When it comes to retirement, there are some ideas that can turn out to be quite different when you examine them closely. We explore five of them.
1. You can live off the state pension alone
The current basic state pension is £137.60 per week, or £179.60 for the new state pension if you were born on or after 6 April 1951 (for a man) and on or after 6 April 1953 (for a woman). That works out annually as £7,155 or £9,339 respectively, depending on meeting National Insurance contribution requirements and other eligibility criteria.
This could be enough for those who own their home outright, to cover the very basics for everyday living but is limiting for those who want to enjoy a more comfortable retirement without money worries. As life expectancy rises, so does the amount of time we’ll need to fund our lives in retirement, including long-term care when we’re older.
2. Matching your workplace pension is enough
With an occupational (workplace) pension, the overall minimum total contribution is 8%, with employees paying in 5% of salary and employer contributing 3%. But this might not be enough to give you the kind of income you’re expecting once you’ve retired.
The good news is you can back your workplace pension up by increasing your contributions if you’re able. Better still, some employers also offer to pay more into your pension to help build your retirement benefits faster, by matching any additional contributions you make up to a set level. If you start the ball rolling earlier, the more tax relief you’ll receive and the more time your overall pot will have to grow.
3. It’s possible to keep working for longer
The reality is, even if you wanted to continue working either full – or part-time after state retirement age, you might not be able to do so. It might be too physically demanding or might not fit in with retirement goals like spending more time with grandchildren, travelling or other pursuits you’ve been looking forward to.
Getting help from a financial adviser can ensure you have your desired level of income in retirement. You’ll then be able to focus on keeping busy through hobbies, part-time work or other areas like volunteering in your community.
4. After a certain point it’s too late to save for retirement
As we’re living – and working – longer than before, while it’s true that the sooner you start the better, life doesn’t always go as planned so it’s never too late to start saving for retirement. Compound investment growth can make a big difference to the value of your pension over time.
5. You can save for retirement without help from an adviser
Even with the best intentions when it comes to saving and investing, doing it alone is difficult. That’s why working with a professional investment adviser can give you confidence about the direction of your investments. An adviser will be able to point out the long-term benefits of your investments and how they can pay off for you.
Speak to your adviser about making the most of your pension investments.
The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.