September 2007

Q & A - INCOME IN RETIREMENT, HOW MUCH IS ENOUGH?

Q. I am 47 and although I have been paying in to a pension for a number of years I really don't know whether it will be enough. I would like to retire or at least work less when I am 60. How much is enough?

A. Pension plans play an important part in retirement planning and do have many advantages e.g. tax relief on contributions, tax-free lump sum at retirement and a pension payable for life. They do still have some limits placed on them as to how much you can contribute and also the extent to which you can access your funds later, so you should look upon your pension as being only part of your overall retirement plan but not in isolation.

The amount of income you will need undoubtedly varies from person to person. Our needs, desires and expectations are all different.

The best way is to sit down and carefully work out what you think you would need as an income when you retire and at what age. Then, with the help of a suitably qualified Financial Planner you can take stock of all the assets that you have now which can help towards achieving financial independence at your chosen age. This will let you see whether you have enough in your overall "pot" or whether you need to be saving more.

You may have other assets that can be utilised e.g. shares, investments, cash in the bank or even your property. All of the above may in some way provide you with additional income in retirement.

With a bit of forward planning you can ensure that you will have enough for when you reach retirement.