A huge part of financial wellbeing is ensuring that we have enough money to live a comfortable and joyful lifestyle when the time comes to retire.
Recent research shows that on average in the UK, we’re not saving enough for our retirement. Most people (52%) are paying the minimum 5% a month into their pension, with the same figure often matched by their employers due to auto-enrolment.
In reality though, we need to be putting away a figure that is closer to 15% a month in order to maintain our lifestyle in retirement.
Based on current income, the government has calculated how much you’d need to keep up your lifestyle in retirement. Let’s take a look at some examples…
Someone earning £13,000 would need 80% of their current income later in life. That works out as £10,400 a year. For someone earning approximately £27,000 they would need 67% of their current income - which is £18,090 a year. If someone earns around £56,000 they would need 50% of their current income which works out as £28,000 a year.
You might be thinking - but what about the State Pension? Whilst it can be a good starting point for retirement, the likelihood is that it won’t be enough to sustain the lifestyle that you will want. Most people will find it difficult to maintain their lifestyle in retirement, but making good decisions right now will help you have financial wellbeing in the future.
So how can you improve your long-term savings? Firstly, check your entitlement for the State
Pension. You should also take advantage of any workplace pensions that your employer must also contribute to. If you start to pay into this as soon as possible, it gives your pension pot the best opportunity of growth.
You can also explore Individual Savings Account options - you may know them as ISAs. These are really good options for long-term savings and a lot of them can be opened easily with just a few pounds.
It can be tricky to think about and prepare for the future. We naturally tend to think ‘in the moment’. However, being prepared for the future is a huge part of achieving financial wellbeing.
When you’re putting money aside into your retirement fund, try and think about the specifics rather than retirement in general. For example, picture your ideal life in the future - the house you want to be living in, perhaps you want to be enjoying your time in luxury beach front hotels, or maybe you want to have a great social life full of activities. Remember that it’s this lifestyle that you’re investing in.
Another really important factor of financial wellbeing is ensuring that your hard earned money and assets are protected. We spend so much of our lives working, so it would be such a shame to put our earnings at risk because we aren’t prepared.
If you need to write or update your Will, or if you haven’t got insurance in place, get in touch with Kindred Estate Planning today.