Will you have enough money to last your retirement?
A new survey has found that just over a quarter of all Britons are on track to meet their financial needs once they retire.
It also revealed that, despite this, 85% said they had 'a fair to excellent' understanding of pensions.
Craig Roberts, independent financial advisor and co-founder of Belgrave Wincham, says: "This research paints a worrying picture for three quarters of retirees in the UK. It essentially means that the majority of people won't be able to support their lifestyle once they stop working. The good news is, that professional advice and guidance can help you improve your financial future if this is something that is concerning you."
Here are four key points to consider when it comes to retirement planning:
Make sure you can fund your retirement
Think about the expenditure you need now versus what you'll need in retirement. You'll most likely have paid off your mortgage, but what about bills, home improvements or a new car? Consider any travelling you plan to do or hobbies you'd like to enjoy with your newfound freedom as well. Research from Which? magazine estimates that retirees will need an average retirement income of somewhere between £26,000 and £41,000 a year. Be realistic. Draw up a list with an approximate cost for each of your projected outgoings. This will give you a good idea of how much you'll need to retire comfortably.
Consider where your money is coming from
Work out where your money will come from in your retirement. It might be a state pension, a private pension, or a workplace pension. You may also have additional revenue streams like investments, company shares or a rental income. Look into the type of pension you have and what this means too. Is it a defined benefits pension, which could provide you with an income that is based on your final salary? Or do you have a mix of private and work pensions from over the years? Having a clear picture of where you stand is an essential building block of any plan .
Make it sustainable
If we were to rewind the clock six years, most people who were retiring would have had an annuity. This provided a guaranteed income for life. The Pension Freedoms legislation in 2015, however, changed this. It now means that anyone 55 years and over can access their defined contribution pension (i.e. a private or workplace pension) more flexibly; taking money out to suit them. For many this is welcome news, but it does place extra responsibility on the individual to make sure that their spending is sustainable. Consider the consequences of this, and how long your pension will pay out.
Prepare for longevity
One of the biggest concerns we hear from our clients is the worry that they will outlast their pension savings. Today, most 65-year-olds will live a further 20 years on average – with many living beyond that. And while it goes without saying that this rise in life expectancy is wonderful, it does highlight the importance of good retirement planning. Paying for social care is one of these. Inflation is another. It's important to understand the challenges you may face when it comes to making your pot of money last.
If you need help getting your retirement back on track, we are here to help. Our team of independent financial advisers specialise in pensions, investments and retirement planning. Contact us on 01978 806505 or email@example.com to arrange a free 60-minute consultation. Alternatively, you can fill in our contact form and we will get in touch with you.
Belgrave Wincham Limited is an appointed representative of ValidPath Limited, which is authorised and regulated by the Financial Conduct Authority under FRN 197107. Belgrave Wincham Limited is registered in England and Wales number 12167416.
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