The first question is how much have you already got in your pension pot? It is a good starting point. Unless you need to access funds urgently the advice would nearly always be to take the long-term view. However, reducing funds now could limit how the overall pension pot can grow in the future.Īlso, it is impossible to predict whether stocks and shares will fall further or make quick gains. The thinking is often to “cut losses” before things get any worse. The coronavirus has caused panic across the world and many investors have been worried about how the impact on markets will affect their pensions.Īnyone approaching or already at that age might have been tempted to draw some of their pension cash recently, especially if the coronavirus has adversely affected their income. Without putting thorough cashflow forecasts in place many people generalise and think they will need the same income they earned when working. Until you look closely at monthly and annual expenditure, it is difficult to appreciate what level of income you need when you finish work. This increased to £33,000 and £42,000 respectively if the lifestyle was considered luxurious, involving regular long-haul holidays and renewing household vehicles every few years. Whether you are single, married or living with a partner will have implications for retirement income.Ī WHICH? survey of retirees found that those enjoying a comfortable “single” lifestyle spend around £20,000 per year. Will you want to spend and enjoy more of this during retirement? Personal circumstances affect income Teenagers can be expensive, as can young adults that have just started college or university.Īdditional factors include holidays, cars, and other major purchases. That will significantly change the household’s monthly outgoings. The same is true for anyone who still has children at home. In fact, they might choose to continue working if they have substantial home loan commitments.
#RETIREMENT MAGIC NUMBER FREE#
This part of the process is vital if you are to fully understand what you need from your pension.įor example, someone who is mortgage free at 55 will be in a vastly different position to someone who has five or maybe ten years of payments remaining as they hit retirement age. Sitting down with an adviser will help answer many potential questions.
Different circumstances require different solutions That in turn affects how much you might need to keep invested. Such things will all alter the amount of income you will need in later life. Many things can change from year to year and predicting how long we will live or whether we will need paid care in old age is a guessing game. What nobody knows is how much money they will need. Since UK pension reforms in 2015, most people know that they can access the funds from defined contributions pension schemes when they reach the age of 55. Whether it is deciding at what age to finish work or how much you need to save into a pension, we all ask what are the magic retirement numbers?
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