Funding A Decent Retirement Income
18th MAY, 2018
Whenever you start thinking about retirement planning, it is worth beginning by working out how much income you think you are going to need.
Generally, few people need as much income in retirement as they did when working. With more leisure time available, however, you may have some ambitious plans for travel or family. All these expectations need to be considered carefully so you can set realistic targets.
Once your target figure has been determined, you can begin to decide how much money needs to come from a pension and how much can come from other sources. For example, the flat-rate, single-tier basic state pension is £164.35 per week (for 2018/19), plus you may have money in Individual Savings Accounts (ISAs) or from rental income from a second property. You may also decide to take some other type of temporary paid employment.
“Pension plan savings are the first step in working out how to make up the difference”
Pension plan savings are the first step in working out how to make up the difference; however, unless you already have a significant work or personal pension arrangement in place, some form of additional saving is likely to be necessary for you to meet your target. Just to give you an idea, a pension fund valued at £100,000 will buy a 65-year-old an annual income of less than £5,400, with no built-in guarantees. If you wish to retire earlier than that, the cost will be even higher. The amount you need to save could, therefore, be considerable.
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