Retirement can require a lot of money these days, if you want to enjoy a good standard of life in your twilight years. We are living for longer now, which means that retirement lasts longer than it used to in the past.
Often people can be looking at a period of 25 years or more in which they need to be able to support themselves without a regular income from employment. The Pensions and Lifetime Savings Association (PLSA) created its Retirement Living Standards guide to assess the sums involved.
This is divided into minimum, moderate and comfortable retirement levels. So, what will be needed to achieve the last of those?
What are the costs per year?
The figures worked out by the PLSA suggest that someone who is living on their own when they stop working will need an annual income of £33,600 to be able to enjoy a retirement defined as comfortable. That might sound like rather a lot of money, but if you are married or in a relationship, the sum required per year will be even higher.
For a couple, it is estimated at £49,700 per year for comfortable retirement. That means having enough to meet essential needs as well as enjoying regular smaller pleasures like socialising and eating out, plus annual holidays abroad and theatre visits.
How can this be managed?
For those who are eligible for a full State Pension, which amounts to £9,627.80 a year. According to the figures put together by the PLSA, a pot of £590,000 minimum is needed for a comfortable retirement, whereas average pension savings for most people add up to £55,900 – clearly that is a massive shortfall.
Retirement sees you having to meet your everyday living costs, plus those of any dependents. You also want to be able to enjoy life, and there will always be unforeseen costs for things like home repairs and fixing or replacing appliances.
So how can you make the money needed to enjoy a pleasant retirement?
Start saving early
Saving towards your eventual retirement is something that you should begin as early in your working life as possible. You can get help from retirement planning specialists in Chester or wherever you live about how best to save.
Buy an annuity
Money that has been put aside into a pension can be used to acquire an annuity. That is something offered by an insurance provider that sees them pay you regularly after your retirement. It guarantees you a post-working income but has the disadvantage of being subject to taxes.
Look for investments
Given the scale of the costs involved in being able to retire in financial comfort, looking to boost your savings through investments will be necessary. That is another area in which a qualified wealth manager will be a lot of help to you.
He or she will be able to identify potential investments that can produce good returns after putting together a financial plan based on an estimate of what you will need. Investments might be in stocks or shares or they could be in things such as property, but they can both raise your retirement savings and produce an ongoing income stream after you retire.
Tax mitigation
A wealth manager should also be able to identify legal ways of cutting the amount of tax that you have to pay on your retirement savings and income. Make sure that the person or company that you hire for this has an in-depth knowledge of the UK tax system, as that is something they will need.
A comfortable retirement requires considerable savings and income, but it is possible with help.
