This can be a very tough question to answer. You may know that you need to save, but you might not know how much, and this can be very frustrating. If you want to help yourself however then here are some top tips that will tell you everything you need to know.
Power of Seven
UK households that are able to put away seven times their yearly income by the time they reach the age of 68 should be able to have a very comfortable retirement. They should also be able to maintain a very similar standard of living when compared to the average household in the UK. This may sound challenging, but you need to set yourself milestones and you also need to try and pace yourself. If you are able to save a year’s worth of income by the time you reach 30 then this will give you a very strong start.
Your Pension Pot and Retirement
Knowing how big your pot needs to be before you can actually retire is super important. If you want to hit the right target then you need to know how much you ideally need to save at a younger age. From the age of 25, you need to try and put away 10% of your annual income, before tax, every year. If you do this, then you will be helping yourself to achieve a good pension and you will also be able to have a comfortable retirement. If you have a company pension as well, then you don’t have to put away as much. If you know that you plan on retiring abroad then it’s wise to look into overseas pension transfers where you can. If you need some help then www.pensionsforexpats.co.uk can give you all of the advice you need.
5PC Withdrawals and Other Information
One of the main challenges that people face when they start planning their retirement is trying to plan how long their pension pot has to actually last for. When you look at the standard age of retirement, which is 68, you will see that you need to shoot for a withdrawal rate of 4.1pc and 4.4pc. This will vary depending on some of the matters that you are unable to control, such as how long you are going to live for, market returns and more.
Other Notes on Withdrawals
You should be able to withdraw from your pension when you hit the age of 55. Tax treatment will vary depending on the tax rules, the individual circumstances you have and more factors. It should be noted that this can change as well. If you are not sure about the overall suitability of an investment, then it would be wise for you to speak with a financial advisor. When you do, you can then trust the fact that you are making a good investment and that you are making the best decision regarding your finances in the future.