You’ve Planned Your Holiday… What About Your Retirement?
We all do it — spend hours searching for the best hotel deals, checking out flights, and daydreaming about poolside…
Everyone’s circumstances are different which is why we cater for a range of clients. The biggest thing to understand is your monthly outgoings. Do you have a mortgage? How much are your bills? What are the little extras that you have each month?
The Pension and Lifetime Savings Association revealed that 77% of pension savers have no idea how much they’ll need in retirement. Thankfully, the PLSA’s figures have broken down the average yearly costings for singles and couples living outside of London.
For singles, the PLSA suggest that £31,300 per year will be enough to live on with moderate lifestyle during retirement or live on £43,100 for a comfortable lifestyle.
According to a report by the International Longevity Centre, the average retirement age in the UK is 64.5, but did you know that you could retire much earlier than that?
Many think they can only down tools once they’ve hit State Pension age( If your wondering when you can retire based on when you were born this page is for you). Yet, this isn’t the case, and you could possibly do it a decade early, thanks to being able to access private pensions from the age of 55.
It’s all about time and money.
How much time you have and how much money you’ll need to fund the retirement lifestyle you want.
Simple, right?
You might be thinking that ‘once I retire, I’ll have to stop spending‘. However, with the proper retirement planning advice, you could live the life you want instead of just getting by.
According to research couples in the UK need a minimum retirement income of £22,400, to live a moderate lifestyle it’s £43,100 or £59,000 to live comfortably.
These stats are a national average outside of London, and your circumstances could be different. Maybe you don’t take a holiday every year, or you’re not one for splashing out on designer labels. It’s all about what things matter to you.
For the average single in the UK, £31,300 per year will be enough to live a moderate lifestyle during retirement or £43,100 to live comfortably.
It all depends on how you want to spend your retirement and the lifestyle you want to live. Working out a plan of action is the first step to understanding your affordability. We’ve had clients who want to spend more time with their family and some who want to jet-set around the world. In our piece ‘Can I retire at 55‘ we attempted to answer some of these all-important retirement planning questions.
We factor in what you want to do once you retire and balance your time and goals as well as your finances.
Our clients Jim and Jan are two of the many happy clients who’ve been able to live their dreams in retirement.
“We know what our budget is, and we work in it, but we can be more relaxed, and it’s much easier. We’re able to sleep easier at night.”
Did you know…
According to government figures in 2022, the average weekly retirement income is £349 after you’ve taken away taxes and housing costs. This doesn’t take in to account that you may have already paid off your house, so you could be sitting even prettier than this.
Only by working out how you want to spend your time in retirement, i.e. on holidays or with your family, is it really possible to begin to see if your pension and savings will be enough income for you.
Before you put your feet up in the garden or start planning holidays, you need to figure out which type of pension/s you have and what options are available to access them. You may want to use a company or service to help consolidate your pension into one manageable pot.
Which one you have can affect what you can do with it, so it is worth bearing that in mind.
This pension is also known as a final salary or a career average pension. This type of pension provides a guaranteed income for life. How much you get depends on your length of service in the scheme and salary levels whilst a member (they can be final salary, so your final salary is used to calculate benefits, or they can be based on the average salary earned during membership of the scheme.
There are many members in a defined benefit (DB) pension scheme, and each member pays a percentage. Your employer then subsidises — sometimes paying as much as three times the amount you put in.
A Defined Contribution (DC) is the more common type of pension. You might know these as SIPPs, personal, workplace, stakeholder or ‘money purchase’ schemes.
These are fundamentally different from DB pensions, in that you’re the only member.
These pensions rely on what you pay into them, and if it is a workplace one, your employer too.
This money is then invested in the markets to hopefully grow over the long term. Once you hit 55, you can take a 25% tax-free lump from your pension, either all at once or in small amounts.
With the remaining 75%, you have the options of choosing an annuity or drawdown.
Joslin Rhodes as a Pension advice and retirement planning company can help with withdrawing a defined contribution pension. If you have any questions give us a quick call free of charge and see how we can best help you.
An annuity pension is similar to a DB pension, giving you a guaranteed income. However, unlike a DB pension, these are customisable, allowing you to add a spouse’s pension or increase monthly amounts in line with inflation. In some cases, if you have a life-shortening health issue, the insurance company can agree to pay a higher amount.
The second option is that you pension drawdown. to access the money how and when you want it. You get much more control over your money with this, but with it added risk.
Like everything in life, too much freedom isn’t always a good thing. If you use that flexibility to overspend, your pot could run out quicker than you anticipate.
Plus, there are investment risks and also tax implications should you take large amounts from a drawdown pension.
This option does, however, have a death lump sum, allowing you to pass on the remaining pot to whomever you wish.
If you have a DB pension but like the sound of an annuity or drawdown, in most cases, you can opt to transfer it to a DC scheme.
You do this by taking advice from a firm that can advise on DB & Final Salary pension transfers. Essentially your scheme will provide you with a Cash Equivalent Transfer Value (CETV) which is lump sum provided by the scheme, to ‘buy’ you out of the scheme.
It’s always worth getting some help and advice to make sure whichever option you choose is right for your individual circumstances. Plus, if your DB pension savings are above £30,000 you’ll need to get professional, regulated pension transfer advice
At Joslin Rhodes, we take clients through the whole process of working out what they want their retirement to look like before considering their assets to work out how to get it for them.
Our expert pension and retirement planning advice team work very hard to give clients the lifestyle they want.
We’ve had many clients from all walks of life – some who’ve been astounded to find out they’re actually better off in retirement, some who were told they could have done it five years earlier, and some who’ve completely changed their life and never looked back.
Using the unique PlanHappy Lifestyle Financial Planning process we’ll help you work out what you want to do in the future, then do the money bit to work out how to get you it.
Ultimately, it’s all about making sure you live the best life you want and giving you the tools, you need to do that.
Our friendly team are here to help, call 01642 525511 or click our contact us page to arrange a call back from one of our experts to help you answer the question, how much do I need to retire?
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We all do it — spend hours searching for the best hotel deals, checking out flights, and daydreaming about poolside…