When do you need to retire?
The general perception is that you will work for most of your life only to retire once you hit a ripe old age – but who says you won’t be ready for retirement by the age of 50? By 40? Or even 30 years old?
You can retire at any age you choose to as long as you have the financial means to support yourself and any dependents. There are a few options to consider.
Retirement is a point in time when you cease working for good. From this point, your employment income will typically be replaced by one or more of three options:
- The State Pension
- A workplace pension
- A private pension
The State Pension and some other pension funds are governed by certain rules and will have access restrictions. In order to know what’s right for you and to ensure your retirement is a fertile one, it’s best to understand the facts and speak to a professional advisor.
How much retirement money is needed to live your life to the full?
The main thing to ensure is that you have enough money when you retire to maintain the lifestyle you’ve become accustomed to. If not, you’ll be working for many more years or making some big sacrifices in order to live.
A basic way to calculate how much money you will need during retirement is to work out the cost of essential bills and allow for disposable income. Once you have this figure multiply it by 20. This will give you a guestimate pot of money needed if you were to retire at around 65 years old. As with any financial predictions, please consult a professional to weigh up your personal circumstances and requirements.
What pension investment is right for you?
Taking your pension depends on a number of factors, including when you plan to retire, how much pension you will receive from all sources, any other income or investments you have and your attitude to investment risk.
The State Pension requires you to have made National Insurance contributions for at least 35 years in your country of residence.
Investing in a workplace pension will see about 5% of your (Qualifying Earnings) automatically taken from your wages every month and safely placed into your pension pot. Your employer will also contribute to your pension scheme at around 3% of your (Qualifying Earnings) per month into their chosen Workplace Pension Scheme.
There are restrictions on how much you can pay into pension savings each year and the age at which you can draw from your pension but at least you know exactly how much is there.
Becky has been a god send to my husband and I in navigating the complicated world of pensions and life insurance. She always has time to explain your options (even multiple times!) and her advice is practical, always with your goals in mind. I wouldn’t use anyone else for our personal financial advice.
What other ways are there to fund retirement?
You are quite within your rights to pay more National Insurance to top up a State Pension or add a lump sum at the end of the tax year into a workplace pension. There are other ways to fund your retirement too such as property investment, tax-relief ISA funds or private savings.
Again, there will be some restrictions as to how much money can be paid in to or withdrawn from funds but in most cases, long-term investing will pay off.
Private funds, property investments and stock market trading offer many options to choose from, so it’s best to seek professional advice before investing.