In our Pensions Crisis Coach series, we aim to help ease your retirement worries. Are you concerned you’re not saving enough for your later years, or don’t know how to find your lost pensions? Email us at money@theipaper.com. We’ll seek to get you on the right track with help from some of the best financial experts and advisers in the business.
Bill writes: I am 59 years old and getting bored of working and thinking about retirement. I will get £8,000 a year at 65 from a defined benefit (DB) pension. I already have £480,000 saved in a defined contribution (DC) pot and have £180,000 in shares and Isas. My wife receives £18,000 a year from her DB pension. We have no debts, no mortgage and no kids to support. Do we have enough to call it a day?
Alina Khan, the i Paper’s money coach reporter, responds… In terms of whether you have enough to retire will depend on the type of retirement you want to have.
Pension UK’s Retirement Living Standards says for a couple to have a “moderate” standard of living they would need £43,900 a year and to have a “comfortable” standard of living in retirement, a couple would need £60,600 a year.
Both you and your wife have DB pensions, which provide you with a guaranteed income for life – regardless of how long you live, and knowing this guaranteed income covers the basics can provide real peace of mind.
But of course, you won’t receive yours for another eight years, and you won’t get your state pension until after that – at 67 – so you’ll likely be relying on your Isa and DC pension – a pot of money you can take once you hit 55 – to provide a lot of your income.
So is it enough for now?
Dan O’Sullivan, owner of Full Swing Financial Planning, said a good starting point is to compare what you spend each month with the income you could rely on if you stopped work now.
He said: “In particular, ask whether your wife’s £18,000 a year pension would cover essential bills, and how much discretionary spending sits on top of that.
“Once you understand any shortfall, you can assess how much income needs to come from savings and investments. Cash should be clearly split between an emergency reserve and any short‑term spending plans.
“For money needed in the near term, cash has a role, but over the medium to long term its growth is unlikely to keep pace with inflation, unlike investments.”
So what level of risk should you be taking with your pension? Most DC pension pots are invested in default funds that don’t tend to come with the highest levels of risk.
Customers can choose which funds their pot is invested in, but it is important for you to invest at a level of risk that feels comfortable to you, but is also appropriate for when you expect to draw income from it, known as drawdown.
O’Sullivan said: “Risk should generally reduce as funds near their point of use, but only in a way that still supports long‑term income needs.”
Depending on your investments and how they perform, O’Sullivan said your pension could potentially support income of around £26,000 a year, or £2,200 a month.
“When combined with your wife’s £18,000 pension, this places you broadly in the ‘moderate’ retirement range, though your own spending needs are a far better guide than benchmarks.”
He also pointed out the way you take income from your pension matters and there are a few options to consider.
Your DC pension allows you to take 25 per cent as a lump sum tax-free at any time once you turn 55, leave the rest invested or take your money as regular payments or as lump sums when you need them.
The money you leave invested in your pension can of course grow or fall depending on market conditions.
If you want to have a guaranteed income, you could consider taking out an annuity with some or all the remaining money you have in your pot.
An annuity essentially is swapping your pension savings for a guaranteed regular income that will last you for the rest of your life.
How much you get will be determined by what annuity rates each provider offers and rates are based on things like the size of your DC pension, your age and external economic factors.
You can access annuity calculators online that can give you an idea of what you might be able to receive, as much will depend on factors like your overall health.
Once you turn 65, your £8,000 a year DB pension will kick in and then shortly after you will begin to receive your state pension, which will give you more guaranteed income and potentially reduce the pressure on needing to rely on investments in retirement.
“You are quite possibly in a position to retire, but only once income needs, investment risk and tax are considered as a whole. Given the sums and complexity involved, taking regulated financial advice could help you retire with confidence rather than doubt,” O’Sullivan said.
Hence then, the article about at 59 i want to retire i have 668 000 saved is this enough was published today ( ) and is available on inews ( Middle East ) The editorial team at PressBee has edited and verified it, and it may have been modified, fully republished, or quoted. You can read and follow the updates of this news or article from its original source.
Read More Details
Finally We wish PressBee provided you with enough information of ( At 59, I want to retire. I have £668,000 saved – is this enough? )
Also on site :