comfort, then £500k is a good pension pot - and a good point to aim for with your retirement nest egg.

Just make sure you’re serious about saving for your pension. Nobody should need to set a 7am alarm at age 70.

Wedding size matters - how much should you save for a wedding?

Here’s where you might want to grit your teeth and think about eloping.

According to the wedding experts Hitched, it’s getting more expensive than ever to get married.

The average wedding cost £20,700 in 2023. That’s up from £17,300 in 2021. If you’re planning for a wedding in five years time, that upward trend suggests you’re going to want around £28,000 in your wedding nest egg. And that’s without a honeymoon. 

A glance at our ISA calculator says that’s possible. If you start with a one-off contribution of £1,000, putting away £414 per month could get you to your £28,000 target in the next five years with a fair wind. That’s assuming you’ve got a balanced approach to risk.

If you’re cautious, you should be looking at putting closer to £450 per month into your wedding nest egg.

Rainy day pot size matters - how much should I set aside for an emergency fund?

A rainy day fund can be any size. Because you really don’t know what it could be spent on. Maybe it’s covering a loss of earnings due to illness, maybe your boiler breaks down or your roof starts leaking and you need to pay for emergency repairs.

The general recommendation from financial experts is that you’ll want enough in your rainy day fund to cover three months’ worth of essential outgoings to fall back on in case of an emergency.

Only you know how much that will be.

So take a look at your essentials - rent or mortgage, utility bills, food, travel. Add on those things you wouldn’t really want to cancel for a short-term emergency - phone, internet, Netflix subscriptions. And work out how much that’d cost you for a three month period.

That’s the minimum you should have in your rainy day nest egg. And it should be in an account you can access instantly. As much as we’d love to point out that a mynestegg ISA could grow your emergency fund, a 5-8 day timeframe to withdraw from your stocks and shares ISA means you should consider a cash savings account for emergencies.

Just make sure that when you’re saving into that account, you’re not taking money you’d otherwise be putting into your pension pot. After all, £500k might be enough for a pension, but the larger that pot is, the more comfortable your future will be and the sooner you can retire.

Remember. When it comes to your nest egg, size matters.

We’re always looking to make saving simpler. To learn more about how to set goals, save for the future, or choose the right pension or ISA, visit the mynestegg Knowledge Hub.