HOW MUCH WILL I NEED FOR RETIREMENT? by Antony Keen
Partner, PM+M Financial Planning
Common questions we are asked as financial advisers are “Will I have enough money when I retire?” and “How much is enough for retirement?”
There is no ‘one size fits all’ solution when it comes to retirement planning, and we could have different answers for every individual based on their circumstances.
Research from the Pensions and Lifetime Savings Association (PLSA) highlights that 77 per cent of pension savers are unaware of how much they will need in retirement, which is why the Retirement Living Standards have been developed – painting a picture of the lifestyle you could have in retirement.
According to the Standards, £20,800 per year will be enough for a single person to live on for a ‘moderate lifestyle’, or £33,600 for a ‘comfortable lifestyle’, and for
couples, it is £30,600 and £49,700 respectively, but what does this mean for you, and how can you ensure you will have enough to sustain the lifestyle you require?
When planning for retirement, it is important to consider seeking support and guidance from an experienced financial adviser.
Typically, your adviser will work with you to establish a clear understanding of what income will be required to support your proposed retirement, when you plan to retire and what assets are already in place.
With this information, advisers can build a cashflow model, using sensible assumptions, to work backwards and highlight what you should be saving.
This clarity is often enough to spark the appetite for an individual to begin implementing a clear financial plan for retirement.
DREAM BIG, START SMALL, BUT MOST OF ALL, START
by Duncan Martinus Chartered financial planner, HF Wealth
Pensions make many people glaze over or ‘ostrich’, sticking their head in the sand.
Some too sceptical to seek professional advice leave it late or they DIY, which is prone to many pitfalls.
A common misconception is thinking employer’s pensions will be adequate or that these cannot be improved upon.
The self-employed and business owners often never get around to making provisions; leave valuable old pensions languishing, or have too much faith in a future business sale.
Some people also expect that their home will provide retirement wealth but in practice, many rarely downsize.
Equity Release ‘Version 2.0’ can be ‘drawn-down’ to supplement retirement income but may not be sustainable or adequate.
The huge expansion of the Buy-To- Let (BTL) market suggests too many are reliant on that one asset.
Late joiners to BTLs may also not appreciate tax changes which made it less attractive.
State pensions pay a maximum of around £10,000 per annum now from age 67; that doesn’t help early retirement ambitions.
Something must meet the shortfall when the typical average annual income needs are around £25,000 for a ‘comfortable’ retirement and an additional £10,000 for ‘luxury’ lifestyles.
For people with surplus earnings, remember to check whether your employer ‘matches’ additional pension contributions above the basic minimum; effectively it’s free money invested into your pot.
Old and existing employer’s pensions should be reviewed, changes to investments considered and if suitable, some allow money to transfer to perhaps a more competitive, better-invested pension.
Up to an hour’s free initial adviser consultations are usually available to review your options and prior preparation will help to make the best use of it.
The sooner you begin, the less chance of disappointment at retirement.
LANCASHIREBUSINESSVIEW.CO.UK
helping your money achieve more
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Get in touch today: 01254 679131
financialplanning@pmm.co.uk www.pmm.co.uk
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Court of Protection advisory Pensions
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