Your pension in your pocket
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How much do you need to retire?
We all know we have to retire at some point. But how do you know if you’ll have enough money?
Living costs in retirement
Life changes when you retire - and so does how you spend your money. Whatever your plans, it's important to keep on top of things and think about the lifestyle you want.
Take a moment or two to work out a budget. That might sound tough or boring, but the better you know and plan your finances, the more confident you'll feel about your decisions.
Your personal circumstances
Everybody's circumstances are different, but the key consideration for most people when they think about retiring will come down to factors such as:
- how much money you think you need in retirement
- if you plan to transition into your retirement by working part-time
- if you have any debt to pay off
- your life expectancy and health
- how much money you've saved in pensions and other investments.
How much will you need?
Based on research by Loughborough University, for the Pensions and Lifetime Savings Association, these living standards show what your annual income in retirement could look like.
Inflation
The effects of inflation mean that money is unlikely to buy as much in the future as it will today, as the price of goods and services increase.
However, there are steps you can take to protect any income you take from your pension. Some retirement products offer some degree of protection from inflation. And you don't have to take all your pension - you can keep some invested, so that it can potentially grow.
State Pension
You'll only be able to receive the State Pension when you reach a certain age, and if you have paid enough in National Insurance contributions.
Find out more about the State Pension
Debt
If you are in debt, you should consider the impact any debt has to your retirement plan. Debt collectors can go after any money you take out of your pension.
Using your pension to pay off debts
If you want to use your pension to pay off debts, make sure you've got enough money left for retirement. The money you have left after tax might not be enough.
It's worthwhile looking at other possible options to pay off your debt. You can find more information on the Government website.
You can see how much tax you could pay when taking a cash sum from your pension, using our tax calculator. If you're just taking tax-free cash, there won't be any tax to pay.
More information
You can find impartial advice on debt on these government websites: