Planning for retirement, or later life finances, are topics that, for most people, are firmly placed in the ‘deal with later’ part of our brains, even though we acknowledge how critical both are to later life wellbeing and security.

Equally, you won’t be too surprised to discover that here at The Financial Planning Group, an important part of our role is to remind, not only our clients, but also the wider community, of the kind of pension pot that will be required to provide the standard of living they would hope for when that day comes.

Whether or not you have a larger company pension provision, or several smaller pots accumulated from different companies spread over a working lifetime, it is important to know (as early as possible) whether that fund comes close to matching your future expectations. And, if you have no pension fund whatsoever, and are becoming increasingly concerned about what you’ll need down the line, we are here to provide that clarity.

A recent article in the Daily Telegraph publishes some of the ball-park figures involved in matching expectations with reality, set against an economic back-drop where the cost of the minimum standard has grown 18% in the past year.

Lauren Almeida’s article suggests that workers need to have a nest egg of at least £645,000 if they want a comfortable lifestyle when they retire, and although there are nuances, that figure certainly serves as a useful benchmark to measure your own circumstances against. The article goes on to suggest:

  • A single person would require an annual income after tax of £26,700 on top of the full state pension, according to a report from the Pensions and Lifetime Savings Association. This would fund three weeks holiday in Europe each year, a £144 weekly budget for food and £56 on birthday presents.
  • That would require a private savings pot of at least £645,000 at age 66, based on current life expectancies and annuity rates, according to calculations by the wealth manager Quilter. A couple would require a private pot worth £797,000, it said.
  • A worker targeting a more moderate lifestyle would need less than half that amount, at £301,000, and a couple would need £294,000. This would allow for two weeks holiday in Europe, and around £74 a week on food.
  • A no-frills retirement would require a much smaller pot of £44,000. This would not budget for a car, but includes a week holiday within the UK and around £41 on a weekly food shop.
  • While more achievable, the cost of the minimum standard has grown 18% in the past year, according to the Pensions and Lifetime Savings Association. A retiree now needs a total £12,800 in annual income to cover their basic needs and live with dignity, it found. Last year the average cost was £10,900.

We help individuals, families and businesses to place their financial affairs in context with their future goals and aspirations. We provide a simple, structured, disciplined and reviewable planning service. We will change the fundamental relationship people have with their money to give them confidence and clarity in their own future. We want our clients to value our service, as much as we do.

If you would like to speak to us about a medium to long term strategy for your pension provision, please contact us to arrange a meeting in our office in central Teddington by calling Tim Norris on 020 8614 4780 or emailing him at Tim.Norris@fpgonline.co.uk

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