Saving into your pension

Planning for the retirement lifestyle you want …

It is well known that many people are not saving nearly enough to provide the lifestyle that they would like in retirement.

At Armstrong Watson Financial Planning, we believe that there is strong evidence to suggest that taking financial advice can significantly improve your financial health over the long term. The financial planning journey aims to bring all of your goals and aspirations together into a simple plan of action to help you meet your income target in retirement.

You are on this page because you are thinking about starting a pension or have a pension and want to know more about your retirement planning. We’ve put together some ideas to get you thinking and help you plan for a bright future, but if you need to know a little more about pensions first, then read all about pensions here.

The benefit of independent advice

Working out what you’ll actually need to live on when you retire is not as easy as you think, especially if retirement is many years into the future.

Our retirement experts are perfectly placed to help you do this, and it’s worth noting some research published by The Pensions and Lifetime Savings Association (PLSA) which provides a broad view of what income you might need for three different levels – Minimum, Moderate and Comfortable - and what goods and services would cost for each level. This can be found at https://www.retirementlivingstandards.org.uk/

  • A single person will need about £10,900 a year to achieve the minimum living standard,
  • £20,800 a year for moderate, and
  • £33,600 a year for a comfortable lifestyle.
  • For couples it is £16,700, £30,600 and £49,700 respectively.

In addition to this, the government have also issued some guidelines in a slightly different way to show how much of your current income you might need in retirement to help maintain your current standard of living:

  • 70% of your current income if it’s between £12,200 and £22,400
  • 67% of your current income if it’s between £22,400 and £32,000
  • 60% of your current income if it’s between £32,000 and £51,300
  • 50% of your current income if it’s over £51,300

The question is which one do you want enjoy?

A widely held view on this question is to simply put away as much as you afford, as early as you can!

There's a very rough rule of thumb for what to contribute for a comfortable retirement …

Take the age you start your pension and halve it. Then put this % of your pre-tax salary into your pension each year until you retire.

For example, starting aged 32 should contribute 16% of their salary for the rest of their working life. Remember that includes both your employer and your contributions.

We believe that this is very much a personal thing and will depend on your own situation. Factors such as when you start saving, whether you have access to a workplace pension, when you plan to retire and the lifestyle you want in retirement will all affect what you need to pay in to achieve your goals.

We have a handy calculator which will allow you have a go at some scenario planning of your own. If you would prefer to talk to one of our retirement specialists, please get in touch.

You might know about some pensions you already have, which is great, and we’d suggest that you make sure that you haven’t forgotten about any others, especially those that may be from previous employments. We’ve seen many people who didn’t realise they had other pension plans. The government have a pension tracing service that you can use to check this. Find pension contact details - GOV.UK (www.gov.uk)

Reviewing your pensions to help determine if they meet your objectives is always worth considering. There can be benefits to consolidating your pensions if appropriate, this could help lower the costs and may make them easier to manage as well. All of this could have a positive effect on the amount you’ll ultimately save for your retirement. Care does however need to be taken when doing this to ensure that you don’t lose any valuable guarantees. We can support you with this as part of our financial planning service.

Pension consolidation

Articles and helpful guides

Take a look at our library of helpful articles, guides and videos to help guide you through the planning process

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