Retirement: The cost of living or existing crisis?
We’re all well acquainted with the cost-of-living crisis by now. Whether it’s filling up the car or your shopping trolley, the cost of the basics has rocketed lately with inflation levels higher than any seen in my lifetime.
The interesting part is that inflation is a year-on-year measure so for example your bottle of milk may have risen by circa 27% in the past 12 months compared with this time last year.
Will the price ever go back down now we’re used to paying it? Even if inflation on your milk is zero over the next 12 months, you’ll still be paying the inflated price this time next year. Then there’s energy, when we will see stability in the energy market is anyone’s guess. Will we see a return to “normal” living costs?
My question is this: Based on your current pension planning, would your retirement be best described as “on the beach” or “on the breadline” or do you simply not know?
State pension: The full new State Pension (35 years National Insurance contributions) is currently £185.15 per week (£9,627.80 per annum). This is due for a 10.1% uplift next tax year due to the triple lock which is good news. That said, if you feel that the triple lock will be retained in the long term, you’re more optimistic than I.
Final Salary/Defined Benefit pensions: These pensions also have an element of inflation proofing built in but again I wouldn’t be holding my breath waiting for good news on the future generosity of these schemes whether they be public or private sector.
Defined contribution pensions: How much will you have saved in your pot by the time you retire? The main variables here are how much do you wish to spend per year from your pot and how long will you live? Of course, the latter is a bit of a tricky one which only further demonstrates the need to plan as early as possible to reduce the chance of running out of money.
The amount of income needed in retirement of course varies greatly from person to person depending on their circumstances and lifestyle. This is all without potential care costs of course but that’s a subject for another day. I think that one thing is for sure though, minimizing your reliance on the future generosity of the State is definitely a wise move.
It’s never too early or too late to get a plan in place for your finances, so, If you’re keen to get into a more informed position regarding your retirement and how the future may look, it may be worth speaking to our expert team to review your current pensions/retirement savings.
For a free initial consultation to discuss how we may be able to help you plan your finances for the future simply click on the “Speak to Our Experts” button on this page, call us on 01244 729 074 or email email@example.com
Please note: This article is provided for information only and must not be considered as financial advice. We always recommend that you seek independent financial advice before making any financial decisions.
Levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor.
The value of your investment can go down as well as up and you may get back less than you have invested.
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