Retirement for most is the sunrise on a beautiful day, the beginning of a new chapter in your life, and the freedom to enjoy your life without work limitations. Firstly, congratulations if you’re almost there, you’ve put in years of work and the glorious idea is on the horizon, or if you’ve still got some way to go, you’re probably wondering how much you will earn when you retire?
When you finally throw in the towel and step away from the day job, it’s safe to say your income will be less than what you’re used to, but your living costs will also change. When you’re working out if you’ll have enough money to survive retirement, you’ll need to:
- Find out what you’ll receive from your pension pot, the State Pension, and any other income you may have.
- Work out the tax you’ll pay on your retirement income.
- Understand what your living costs are likely to be.
After you’ve done the calculations, if you decide you won’t have enough to live on after you retire, you could put more in your pot now, or delay taking your pension by retiring later.
So where exactly will your income come from?
Most likely, you’ll have pensions from your employer(s), personal pensions, and the State Pension provided by the government. Plus, you may see other income from:
- State benefits: pension credit, housing benefits, council tax reduction.
- Housing: rental income, selling property
- Savings or pensioner bonds
- Dividends from investments
- Work: you may continue working for a number of years.
How to work out your retirement income?
If you’re unsure exactly what you’ll get, you can follow these 5 easy steps;
- Check how much is currently in your pension pot and which pensions you’ve paid into.
- Add your pension pot to your state pension. You can check your state pension here to find out how much you could get, when you could get it, and if you could increase it.
- Check what other income you’ll have in retirement and how it might change.
- Decide what you’re going to do with your pot and explore your options by getting quotes from providers.
- Deduct the tax you pay.
How much will you need to live in retirement?
Working out how much you’ll need to cover costs during your retirement is just as important as knowing how much pension you will receive. You should take into account how much your living costs are now and then deduct that from your retirement income, this will give you an insight into whether you will have enough money to live off in retirement. However, bear in mind that over the years your needs and expenses will differ.
You may pay less on:
- Your mortgage
But, you might pay more for:
- Energy and water bills
- Care costs
Act now to increase your retirement income
If you’re worried you might not have enough funds to cover your retirement, you could start paying more into your pot now, delay taking your pot or delay taking the state pension.
How to manage your pension
Your company should have a powerful platform to ensure your pension is accounted for and that you’re able to retire swiftly, and easily. Your firm should consider a Human Resource Management platform provider such as Holded Team to manage everything their employees need, such as, benefits, vacations, and sick leave. Plus, the platform is provided in a beautiful, user-friendly package.