Comfortable Retirement Income: – There is a high possibility that you pay into your personal pension or corporate pension every month, but do you know how much money you will need to live on after you finish your job? The recently updated Pension and Lifetime Savings Association (PLSA)’s “Standards of Living After Retirement” lets you know how much annual income you will need after retirement. These standards and our tools and resources can help you plan for the future you want.
Comfortable Retirement Income
To achieve a comfortable standard of living, a single person needs £37,300 a year. A comfortable income for a couple is £54,500. At this level, you can enjoy luxuries such as a three-week trip abroad. You will also have more money for shopping. To achieve the minimum standard of living, a single person needs a retirement income of £12,800 per year. Meanwhile, a married couple would need to pay £19,900 a year. At minimum standards, basic needs such as groceries are met and there is still money left over for fun. For example, you can holiday in the UK several times a year, but not abroad. And this standard does not take into account the running costs of the car.
How much money do I need for partial retirement?
Partial retirement is beneficial for people who aren’t financially ready (or just don’t want to) quit their jobs completely. You may need less money for retirement than if you quit your job completely. After all, your employer will continue to pay you for your work. In this situation, you may decide to take retirement benefits to supplement your income while continuing to save under your plan. Or you may have other savings that you would like to use before you start withdrawing money from the plan.
What kind of lifestyle do you want to have after you retire?
What do you plan to do after you retire? Do you think you will take a lot of vacation? Do you want to redecorate your home or buy a new car someday? It’s important to ask yourself these questions. Knowing how much you’ll have to pay when you quit your job will help you determine how much money you need to save.
What is your standard of living after retirement?
PLSA has proposed three retirement living standards (minimal, moderate and comfortable) based on research from Loughborough University. Essentially, these criteria indicate how much money you need at three different “lifestyle levels.”
- Minimum amount – Basic needs are met, and some money is left over for non-essentials.
- Moderate – Provides greater flexibility and financial security than meeting minimum standards.
- Comfort – Increases financial freedom and allows for some luxury.
Each standard includes the cost of a “basket” of goods and services. These are goods and services whose prices are valued over time, especially to track inflation. This standard indicates the potential costs of housing maintenance, food and beverages, transportation, vacation and leisure, clothing, and assistance to others. Find out the annual income required for individuals or couples.
Adequate retirement benefits
To achieve a reasonable standard of living, a single person would need £23,300 a year, while a married couple would need £34,000. If you can afford a car, you can replace it every 10 years. Every year, she also takes a two-week vacation to Europe. Therefore, this standard also accommodates more expensive leisure activities.
How Retirement Planning Can Help You Achieve Your Retirement Goals?
Now you may know how much money you’ll need to fund your retirement. And there are several ways your retirement plan can help you save that amount.
If you pay into a company pension scheme, your employer usually also pays. Typically, the minimum deposit amount is 3% of your “qualifying income.” This is everything you can earn in a year between a minimum of £6,240 and a maximum of £50,270. However, some employers may apply a percentage payout on all income, even if it exceeds the limit.
Minimum deposit amount is 5%. That means the minimum deposit is 8%. Some employers will contribute more than a 3% minimum amount, while others will double your payment up to a certain amount. So, the more you contribute, the more they contribute. This will help increase your savings.
If you are part of a pension plan, the pot can grow because the money paid into the plan is invested. The longer you invest your money, the greater the potential for growth. However, keep in mind that the value of your investments can go down as well as up, and you could get back less than you invest.
Retirement plans can also help you reach your retirement goals thanks to tax benefits. Many people receive tax relief on their retirement savings.
What help is available to prepare for retirement?
There are many resources available to help you prepare for life after work. Learn more about planning for your future by attending a free Retirement Webinar. The information contained herein is based on research and should not be construed as financial advice. Tax rules and laws are subject to change and will affect the tax you pay depending on your personal circumstances and where you live in the UK.