Will you ever be able to retire? - December 2014


According to the Telegraph, those of us that make up Generation Y (currently aged 18-33) may not receive the same generous pensions as the rest of us who are at (or coming up to) retirement age. 

If you are planning to retire on a state pension, then you may want to review your financial plans and budgets. According to the money advice service, a basic state pension is currently £113.10 per week for a single person, or £226.50 for a couple provided that both have enough qualifying years.

For some people, a basic state pension will not be enough for them to sustain their desired lifestyle upon retirement. Having an effective financial plan which will offset any budget shortfall is therefore important.

You may plan to utilise savings, downsize to release capital or have investment income which will offset any shortfall. In either event, these need to be part of your financial plan, based upon a clear understanding of your monthly expenditure.
Although options do exist for those getting close to retirement, the earlier you start a pension the better. For example:

Someone saving £100 per month for 40 years (eg from 25 to 65) would put the same amount into their pension fund as someone starting 20 years later, who pays £200 per month.

However, the person who started saving at 25 would have a much bigger overall fund. Assuming an identical investment strategy and with both achieving a 6% return over the investment period, which isn’t guaranteed, then;

    • The person starting at age 25 would build a fund of around £190,000

    • The later starter’s fund would grow to around £90,000

If you're unsure whether your financial plan or pension plans are right for you, or you need help creating them, Always Independent are here to help.

We offer every client a free initial meeting to discuss their needs, and can provide independent expert advice.

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Registered in England and Wales number 6441865 © Always Independent Financial Solutions Ltd
Our alternative dispute resolution provider is the Financial Ombudsman Service. Their website is financial-ombudsman.org.uk and you can find out more information via this link.
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