How much Pension Pot do you need to Retire?

May 4, 2018 | Retirement Planning

The question of how much pension you need to live in retirement is not a fixed sum for everyone to aim for. It is dependent upon a number of factors such as:

  • What kind of lifestyle you want in retirement
  • When you want to retire
  • Your future plans
  • Cost of living
  • Current state of your finances and outgoings

It is important to factor in that many of your current expenses may not exist. For example, travel costs to work and any money spent while at work will stop. You may have paid off your mortgage by the time you retire, and you may qualify for other discounts now that you are classed as a pensioner.

This means that the money you need now you might not be needed once retirement comes.

It is believed that to retire on the same standing of living you have now; you will need to have a pension that pays out two thirds of what you are earning in employment.

Let’s say you are earning £25,000 per year, you would need a pension that paid £16,750 per year. The state pension providing you have 35 years of National Insurance paid in would give you around £8,000 of that figure. Leaving just under £9,000 a year to come from additional means, such as a pension fund.

As such, you would need a pension pot of around 160,000 to 180,000 to receive £9,000 a year in pension.

However, this gets a little sticky as other factors come into play such as do you want to draw down some of your pension as a lump sum or buy an annuity.

This is a rough guide to how much you would need and it greatly depends on your circumstances. If you have a mortgage to pay you may need to drawdown some of your pension to pay it. You may have ambitious plans for your retirement, and this may require additional funding.

Getting the Right Pension Advice

As an award winning financial planner I can help you manage your money to give you a better retirement. Click here and complete the Call Back Service form and together we can look at what you want from your retirement and how to fund it.

Source: Daily Mail

For more information, please contact Michele Carby at Holborn Asset Management on +971 50 618 6463 and on e-mail at [email protected]


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