Financial planning for your retirement

10 Dec

As a population, we’re all living longer. We’re also staying healthier and more active and it’s certainly not unusual to stay hearty for decades rather than years after your retirement.

This is great news, of course, but it does mean that we need to make adequate provisions for our later years. There’s been a lot of talk about the impending pension crisis and official job figures released in June showed that nearly one in ten people of pensionable age – more than 1 million in total – were still in work.

This represented an increase of almost 100,000 over the past 12 months alone and stood at almost double the levels of a decade ago.

Part of this phenomenon can be put down to changing social attitudes. Many older people are fitter and want to continue to work. The default retirement age has also effectively been retired, meaning employers can no longer force out employees on the basis of age alone.

Some older workers see themselves as having little real choice in the matter however, and feel like they have to continue to work due to financial considerations. It’s never too early or too late to start planning for your retirement, but what should you consider financially?

State pension 

The basic state pension is a regular payment from the government to those who have reached state pension age and who qualify through their National Insurance contributions.

The maximum state pension is currently £110.15 per week. For a long time the state pension age was 65 for men and 60 for women but this is set to change, with the coalition government seeking to link it to life expectancy.

This could see it hit 73 for current 33-year olds and 77 for today’s teenagers. A state pension age calculator based on current rules is available on the government’s website 

Private pension 

Many people also choose to augment their state pension with private or work-based pension. A duty to auto-enrol their employees into a work-based pension is now being phased in, although individual employees can opt out.

A good quality annuity calculator like the one available for free at can help you work out what type of annuity might provide you with a suitable source of income in retirement.

This tool can give you a good overview but you should still seek advice from an independent financial adviser before making such an important commitment.

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