How long will your pension need to last?
We are all living longer in the UK. On average, people aged 55 today will live to their mid-to-late 80s. Around 1 in 10 men and 1 in 5 women this age will live to 100 – where you can look forward to receiving your telegram from The Queen.
It is essential to prepare yourself for a long life, especially when it comes to financial planning.
If you’re curious about how long you might need to stretch your pension fund out over your long retirement years, try our life expectancy estimation tool, powered by the Office for National Statistics.
Enter your age below:
Disclaimer: This age estimation tool is sourced from the Office for National Statistics and should not be taken as a true estimate of life expectancy; this is influenced by many factors (for example, your lifestyle choices and health) and can vary hugely from person to person.
It’s important to remember: taking too much of your pension money in early retirement could mean you don’t have enough for later.
Find out your retirement date
Your selected retirement date could influence when you decide to take the money from your pension pot.
You can check your pension paperwork, eg your annual pension statements to find out what age and date you’ve said you want to retire at. Please contact us if you are having trouble finding it.
If you want to change your selected retirement date ask your provider if you have to pay a fee or if it changes the terms of your pension.
Make your money last
Knowing how long your money needs to last depends on when you want to start taking it and what your future plans are, eg you might want to carry on working after you reach State Pension age or the retirement date on your pension.
You may decide to leave your pot untouched and keep paying into it — this could give you more money to live on over a shorter period of time.
You’ll need to work out what you’ll have in retirement before looking at how long your money needs to last.
When to start taking your pension pot
You decide when to start taking money from your pot – you can do this from age 55. In some rare cases you can take your money earlier.
Most pensions set the age at which you’re expected to take the money from your pension pot, eg when you turn 65. This is known as your ‘selected retirement date’ and may be different to your State Pension age.
You don’t have to take your money when you reach this date. You can leave your pension pot untouched until you’re ready to take from it.
The longer you leave the money invested and continue to pay into it, the higher your income could be when you choose to take it. You also don’t pay Income Tax on the money for as long as it stays in your pot.
You might want to continue working for a while, possibly part time. Many employers offer flexible working arrangements for people close to or over retirement age.
Do you have our Pensions & Tax Planning download?