Budgeting for retirement can be more difficult than budgeting whilst you’re still working. Some costs may increase, such as heating your home, and you’ll have to work out exactly how much income you will be receiving from your pension.
The average British wage is about £26,000 – to replicate that in retirement you’d need a pension pot of more than £300,000. However, according to ‘Which?’ it’s unlikely that you’ll need as much money in retirement as you did while you were working, although the amount clearly depends upon your own hopes and expectations of how you will enjoy your retirement!
When sitting down to plan your retirement budget, it’s a good idea to first get some idea of your current spending. A report by ‘Which’ suggests keeping three months’ worth of bank and credit card statements, payslips going back three months and three months of shopping receipts – remembering to factor in one-off spends like birthdays, Christmas, holidays and car repairs. Then work out where you think you’ll spend more once you’ve retired – because your situation is changing so will your spending habits. You’ll need to compare this with how much income you’ll be getting in retirement (from pensions, benefits or savings), to find out if there are any shortfalls.
The above simple plan is a long way off proper financial planning, but it should provide a handy starting point as an indication of the income you might need in your retirement. Once you know that, we can set about working out exactly what you do need to make sure you can do everything you want in your later life.
Planning for Retirement needs careful attention to Lifestyle Planning, to make sure you will have enough income to do the things you want to in your retirement.
If you would like to discuss your concerns for retirement call us on 01454 416653.
Sources: www.which.co.uk (Published advice on the website: January 2015)