Are my pension savings enough to retire?

Can I afford to retire, yet?

This is probably the question everyone wants answered. Is your retirement plan on track and are your savings realistic to your needs? Have you compared your existing savings to a target retirement?

It’s important to look forward, think about how much you spend and whether you have debts to repay at retirement. Your mortgage may need to be repaid, you need to use the pension lump sum allowance (PCLS) from your pension to repay it – but you’ll need to work out if that will be enough.

Can I afford to retire, yet?

It’s probably the question that pension advisers are asked the most. Usually in jest, people from age 40 tend to start to think about their retirement from work. The answer is always the same, “that depends on what you need”.

Use our online calculators to analyse your savings needs and the pension age you’re on track for.

In general terms, considering long-term growth of a balanced investment portfolio, you should achieve a net return of 3-4% per annum. This is less than most advisers will discuss, but conservative estimates are the key to a sensible retirement plan. So, for every £100,000 you have in your pension, you could safely generate £3-4,000 without too much concern over eroding the capital. Under good advice, you could take a more aggressive withdrawal strategy, targeting spending your capital rather than leaving a death benefit.

Will your pension savings meet your retirement goals?

A list of questions you should ask yourself to prepare your finances for retirement…

  • what will I get from the UK or other government state pension, and when will I be able to claim it?
  • what are my company pensions worth, and do they offer options for a lump sum, or death benefits?
  • will I need to repay any debt or need to plan for a lump sum expenditure?
  • will I have any other structured income for retirement, like property rent or savings/investment returns?
  • how much of the pension lump sum you I need?
  • will I need access to ad-hoc withdrawals in retirement, to gift to loved ones or for large purchases?
  • how will my financial lifestyle change and will my expenditure will reduce into my old age?
  • what will be your marginal rate of tax in retirement? how should retirement income fit for tax planning opportunties?
  • do I want to leave a death benefit for loved ones?

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