Pension Saving for Retirement

When you retire, you will still need an income to meet the lifestyle you have planned for a long time. People are living longer and enjoying better health than their forefathers. One way of determining how much income you need is to work out the likely expense of household bills and add to this your lifestyle choices, such as traveling, hobbies and entertainment. Another way is to determine what outgoings you will not have in retirement, such as traveling to work, and deduct these from your current income requirements. Either way most of us live up to our income and that is likely to form the basis of your needs in retirement.

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The state makes some contribution to this in the form of a basic pension and, if you qualify, for supplementary pensions or benefits. The basic state pension is equivalent to about 19% of average earnings*, so is well below the defined poverty line. The ratio of those in retirement to those in work is getting greater; therefore fewer people are supporting the state pension through National Insurance Contributions. This means it is getting too costly for the taxpayer so state benefits are likely to reduce.

Most people therefore need to supplement the state pension to maintain a reasonable standard of living in retirement. Saving for retirement does not have to be through pension schemes but their accompanying tax benefits make it worthwhile for pensions to be included in your financial planning. Pension schemes are available either through your company, by taking out a personal pension or both.

*Office of National Statistics October 2008.

So if you are reviewing your Pension arrangements, utilise our

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