Have you saved enough for your Retirement?
This article is for information only and no recommendation is being made or should be construed from the contents of the article. Always seek independent financial advice prior to taking any action.
Retirement Planning : How much do you need for your ideal retirement?
Take our mini quiz below to find out……
Pensions are still one of the most efficient ways of saving for retirement as your contributions are topped up by HMRC, and often employers. The golden rule is the earlier you start, the better and you should always try to invest the most you can afford.
Using our questions you can work out what kind of retirement income you may need and how much you will need to be saving each month to achieve it. Choose the answer to each question that mostly applies to you then check against the findings below to see how you need to be saving to achieve your ideal retired life.
You can also use our pension calculator on our website as a quick and easy way to calculate the cost of a pension based on your age and how much you want to save each month.
Travel : When you retire, what kind of transport will you need?
A: You will need two cars – a decent sized newish car for the big trips and a smaller runaround.
B: Just one car should cover all your needs.
C: No car needed. You are planning to make the most of your free bus pass.
Energy Bills : Being at home all day could increase your heating bills, how will this affect you?
A: You like to stay warm and you feel turning the heating off and on wastes of money so you’ll just keep it on low all day, just changing the temperature thermostat when needs be.
B: You’ll have the radiators on just for a few hours each day unless it gets really cold, then the heating might be left on all day.
C: You’ll just put another on a jumper. The heating doesn’t need to be on all day.
Food Shopping : when you retire where would you be happy doing the majority of your food shopping?
A: Only Waitrose or M&S will do – good quality food, minimum preparation needed and free coffee.
B: You’re happy with the standard supermarket – Sainsbury’s & Tesco’s have everything you need at a good price with the odd luxury.
C: You like a good bargain – shops like Lidl or Aldi are definitely the best value for money.
Holidays : When you retire what kind of holidays will you want to take each year?
A: Long and luxurious trips abroad to amazing places that you just can’t do while you are working.
B: You’re happy with a couple of week-long visits to the usual holiday destinations in Europe each year.
C: You’ll stick to visiting relatives in the UK.
Eating Out : When retired, how often will you want to eat out?
A: You may go out a couple of times a week to your favourite restaurant nearby — and maybe try something more upmarket every now and then.
B: Perhaps once a week in a modest but decent little restaurant around the corner.
C: Hardly ever, you’re happy to stay at home and cook.
Hobbies : Now you’re not working, how will you spend your free time?
A: You love going to new places, taking weekend breaks and visiting the theatre
B: You’re happy to join the National Trust for your days out – there are so many places to visit all for free.
C: You would love to volunteer at a local charity shop and go for long walks in the country
Your Health : How will you stay in shape?
A: You prefer to belong to a nice gym with a pool and spa facilities.
B: Your happy going to the local pool and maybe joining a walking club
C: You will keep yourself fit walking and cycling everywhere
Helping Your Children : Are you hoping to be able to help out your children and grandchildren?
A: You want to be able to give your children and/or grandchildren a hand in getting a foot on the ladder or help cover their university fees.
B: You would like to lend them some money, but you would like them to pay it back at some point when they can.
C: You won’t be helping them out, they need to make their own way in life.
How did you score and what will this mean when planning for your retirement*?
If you scored mostly C’s you are going to need around £10,000 a year on top of your State Pension. This really isn’t going to be much to live on which will mean you will have to be very careful in your spending in your retirement years and be constantly watching the pennies. To build up a pension of £10,000 a year you will need to save £45 per month from the age of 30, £80 from age 40 and £300 from 55.
If you scored mostly B’s, you will need around £17,000, including the State Pension. With this amount for your retirement, although you may have to make a few cutbacks compared to when you were working, overall, you will have a comfortable retirement with the odd luxury. To achieve this pension you will need to save £180, 000 overall which is £175 a month from the age of 30, £330 from age 40 or £1,200 from 55.
If you scored mostly A’s, you will need around £27,500 per year, on top of the State Pension. This will allow you to continue in the good life well into your retirement. You’ll be able to splash out on the odd luxury holiday, a new car or help your family out. To achieve this pension you will need to save a pension pot of £390, 000 overall, which is saving £385 a month from the age of 30, £700 from age 40 or £2,550 from 55.
What do you do now?
If your retirement plans are all on track, that is great. However, if your expectations are higher than the reality then it is never too late to do something about it. Talking through your existing financial position and future plans to a professional advisor can really help.
At Prosperity IFA, we will review any existing pension arrangements you may have and report on whether these will meet your retirement objectives. With all the new rules introduced by the government over the past year on how and when pension savers can take their pension benefits, we can make sure you make the best choice for your own personal circumstances.
For a more personalised, caluclation of your pension pot try Propserity IFA’s Pension Calculator.
If you are only just starting to think about planning for your future, come and talk to Prosperity IFA. We can guide you through all the options available and advise you on the best route to take based on important factors such as when you want to retire and your expected level of income.
Call us now for a free initial consultation on 01892 300 303.
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