In 1997 the average family spent 331 a week, but that figure covers a range from 171 for the bottom fifth to 556 for the top fifth. Clearly the composition of the weekly expenditure between the two ends of the spectrum will be sharply different. For the sake of this exercise let's assume that the average is around 200 a week, or 10,000 a year. That is a lot of money in anyone's language. But the dividend yield is not the only return we get from the market.
Shares rise in value as companies earn more and increase in value.
Quite how much they rise varies a lot from year to year, but as we have shown elsewhere on the site they have risen in value more than any other investment over all periods in excess of 21 years. Forecasting what they will do in the future is pretty tough. But if we do that our pot needs to be bigger, about 375,000 in fact. Nevertheless we also have to be realistic and a target of 250,000 in your pension fund is still a challenging one. A target of 250,000 Even though drawing down 15,000 a year from a 250,000 pension pot will shrink it in real terms, it will still be there until the day you die.