In the UK today 40 percent of people consistently put away too little money each month to fund the cost of their retirements. Too many people simply spend for today being unaware that tomorrow waits for nobody.
Throughout the working lives for many of us the day on which we will need to draw on our pensions seems consistently far away.
Even for those lucky enough to be enjoying their youth in a carefree way, the fact remains that by failing to invest in the present, the time they enjoy is being waste.
The government has announced in the last twelve months a huge series of changes and shake-ups in the pension market and savers will have more freedom than ever before to decide how they access their pension savings from the beginning of the new tax year.
The question of how much to put away each month into a pension is a complex one and in this blog, we will address what you need to consider before you arrive at a fixed sum.
What sort of lifestyle do you want in retirement?
The first thing to consider is what type of lifestyle you hope to enjoy once you’ve retired and at what age you see yourself retiring. Will you travel or move abroad, settle into gardening or turn your hobby into a business?
Many people leave their working lives before reaching the once statutory 65, and age discrimination legislation now prevents mandatory retirement at any age.
It is possible, therefore, to retire earlier or later, but you will need the finances to sustain you.
The rather bleak question of how long you will live in your retirement also needs to be addressed.
Will you retire with debts?
New pension rules ending the compulsory purchase of annuities means that when you do retire, a portion of the pension pot could be used to pay off debts such as mortgages.
This will leave savers with less of a recurring monthly income but also lower overheads and more security.
The chances are that if you are reading this, you may already have a pension plan. If you are a UK tax payer, you may also have access to a state pension through paying national insurance.
This means that you might be in a better position than you thought, so a first step should be an audit of what savings and investments you have.
Our Pensions Tracing Service, can help you find any obscure pots of money that you are entitled to. Alternatively if you would like some advice or help in devising a pensions strategy for the future or finding a pension fund that suits you, why not speak to a professional adviser.
The Financial Conduct Authority does not regulate taxation and trust advice.
LEVELS AND BASES OF RELIEFS FROM TAXATION ARE SUBJECT TO CHANGE
THE VALUE OF INVESTMENTS AND INCOME FROM THEM MAY GO DOWN. YOU MAY NOT GET BACK THE ORIGINAL AMOUNT INVESTED