In the back
Buying an annuity may
secure your finances until
you die, but the amount of
income it will generate is
often a lot less – and a lot
less flexible – than living off
your investment portfolio
In reality, there are only a few
variables you can control that
influence how much you will receive
in retirement:
[ PLATFORMS & PENSIONS ]
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lifestyle, so you have an idea of how
much money you need to support
it each month/year. Although you
are likely to slow down in your later
years, budget for being active for at
least the first 10 years of retirement
and putting something aside for
healthcare costs in the latter years.
And remember inflation!
Taking stock
Look at the pensions you have
accrued over the years and add
them together. Add in the monthly
contributions that have still to be
made and work out a pot size at
retirement.
If you plan to retire early, consider
two important points: you will lose
any further contributions into your
pension and you will be spending it
earlier. Every year of early retirement
will have a significant impact on your
total pension pot.
If you have other investments, such
as a house, second home or other
assets, try to value them and assess
whether they are fit for purpose in
retirement. You don’t have to have
a fire
sale to boost your
pension, but you may not need a
large house or one convenient to your
former place of work.
Remember assets such as larger
houses, cars and second homes all
command significant running costs
that may be unaffordable on a pension.
Finally – and most importantly – your
investment strategy can make a big
difference at and beyond retirement.
Buying an annuity may secure your
finances until you die, but the amount
of income it will generate is often a lot
• Your chosen or desired lifestyle
(and associated costs)
• The value of your pension pot and
how much more you can realistically
add prior to retiring
• The age you retire at
• The value of other assets you can
realise at retirement
• Your investment strategy in
retirement
The first thing to do is think about
what your lifestyle in retirement
may look like and compare it to
how you live now. Ask yourself if
you are likely to change your habits
and whether, with extra free time,
you are going to spend more on
travel, hobbies, shopping and so
on. Be honest and try to cost up this
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