How long will the income withdrawn from your pension last?

How long your pension pot will last depends on many factors, from your required income to how much you’ve got saved and your life expectancy. There are a number of things that need to be considered when you are planning your pension.

Your desired income when you retire 

This refers to the amount of money you would like to have in order for you to have a comfortable retirement. Now this can depend on your standard of living and personal circumstances. Which conducted a study that stated you would need £26,000 to live a comfortable retirement, whereas a luxurious retirement with long-haul holidays would cost a couple £39,000 a year. 

How much you have already saved for your pension

To fully understand if you are saving enough money for your pension you need to understand your current pension balance and the retirement income you would desire. By checking the balance of your pension, you can find out how much it is worth today and how much you can expect to receive at your retirement date. We often give the advice to consider transferring your retirement savings which are spread across lots of providers into one. This makes it easier for you to manage and also allows you to consolidate any pensions you may have forgotten about. Our clients often find this helpful when they have had many employers over the years, bringing pensions you may have started with previous employers into one place will prevent them being misplaced in the future. 

Your life expectancy  

In 2020, the average life expectancy in the UK is 81.15 years, and the state pension age is 66 years old, a difference of 15 years. If you decide to stop working and cash in your personal, workplace of private pensions at 55 years old, then you will need enough money to last you 25 years. This is a long time to live off your retirement savings so it is important to think about the kind of retirement you want to have from a young age so that you can save money often rather than having to sacrifice more of your wages later on in life. 

In order to ensure you don’t have a shortfall in later life, you’ll need to save enough money for your retirement. We can advise on the best way to do this.  Get in touch today if you would like to more advice about pension plans. 

*A pension is a long-term investment not normally accessible until 55. The value of your investment (and any income from them) can go down as well as up which would have an impact on the level of pension benefits available. 

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