After twenty five years most of us have paid our mortgage, our children have usually flown the nest and have families of their own and we find ourselves fast approaching middle age and retirement. When our children leave home we discover that we have more disposable income and we are in a better position to start enjoying life so we think. Then we realise that we need to start saving for our fast approaching retirement. It’s at this point that you should consider talking to a Pension Expert for some sound advice which is relevant to your circumstances – after all it’s your retirement you should be planning for.
In most cases our pension funds will not support us to the standard of living we have become accustomed during our working lives. It’s possible that most of us may be retired from work for up to thirty years before we die. Countless people will find themselves continuing to work into their seventies in order to survive and maintain their standard of living. Some fortunate people will retire on a full and final salary scheme from their employers at the end of their working lives. Many full and final pension schemes are now closing due to the cost of maintaining them.
We Are Living Longer In Retirement
Statistics suggest that we are all living longer and most of us can expect to live until our mid-seventies and eighties. However recent information from the Office for National Statistics (ONS) suggests that the number of people living in the UK aged 100 has increased by 73% in the decade to 2012. In 2012 there were 13,350 centenarians living in Britain, up from 7,740 in 2002. By 2022 it’s suggested that the number of people aged 100 could be over 50,000.
There is a large section of the population who do not have a company or private pension to help finance their retirement. Everyone in the United Kingdom is entitled to a State Pension. To receive a UK Pension you need to have accrued 30 years of National Insurance contributions to qualify for the current State Pension of £113.10 per week . A married couple can expect to receive double the single person’s pension totaling £226.20 a week. As long as both partners have accrued enough years to qualify for a full state pension. If either partner has not built up their own state pension, then they will still be able to claim a state pension based on their qualified years.
In the event that either couple have not paid sufficient years of National Insurance contributions and their income falls below a certain level then they could be entitlement to claim a pension credit. This can take their income up to £148.35 a week for a single person and £226.20 a week for a couple (in 2014/15). Also check to see if you may be entitled to the additional State Pension called SERPS or known as the State Earnings Related Pension Scheme.
The government offers various kinds of further financial support, some are income related, and some are not. Like Pension credits which will guarantee a minimum weekly if you are single or have a partner. You may also be entitled to other income related benefits like Council Tax Benefits, Housing Benefits, Cold Weather Payments, help with Health costs and a contribution to Funeral costs in cases of extreme poverty.
Living Standards In Retirement Could Be Different
I suggested at the beginning of this article that most people reaching retirement would probably be unable to match their standard of living prior to retirement. The state pension is there to provide all of us with a safety net, although for many people this will be their only source of income during their retirement. Many people will certainly be working into our seventies and eighties as long as they still have good health and employers want to employ them. Some folk are fortunate and will just sail through their retirement without worrying about money having been in well paid jobs with full salary pensions to enjoy in their retirement.
It is important that we start planning for our retirement in our twenties. Unfortunately when we were in our twenties we all wanted to enjoy ourselves traveling and partying (we wanted the sex, drugs and rock and roll experience), in our thirties and forties many of us had a mortgage and a young family, in our fifties we waved goodbye to our children as they left home. So the right time to plan for our retirements just got pushed further and further away. I remember back in the mid 1980’s everybody you met was a pension adviser, yet today you have to actively seek out a pension specialist. If you have not started planning for your retirement then start to day!
- Some fortunate people will inherit their retirement funds from their parents when they die, assuming their parents don’t out live them.
- There are homeowners who will downsize their home when the time comes and buy a smaller home or they will look to rent whilst using the money from their home to finance their retirement.
- Equity Release Schemes have become popular amongst homeowners who have found themselves to be equity rich but income poor. In other words they have homes that are worth a lot of money but have little money to live on each month. Homeowners have seen their homes more than double in the last twenty years and believe that it may be worth releasing some money from their homes through an ‘Equity Release Mortgage‘.
- Start a small business that you can run from home on the internet or using any trade skills that you have acquired over your working life. I spoke to a man last year who proceeded to tell me that he had been retired for 165 days, thirteen hours and 26 minutes and it was driving him mad. He explained that he loved his wife but found themselves thrown together twenty four hours a day, this was not what he had signed up to 35 years earlier when they married. The truth of the matter was that they were financially poorer since he retired and had more time on their hands then they knew what to do with. He said he had started counting the days to his retirement and had never imagined retirement to be so boring. His boredom was more to do with not having the money to go out and do the things he and his wife had always talked about. I suggested that as he was a qualified electrician he should Google electricians in his local area and telephone the owner or managers to see if they had any vacancies as he was looking for part-time work and was available for holiday cover and sick cover and could work at short notice. I saw him two months ago and Wow! what a different man he was. He walked over to me and shook my hand whilst thanking me for pointing him in the right direction. He was now working a for two local electricians on a part-time basis and was covering both business for holiday cover.
Don’t wait until it is too late to consider your retirement start thinking about it sooner rather than later. It’s never to late to start planning for your retirement. We will all be retired for a long time and it will be at a time when we may not be able to work due to old age and illness.
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