Retirement planning: Mom explains how she calculates how much she needs in retirement | Personal finance | Finance


On the Rewirement podcast, Angellica Bell spoke with a single mom about her retirement plans and how she aims to get there. Beverley is in her 50s and wants to retire in the next 10 years, but she stopped contributing to her pension for about five years.

She was fired, then took more time to care for her parents when they fell ill.

As she begins to look ahead, she doesn’t know if she will be able to retire next year and move into her dream home, closer to her son.

She asked herself, “What can I do in the next 10 years to prepare for retirement? I don’t want to work until I’m 75 or even 70.

Financial expert Phil Anderson spoke with Beverley about some options she might have.

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He said: “With the cost of living crisis people are finding it harder, the bills are going up a lot but you also have to be aware of your future.

“If you can afford it, pay more in [to a workplace pension] because it is something important.

“If you missed five years of payments, what I would do is try to figure out how much I missed coming in.

“Although it’s only five years missed, it’s probably more than that because of capitalization and growth, so sometimes you’ll have to make sacrifices.”


He suggested how she can calculate exactly how much she needs for retirement.

He said: “Some people will spend a lot when they retire, some people will spend a lot less, so I would say look at your ins and outs now, and look at your ins and outs when you retire.

“At this point you might have fewer expenses, like less travel expenses, mortgages could have been paid off, you might consider downsizing your house, so that’s also a good reason to review your finances on a regular basis.”

Beverley explained to the financial expert that she had taken the figure of 20 years and divided her retirement pot by 20 to see how much that would leave her, and so she would know if she could survive on that figure.

“It was a very simplistic way of looking at it,” she said.

She continued, “As long as I have my finances organized and can live with that amount, then it should be fine.”

Mr. Anderson explained that the hardest thing about planning for retirement is the unknown.

Nobody knows when they’re going to die, so people can only walk away from the averages and the data.

For example, women live longer than men and therefore might need a larger pension to support themselves, he said.

Additionally, Beverley explained that the only way for her to afford a forever home and be closer to her son is to dip into her retirement pot for a contribution, but she wasn’t sure if that was it. a good idea.

Mr Anderson said: ‘For some people it’s the right thing to do, but if you take money out of your retirement it will have a big impact on your retirement income.’

He gave an example: if someone took a lump sum of £50,000 from their pension, over the next ten years that money would have grown and could be worth £100,000, which would have an impact.

Another option he suggested was to take out a mortgage, but he warned that not all providers will offer mortgages for seniors. He suggested people get a lifetime mortgage aimed at Britons aged 65 and over.

Rewiring of Legal and General is available weekly starting Thursday, June 23 on all podcast providers.

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