Expert reveals tips on how to save for retirement
We use your sign-up to provide content in ways you’ve consented to and to improve our understanding of you. This may include adverts from us and 3rd parties based on our understanding. You can unsubscribe at any time. More info
It’s important for those who are 20 to 30 years away from retirement to be able to envisage what this time will look like for them before they start taking active steps to know how much to save. In an exclusive interview with Express.co.uk, Peter Komolafe, founder of The Conversation of Money podcast discussed the specific amounts that people may need for different lifestyles they may wish to lead in retirement.
He said: “When you retire, do you want to maintain the same livelihood and lifestyle you enjoyed during your working years?
“The reality is that no one wants to get to retirement then have to downgrade their lifestyle.
“So, try to envisage what do you want that retirement to be like for you.
“Then you need to try and essentially ascertain the monetary amount needed to sustain that livelihood.”
The money expert referred to a Which? Survey from February with nearly 7,000 retirees taking part.
They were asked about their spending to develop retirement income targets for one-person and two-person households.
The survey found those who are single and retiring would need £13,000 per year via pension drawdown to live an ‘essential’ lifestyle.
Mr Komolafe continued: “What this basically means is you can pay the bills and not really much else.
For single-person households, achieving a comfortable retirement would mean a pot of around £192,290 alongside the state pension to get to an annual income of £19,000 via pension drawdown, or £305,710 through an annuity.
A comfortable lifestyle includes things such as eating out at nice restaurants and going on short haul holidays buying tobacco and alcohol, as well as giving to charity.
If someone wanted to live luxuriously and go on a long-haul holiday and get a new car every five years that number would then be £31,000 per year.
For couples, it varies – it’s £18,000 for an essential lifestyle, £26,000 for a comfortable lifestyle and £41,000 to a luxury lifestyle.
He continued: “So you have to ask yourself, what type of retirement do you want?
“Do you want to be able to go on long haul holidays, do you want to be able to change your car every five years, do you want to be able to eat out and do your hobbies, and have time for those kinds of things?
“If you, do you need to figure out the monetary amount you need to generate on a yearly basis and try and create a plan towards that.
“The good news is that most people have access to the state pension as well so that will fill up some of that gap.”
The full state pension for the year 2021-22 is currently £179.60 a week (£9,339.20 a year).
Some people may get more or less than this depending on their National Insurance contributions.
Source: Read Full Article