Unless you choose to take your retirement income as an annuity – a guaranteed income for life – it’s up to you to make sure your pot lasts throughout your retirement. But how do you work out how long your pension income will last? And what do you need to think about? We cover everything you need to know.
Retirement looks different to everyone. Whether you have plans to travel the world or are looking forward to a quiet life spent with loved ones, you want to be sure that your pension savings will last you long enough to cover the costs. And how long your pot will last really depends on four things…
1. How much you’ve saved into your pension
The amount you’re saving – or have already saved – into your pension will make a big difference. You want to make sure you’ve saved enough to cover everything you want to do in retirement, plus the necessities.
If you’ve stopped work and finished saving, check your balance so you know what you’re working with. Make sure you’ve accounted for any old workplace pensions you might have forgotten about. You can find out how to track down old plans in our article. If you find your retirement savings are spread across a few different plans, you might find them easier to manage if you bring them all together. Transferring isn’t right for everyone though, so check with a financial adviser if you’re not sure.
If you’re still saving, our pension calculator can help you work out how much money you could have in your pension pot when you come to retire.
Don’t forget to account for the State Pension too. If you’ve made over 30 years’ worth of National Insurance contributions, you’ll be entitled to receive it when you reach State Pension age. From April 2023, those qualifying for the full new State Pension will receive £203.85 a week. And those who are on the older, basic State Pension will receive £156.20.
Although this will give your retirement income a welcome boost, the State Pension on its own would give you less than a…
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