How long do you have before retirement? How many pay cheques? Let’s say you’re planning to work for 20 more years before you retire, that’s only 240 pay cheques! Fewer than you thought, isn’t it?
If your household currently brings in circa £50,000 per year and you’d like to maintain the lifestyle you’ve become accustomed to after you retire, you’re going to need to find the majority of that £50,000 from your savings.
Currently, the state pension provides retirees with £155.65 per week. Of course, this is expected to increase with inflation, but it’s worth bearing in mind that nothing is guaranteed! At current state pension rates, that weekly allowance adds up to only £8,093.80 per year. Even with a second retiree in the household, you’re a long way off that £50,000 target.
We all have big dreams for our retirement – perhaps take that holiday of a lifetime or pay off the mortgage. One thing is for sure, money worries are not featured in anyone’s ideal retirement plan, so why not start planning now?
Pensions are a hot-topic in 2016 as all businesses, large and small, will be required to make arrangements for workplace pensions for all their staff under the automatic enrollment scheme. Another big change to the way the government handles pensions is that you can now apply for an online state pension statement.
The state pension statement is a forecast and should be a vital tool in planning for your golden years. Previously this service was only available via phone or post and only available to those over 50 years old. This new move to allow everyone access, and easy access online at that, shows that the Government is getting serious about helping people plan for their pensions.
You’ll need a government gateway ID to apply, if you have one already (contractors, freelancers and self-employed will certainly have one) go ahead and log in with those details, if not, you’ll have to set your Government Gateway ID up’. You’ll also need your payslip, passport or P60 to hand to answer the security questions.
Once logged in the site predicts the weekly, monthly and annual state pension for the date you’re due to retire. Remember, if you don’t currently have a workplace pension scheme, you soon will; the only exceptions to this are those who are under 22 years old, earn less than £10,000 per year or work abroad.
Helpful tip #1: If you’ve spent time working abroad, this may count towards your state pension, which requires at least 10 years of recorded National Insurance payments – but you have to inform HMRC. You can make this declaration via the state pension scheme login
Helpful tip #2: If you’re a work addict and plan to work past the state retirement age, you could increase your state pension contributions, read all about deferring your state pension here.
Most importantly, don’t leave it too late, whether you’re in your 20s, 30s, 40s, 50s or 60s go and log in and start planning, the longer you have to prepare, the better. And if you’d like general advice on this, why not give us a call on 01614776789 / 02031741436 or email us at [email protected] for a no-obligation discussion about pensions and savings.