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Summary
- Traditional notions about retirement age have undergone a lot of change over time.
- Increasing life expectancy and changes in the age requirement for state pension has contributed to this change.
- The age is expected to go up further to 67 by 2028 as the age is reviewed continuously and has a scope of further increase.
Traditional notions about retirement age have undergone a lot of change over time. Increasing life expectancy and changes in the age requirement for state pension has contributed to changing the concept of retirement. The state pension age, the age at which one begins receiving pension, in 2020 was raised to 66 for men and women. The age is expected to go up further to 67 by 2028 as the age is reviewed continuously and has a scope of further increase.
But there are no clear answers on how much pension is enough to live a comfortable life post retirement. In the article, we will try to find out a kind of a pension pot, which is good and figure out how its value can be boosted over time.
Copyright © 2021 Kalkine Media
Retirement income plan
To create an income plan, you have to make a record of all the funds available to you. The funds would include income and capital. To create a basic estimate, you can look at your present finances and how they are expected to change over time, accounting for the withdrawals to be made.
That would give a rough estimate of what is enough to retire at 60.
Track missing pension
A pension could easily lose track of if you have had multiple jobs or moved house. The Association of British Insurers has made an estimate that in UK, about £19.4 billion currently might be either lost or are stuck in unclaimed pensions.
This could be a time-consuming process. One might take help from professional organisations and service providers to claim any lost SERPs pensions.
Make correct investments
It is important to know whether your pensions are invested correctly. If you have got hold of a couple of private pensions or workplace pensions over the years, it is possible that one of those isn’t invested correctly. If that is the case, it could limit the growth in the pension pot. If your investment strategy is poor, it could cost you as much as £13,000 in 20 years.
A good pension would offer a varying range of investment funds that would put your money in different types of assets in different geographical locations. The diversity would also help you to assess your risk appetite. A wide range of investment choices is provided by a SIPP (self-invested personal pension). But you could also seek professional help before making investment decisions.
Bring down charges and fees
A good pension is one where fees charged are kept at a minimum. Pension charges reduce your investment returns. It could severely impact the amount you ultimately are left with at retirement.
Reducing fees and charges helps you to save £23,000 on an average over 20 years.
