Have you thought about how much you’ll need to live on when you stop working?
These are the results from the Poll:
- Yes, planning ahead is important: 53.3% of 197 votes
- No and I’m not sure if I’ll have enough : 46.7% of 197 votes
Usually, you’d expect your living costs to be lower once you’ve retired – but this will depend on your personal circumstances.
For example, if you don’t own your home, you would still need enough money to pay rent and utilities – unless you have plans to move in with family. Even if you own your home outright, remember that having more free time might mean you spend more on hobbies, holidays and days out with friends. You might also wish to put money aside to help your children or grandchildren buy their first home or go to university.
The Department for Work & Pensions (DWP) has set out how much you might need each year when you retire (for a modest lifestyle), based on how much you earn now:
If you earn less than £12,200, you might need 80% of this income when you retire
If you earn between £12,201 and £22,400, you might need 70% of this income when you retire
If you earn between £22,401 and £32,000, you might need 67% of this income when you retire
If you earn between £32,001 and £51,300, you might need 60% of this income when you retire
If you earn more than £51,300, you might need 50% of this income when you retire
So for example, if you earn £20,000 a year, you may need £14,000 each year when you’ve retired. Some of this will come from the State Pension – but the rest will have to come from your savings.
If you don’t know how much you’ve saved up in our pension, you can check it online anytime, by going to Manage Your Account (MYA). This is an area on the L&G website that lets you look at your pension information whenever you want. Click here if you haven’t yet registered for MYA.
Legal & General’s Retirement Planner tool will give you an idea of how much your Retirement Savings account might be worth when you stop working and how long it might last you in retirement.