How much annual income will you receive from your pension and savings?
Retirement will probably be one of the biggest events you ever go through in your life, so it’s not something you’ll leave to chance. But knowing how much you’ll need, and how to get there, isn’t always easy.
According to The International Longevity Centre UK (ILCUK) report, a substantial proportion of Generation Xers (those born between 1965 and 1980) in the UK face financial difficulty in retirement, with one in three expected to face significant disadvantages.[1].
How to stay within the limit to avoid a tax charge
If you’ve been diligently saving into a pension throughout your working life, you should be entitled to feel confident about your retirement. But, unfortunately, the best savers sometimes find themselves inadvertently breaching their pension lifetime allowance (LTA) and being charged an additional tax that erodes their savings.
Everyone has different circumstances and different expectations
No matter how far away you are from retiring, it’s important to plan for the future. It’s hard to know exactly how much you’ll need because everyone has different circumstances and different expectations. Today you have new pension freedoms to decide when and how you retire.
Retirement might seem a long way off but the later you leave planning for it, the less chance you have of achieving the retirement you want. We all dream of how we’ll spend our retirement but that dream looks different for everyone.
It’s all about the planning, now and in the future
The government has confirmed that it plans to increase the minimum pension age at which benefits under registered pension schemes can generally be accessed, without a tax penalty, from age 55 to age 57 commencing 6 April 2028.
Looking at different sources to estimate how much income you’ll have
When deciding when to retire, the most important thing to consider is making sure you have enough money to live comfortably. Imagine you’re retiring today. Will you be able to financially support yourself, and potentially your family too, with your current pension savings?
Are you ‘mid or late career’ or planning to retire within ten years? If the answer’s ‘yes’, then you probably want to know the answers to these questions: Will I be able to retire when I want to? Will I run out of money? How can I guarantee the kind of retirement I want?
Saving into a pension is one of the most tax-efficient ways to save for your retirement. Not only do pensions enable you to grow your retirement savings largely free of tax, but they also provide tax relief on the contributions you make.
If you’ve been diligently saving into a pension throughout your working life, you should be entitled to feel confident about your retirement. But, unfortunately, the best savers sometimes find themselves inadvertently breaching their pension lifetime allowance (LTA) and being charged an additional tax that erodes their savings.
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