How much pension will I get vs How much pension do I need?
This is the most important question you need to be asking about your retirement planning. To ignore the answer could have devastating consequences for you in later life!
As you approach your retirement you might have many questions that you are looking to be answered. It can seem daunting at first but a good place to start with your retirement planning is to have a look at what your income vs outgoings are likely to be in retirement.
This will involve:
- Getting your State Pension Statement
- Obtaining an estimate on how much you could be entitled to from your workplace pension
- Adding up your savings and investments, including your pension and any other investment funds you may have
- Trace any lost pensions – don’t worry as you can use the Government-run Pension Tracing Service to help you with this
Add these up to get an estimate of your retirement income (how much pension will you get)
The next step is then to have a look at your outgoings and judge how these may change in retirement. For example, you will not have any commuting costs, but you might need more money to invest in hobbies to keep you occupied. If you’re going to be home more, you will need to consider that your heating bills will go up. Also, the cost of inflation will have an impact on your retirement funds.
Add these all up to get an estimate of your retirement outgoings (how much pension will you need)
If you then take the outgoings away from your income then you will be left with a figure. If this is a positive number, well done, your pension income will be more than you need. However, if the number has a minus in front of it, don’t panic because there are still things you can do.
Explore Options That Could Boost Your Pension
If you’re facing a pension shortfall then there could be options available to you that will offer a boost to your pension!
Some of these you can start to do straight away. For example, you could start increasing the amount you pay into your pension every month. Alternatively, you could delay or push back the date on which you start withdrawing your pension by working longer, allowing you to accrue more pension funds. You could perhaps even consider continuing to work part-time in retirement, an option that will provide additional income.
Here at True Bearing we recommend that you start your retirement planning as early as possible. The longer you save for your retirement, the longer your pension pot has the opportunity to grow. An Independent Financial Adviser can help you keep on track with your retirement planning.