You now have more options than ever before to help you find a solution
For many people, retirement now represents an opportunity to realise life-long ambitions, pursue new passions or help family members with their income needs. Since pensions freedoms, you now have more options than ever before to help you find a solution.
Save now to accumulate the right sum for your future
We all want to save enough to ensure that we have a comfortable retirement. But the challenge is to know just how much income we’ll need as a pensioner – and how to work out how much we’ll need to save now to accumulate the right sum.
Be honest about how you want to live in retirement
It’s important to make realistic estimates about what kind of expenses you will have in retirement. You need to be honest about how you want to live in retirement and how much it will cost. These estimates are important when it comes to calculating how much you need to save in order to comfortably afford your retirement.
Estimate your retirement costs by looking at your current expenses
Part of the process is to estimate your retirement costs by looking at your current expenses in various categories, and then estimate how they may change. For example, your mortgage might be paid off by then – and you won’t have commuting costs. Then again, your health care costs are likely to rise.
To achieve the retirement income you require, you need to know the answers to these questions:
What is the value of your pension pot?
What are your other sources of retirement income likely to be worth? (These include the State Pension, Individual Savings Accounts, property, and other savings and investments)
How long will your money need to last?
How much will you require to achieve your essential and additional income needs in retirement?
It’s important to make a distinction between essential income needs and additional requirements.
Essential income needs: the minimum level of income for basic lifestyle needs.
Additional requirements: these could include travel, hobbies, starting a business or helping younger generations onto the property ladder.
Unexpected costs: healthcare costs, family emergencies.
Leaving a legacy: passing on an inheritance.
Give yourself the best chance for a happy and secure future
Whether your retirement is fast approaching or decades away, many people are unable to retire when they’d like to because of their financial situation. With careful planning, you can avoid this predicament. Planning ahead for retirement allows you to decide when and how you will retire, and whether you will continue to work. Even if you have not begun to plan, you can still start preparing yourself at any time – it is important to give yourself the best chance for a happy and secure future!
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