How will your pension pot affect your standard of life in retirement?
How will your pension pot affect your retirement? Research carried out by the Office for National Statistics has revealed that 32% of people interviews expected workplace pensions or private pensions to provide enough income for their retirement, even though they weren’t necessarily contributing to one.
A common theme that we have seen over the years for people not wanting to contribute is due to low income or not being in employment at all. Interestingly, 46% of people believed buying a property would be the best use of their money.
However, the survey also unravelled issues for those who are actively contributing to a pension. 51% of people who completed this survey said they are confident that their retirement income would be enough to supply the standard of living they want, even though, according to Saga Investment Services, people over the age of 40 consistently underestimate the pension pots that they will need.
For example, respondents estimated that a pot of £500,000 would be enough to fund an annual income of £64,000, when realistically this would only generate £27,004 of annual income. Will this amount fulfil your standard of living? And what about those who continue to rely solely on the full basic state pension – which currently stands at £119.30?
There are a number of factors to consider when predicting the amount of income you will have at retirement; any workplace or private pension savings, any inheritance you may receive and the age you are planning to retire. With life expectancy continually improving, your retirement may be longer than you think and you will also need to factor in the cost of any possible care.
If you are concerned that your pension funds won’t be enough, you have a number of options:
- Start saving more money! Pay more money into your pension pot and this in turn will increase your income at retirement.
- Delay your retirement date – defer the date when you begin to withdraw money from your pension.
- Seek professional advice – pensions are a complex area and legislations are continually changing.
If you have any questions or concerns on how your current pension pot may affect your standard of life in retirement and to speak
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How will your pension pot affect your standard of life in retirement? Was first published 27 March 2017
The value of investments can fall as well as rise and past performance is not a guide to the future. The content of this publication is for information only. It does not represent personal advice or a personal recommendation, and should not be interpreted as such. Please do not act upon any part of it without first having consulted an Independent Financial Advisor.