We all know that the earlier you start saving for retirement the better, but how do you work out how much money you need to save to retire and enjoy your retirement plans and dreams?
At LowerMyCharges we can help you to plan effectively for your retirement and work out whether you’re on course to save enough to afford your desired lifestyle.
How much do you spend?
How much do you spend today and how much you expect to spend in retirement? This figure will dictate how much you need to save before you can live your desired lifestyle far away from work. You need to be honest with yourself and have a clear idea of your current spending. Spending habits formed now are likely to be the same in retirement unless you have plans to change them.
Depending on individual circumstances, it’s possible that your mortgage will be paid off by the time you retire. Once you reach the state pension age, you may also get certain benefits, such as free bus pass, council tax discount, free prescriptions and you won’t need to pay for your TV license.
Check out your pots
Conversely, you may find some outgoings higher or end up having additional expenses, too. This could be higher energy bills as you will be spending more time at home, and care cost – you need to ensure you have a plan for every eventuality!
If you need help working out your budget, you can speak to one of our advisers or why not use the Money Advice Service Budget Planner.
Depending on what stage of your work life you are at, you could possibly have several pension pots.
Depending on how many employers you’ve had, there could be a pension pot for each company you have worked for. If this is the case, then you need to take into account both your personal pension and the state pension paid by the government.
You could have additional sources of income too, this could be part-time work, rental income, interest from savings, dividends from investments, money from selling your property or benefits such as housing benefit or carers allowance.
You’ll need an experienced, independent financial advisor to help you plan your finances and choose what to do with your pension pots.
The reality is that most people are not saving enough today for their future. In fact, the average amount of saving is just 4.4% of your salary, (the United Kingdom Household Saving Ratio). At this rate, it is estimated that you would need to be saving for nearly 67 years to match your current income in retirement.
No matter how old you are today, you can always write — or rewrite — your own journey to your retirement story. There are ways to boost your pension, even if you are already approaching the state pension age. You have two main options: put more into your pot or defer taking your pension by a couple of years to help the pot grow.
Reaching retirement is inevitable, and so it’s important you take control and plan ahead – after all, people who receive financial advice are on average £40k better off than those who don’t! *
Here at LowerMyCharges, we are experienced financial services professionals. The research from the International Longevity Centre (ILC UK) finds that people who receive financial advice are on average £40K better off than those who don’t. Because we believe that financial advice should be accessible to everybody, we have made it affordable and convenient. Get in touch via our website or call us on 0800 1404542.