How much will my pension be worth?
The answer to the question about how much your pension will be worth depends on a number of factors, including your age, pension contributions, when you plan to retire and how your money is invested.
Workplace pensions
If you have a workplace pension you can access your pension lump sum from the age of 55, but most people prefer to wait until they retire from work before using their money. The value of your workplace pension is dependent on your and your employer’s contributions, which is based on your earnings.
At Endeavour Financial Services, we’ve created our own Wealth Calculator. This tool is a good way to assess whether you have a reasonable chance to achieve your desired retirement income. If the results of the calculator mean that you will not reach your retirement income target, you can increase your contributions, or consider alternative investments that will provide money for your retirement.
The tool can be found at the bottom of the page, and is very simple to use. If you’d like to find out more about how much you’re likely to be living on when you retire, another good resource is the government-funded Money Advisory Service.
The state pension
Provided that you keep up with national insurance contributions, you will also receive a state pension. If you are a few years off retirement, it is difficult to predict accurately how much state pension you will get.
The state pension rises each year according to what is known as the triple lock. As of September 2017, this system looks at three factors – inflation, average earnings and 2.5%. The state pension rises according to the highest percentage increase in inflation or average earnings. If neither has increased by 2.5%, then the state pension goes up 2.5%. Some politicians have argued that the triple lock system is too costly to the government and want it abolished. If this happens, it is not clear what will replace the triple lock.
Private pensions and other investments
As well as workplace pensions. there are a number investment options available to boost pension income. Self-invested personal pensions (SIPS) are often referred to as do it yourself pensions in which the holder of the pension can choose what their pension funds are invested in.
You can also invest in stocks and shares to build up retirement wealth. There are other investments such as property, wine and starting a business that can be used to create retirement money.
Use a financial advisor
Discuss your retirement plans with an Endeavour Financial Planning advisor in order to get a good idea of what your pension will be worth. If your present pension savings are not enough to fund a financially comfortable retirement, your advisor can discuss all the investment options available for you to increase your pension savings.
Ideally, your pension should be worth enough to generate an income that maintains the lifestyle to which you are accustomed. Talk to us to find out how this can be achieved.
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
Sources used: https://www.moneyadviceservice.org.uk/en/tools/pension-calculator http://citywire.co.uk/money/qanda-what-is-the-state-pension-triple-lock-guarantee/a686253 http://www.moneysavingexpert.com/savings/cheap-sipps
