This is often one of the most challenging questions faced by those approaching retirement. Recent research (1) has concluded that the average cost of being a pensioner is £11,620 a year. This figure represents an increase of £420, up 3.75% on last year.
As might be expected, there are marked regional variations. Those living in Wales spend £9,990 whereas those living in the more expensive South-East spend more, around £13,270.
Unsurprisingly, retired people spend more time at home, and around 14% of their cash is spent on fuel and housing. This is more than they spend on food and non- alcoholic drinks (13%).
What these figures demonstrate is how important it is to make adequate provision for retirement. The new flat-rate state pension, paid to those retiring after April 2016, is set at £155.65 for someone with the required National Insurance contribution record, meaning that there will be a funding shortfall for many who have either not made sufficient contributions or have ‘contracted out’ for a significant period of their working life.
PENSION PLANNING PAYS
To enjoy a comfortable old age you need to think about what your retirement goals are, and how much money you need to fulfil them.
Many people find it helpful to think about their income needs under various simple headings, such as basic living costs, emergency cash reserve, pastimes and hobbies, gifts to family members, and money earmarked to enable them to realise their ‘bucket list’ ambitions.
By viewing your finances this way, you can gain a clear picture of how much you need to have saved by the time you reach retirement. With these amounts in mind, you can build up a comprehensive plan to help ensure that you can enjoy the sort of retirement you’ve always wanted.
THE VALUE OF GOOD ADVICE
The key to building up an adequate fund is to start as early as possible and save as much as you can reasonably afford, not least because of the tax breaks available on contributions. Annual and lifetime allowances apply.
(1) Key Retirement, The annual cost of being a pensioner, May 2016
Here at Logic Wealth Planning we think it’s never too early to start planning for your retirement, to ensure that once you stop working you can continue to enjoy life to the full.
As one of the leading IFA practices in Greater Manchester, Logic Wealth Planning has a team of experienced Financial Advisors specialising in Wealth Management. Working closely with clients in the Heywood, Rochdale, Bury and surrounding areas across the North West, we believe that however modest your income may be, when it comes to Pensions, Savings and Investments we provide the best financial advice, ensuring that your money is working hard for you and allowing you to enjoy a comfortable lifestyle right through to and including your Retirement years. For your first meeting with us – entirely free and without obligation – please call us now on 0808 1234 321. We look forward to hearing from you.