How do you work out what income and how much money you will need when you retire?

In working out what income you will need in retirement, there are many factors to take into consideration. You are not only having to look ahead 20, 30, maybe 40 years into the future, you are also having to look at your outgoings in the here and now and having to work out what you can afford to save in order to fill your retirement pots.

Of course, one of the biggest factors, and one that is becoming ever more significant as medical science continues its advances, is how long you will be retired for. Long gone are the days when a man retiring at 65 would do well to reach 70. Of course, no-one has a crystal ball, but today, a 65-year-old man has a 50% chance of living to 87, and a 65-year-old woman a 50% chance of living to 90. Many people live longer than this. The longer your retirement, the longer your retirement income and savings need to last.

The type of lifestyle or standard of living that you want will be a big factor in determining how much money you?ll need in retirement. It is generally agreed that you?ll need anywhere between half and two-thirds of your pre-retirement income to sustain a similar standard of living. Of course, your spending habits and priorities, and therefore the amount of income you need, will change once you retire. While you?ll no longer have any work-related expenses (such as travel), and you will have hopefully paid off your mortgage, you will almost certainly spend more time (and money) on hobbies and leisure interests you neglected while working. And the number of hours you spend at home are likely to increase meaning your household bills rise.

Careful planning in building up your savings to support your future is needed and is just as important as getting advice when you reach retirement.

If you would like to have a chat about planning for or managing your retirement, please do not hesitate to get in touch with us on 01945 581937.

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