According to the Pensions and Lifetime Savings Association, a single pensioner would need a pension income of £10,200 to live a “minimum level” lifestyle in retirement, which is already slightly more than the current maximum new State Pension of just over £9,100 a year.
Profile Pensions estimates that a single pensioner could live comfortably on £17,818 a year, which would require a pension pot of £237,000 at retirement. If you’re in a couple or don’t own your own home, you will need to aim for a higher income and pension pot.
According to data compiled by the FCA, the average UK pension pot after a lifetime of saving stands at £61,897. With current annuity rates, this would buy you an income of only around £3,000 extra per year from 67, which added to the maximum State Pension, makes just over £12,000 a year.
If you are concerned about not having a comfortable retirement income, it can pay to take professional advice to improve your pension pot value. Research by the International Longevity Centre UK shows that on average, UK savers improve their pension wealth by £30,991 by taking advice.
If you are looking for a more comfortable retirement of £25,000 a year, you will need to have built a sizeable pension pot by the age of 55 to make this manageable. A pot of £100,000 and a monthly contribution of £500 9at 5% annual growth and 1% charge) is likely to get you to a pension that achieves a retirement income of £25,000 a year until you die, whereas if you have only got a pension pot of around £50,000 at 55, a much larger monthly contribution of £1,300 would be needed.
Saving more is obviously an important factor to ensuring you have a good pension pot. However, when it comes to planning for retirement, many people are not aware that getting a good deal for their pension can save many thousands of pounds.
If you haven’t reviewed your pension savings recently and want to check what sort of retirement your current pension pot might provide, it’s often worth taking professional pension advice. Contact us at GSI to see how we can help you plan for the retirement you want, today.
Adapted from a Telegraph Article by Financial Solutions Team