How much money will I get when I retire?
If you are a number of years off retirement, it is impossible to know exactly how much income you will have at retirement. This is because no one can predict exactly how much the state pension will rise before you retire, whether the interest rate on savings will go up or not, and how other investments will perform.
It is possible to calculate an estimate of how much money you will get when you retire, and our Wealth Calculator (at the bottom of the page) can help you. You must first identify where your money will come from and how much each income source will contribute to your retirement funds.
State pension
Most people on retirement will be entitled to a state pension. Currently, this is £155.65 a week. Each year, the state pension rises by a system known as triple lock, which looks at the rate of inflation, average earnings growth and 2.5%, and raises the pension by whichever is the largest. You could use a 2.5% rise to calculate approximately how much your pension will be worth, but remember that future governments could change the rules and increase the pensions by a different amount.
Workplace pension
You may contribute to a workplace pension scheme or a self-employed pension scheme. There is no guarantee what your workplace pension will be worth when you retire. Obviously, the more you contribute, the more you will receive.
As a rough guide, if you start contributing at 22 with a salary over £42,000, you could expect your workplace pension fund to be worth around £267,000. A 30-year-old starting a pension scheme on a salary of around £20,000 could receive a pension pot of about £78,300. If you start saving late at the age of 50, your pension pot will be very low.
These figure show that what you can expect to receive in your workplace pension is dependent on how early you start saving and how much you earn, which determines your minimum contribution.
Savings interest
If you have savings in a bank savings account or bonds, you can leave it to provide interest or withdraw savings at retirement. How much interest you receive and the amount of savings depends on how interest rates fluctuate,
Investments
If you have invested in stocks and shares, you will probably receive dividends, but it is impossible to predict how much your investments will be worth on retirement.
Property
If you own property, you have the option of selling the property to raise retirement money. Many retired people sell their family home and move to a smaller one to release money.
Some people purchase property to generate a rental income when they retire.
The final amount
While it is impossible to know exactly how much money you will get when you retire, if you have a retirement plan that includes a number of saving strategies, you can make a good estimate.
To plan your retirement, talk to Endeavour Financial Planning. We can discuss all your retirement options and how they can provide a financially comfortable retirement.
A pension is a long term investment. The fund value may fluctuate and can go down. Your eventual income may depend upon the size of the fund at retirement, future interest rates and tax legislation
Auto Enrolment advice is not regulated by the Financial Conduct Authority.
