One of the main areas of planning where we work with clients is looking towards retirement.
Recent research by Royal London showed that the message of realistic retirement planning may not be getting through.
They spoke to different age groups to understand how they were planning ahead to retirement.
In the under-35 age group, two-fifths of adults expected to retire before the age of 61 and expect to need just £1,086 a month (although only 27% of this age group had calculated what they will need in retirement).
The 35-49 age group are planning for retirement at age 64, and those over age 50 at age 65.
With the state pension age continually increasing (to age to 67 between 2026 and 2028 and 68 between 2044 and 2046) retiring earlier is great for a long retirement but creates a “funding gap” that needs to be covered by workplace pensions, personal pensions and income from other assets.
Retiring younger might be good for our souls, but it could be painful on our wallets.
Research from the Pensions and Lifetime Savings Association (PLSA) states that, roughly speaking, a single person will need £13,000 a year to achieve the minimum living standard (£20,000 for a couple) and £37,000 a year for a “comfortable” standard of living (£54,500). These figures assume your mortgage is cleared and there is no rent to pay.
Find these figures and the information behind them here: https://www.retirementlivingstandards.org.uk/.
The days of working with one company our entire careers and living off that pension have passed: On average, we have 5 or 6 roles and that can mean fragmented pension pots.
The good news is that auto-enrolment means workers are contributing earlier and are more aware of their pensions.
But the earlier you plan, the easier the job is: whilst those in their 20s and 30s may not have disposable income to save significantly into pensions, having a plan will keep you on track. And for those closer to retirement, knowing where you stand, assessing current pensions and ensuring you are making the right contributions can ensure goals are met.
If you want to speak to one of our team about your retirement plans you can contact us here