Retirement Health
Achieving a strong financial footing in retirement starts throughout the pension saving journey, even during times of economic hardship such as the current heightened cost of living.
How much do individuals need for retirement?
The Pension and Lifetime Savings Association in partnership with Loughborough University have developed a Retirement Living Standards resource.
This was built to help people understand what their retirement lifestyle might cost, either as an individual or couple, by estimating key expenses like food, home, transport, holidays and leisure, clothing, other personal expenses and giving.
Combining these costs, individuals can choose from 3 possible retirement level expenditures (minimum, moderate or comfortable) based on different lifestyles depending on their preferences and retirement goals.
What should those thinking about taking their pension money now consider?
Dipping into your pension pot early, for example to cover short-term living expenses, could have a significant impact on your future retirement income.
Withdrawing money from a pension can have tax implications. Normally, only a cash lump sum of 25% of your pension pot is tax free. In addition, it may limit tax reliefs available for any future pension contributions.
What support is available for those thinking about taking their pension money?
Pension Wise from MoneyHelper offers free, impartial guidance to over 50s with a defined contribution pension pot (either personal or workplace).
This government service includes an approximately 60-minute appointment with a pension expert.
During the Pension Wise appointment the different pension options available will be explained as well as the other things that need to be thought about.
What should those thinking about stopping or reducing pension contributions consider?
Stopping or reducing pension contributions can have long term financial consequences, as a smaller pension pot now could lose out on potential future growth.
It could impact on their employer contribution available.
What should those thinking about using drawdown consider?
You need to carefully consider how much income you can afford to draw from your plan, otherwise there is a risk you could run out of money.
It is also important to regularly review your income levels to take account of investment performance.
To help enable informed drawdown decisions, we have teamed up with Guiide to allow our members free access to their pension calculator.
What does the Guiide pension calculator do?
If you want to drawdown your pension, it shows you how much you need to pay in before you retire and how much to take from your pension and other savings when you retire, to get what you want tax efficiently and avoid running out of money.
It also shows you how much money you can save in tax, meaning more of your money can go towards your retirement income.