The official state pension age has now reached 66 with further increases inevitable. For new recipients, the state pension is now £175.20 a week. Given this, accountants Mercer & Hole recommends that we should all be looking to make provisions for income over and above what the state will provide. Having a sensible retirement plan is vital for everyone.
Michael Lapham, Director of Financial Planning at accountants Mercer & Hole suggests everyone, not just the very wealthy, should consider the following.
“Have a plan. This should include details of when you want to stop working and how much income you are targeting to have to live off. Think of your state pension as a foundation and any provisions that you make over and above that are merely going to make life easier. Whilst there is no cast-iron guarantee that the state pension will even exist in years to come it does now, and you can only plan with what you know. For that reason, and many others, your plans should be kept under review.
“Budget and forecast. These will be fundamental in building a sensible plan. Look at your existing expenditure and consider how much you can afford to commit to saving. Also think about where you are putting these savings and how much they are likely to grow by, not forgetting the impact of inflation.”
“Pension savings is for most of us the most tax-efficient way of saving for retirement. If you are an employee, ask whether are you a member of your employer’s pension and receiving contributions from them? If not, why not?
“Pensions are not the only potential source of retirement income and creating incomes from assets should also be considered. ISAs, cash deposits, income from shares or property, or even the potential proceeds from the sale of a business are just a few examples.”
“Finally, and most importantly, do not bury your head in the sand. It will not go away.”
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