What is your retirement number?
In my experience most people fear retirement; not just on a monetary level, but also on a psychological one. The two are, after all, often inter-related.
Your ‘number’, or how much you should be setting aside for when you stop working, has to be dependent upon your own unique circumstances. How much you need, and when you’ll need it, really does depend upon how you wish to live your life.
Unfortunately, many articles that appear in the press allude to us having to pay huge monthly premiums into our pensions, often way beyond what is personally affordable. Extremely low annuity rates are largely to blame for this, along with low anticipated growth rates.
I recently met with two new clients who were under the impression that they would have to carry on working until they were 70 because ‘the word in the office’ was that it wasn’t worth retiring until they had accumulated a certain amount in their pension pot.
Through modelling various scenarios and by fully understanding their own unique scenarios, we demonstrated that they could actually both retire at age 59.
So, how exactly was this possible?
Careful planning allowed them to have a coordinated strategy for their pensions and investments, making the most of their tax allowances each year and then drawing money – when required – from different pots in the most tax-advantageous way.
We have a mantra at Blue Sky Financial Planning:
If you are planning to invest in a pension, then first you must invest in planning.
Don’t let others tell you what you should be paying into your pension. A comprehensive plan helps you understand what pension strategy is appropriate, so take control and partner up with a professional financial planner.