Thinking about retiring?

PREPARING FOR RETIREMENT

Hi all a short blog which I hope will provide useful information if you are contemplating retiring and hopefully, this will assist you when considering when you can finally give up the 9 to 5. An elder told me that from the day we are born, we enter an institution that begins with school and continues within the institution until we retire. How much time do we spend within the institution until we retire and are free to follow our dreams?

Thanks very much as always to all those who attended the recent session, a special thanks to Miss P for your valuable contribution about considering your retirement options, and to Ms S for sharing new information about HMRC tracing your employee details, remember knowledge is power details this information is detailed further below:

Did you know that one third 30% of Black women in the UK say they plan only to reduce their working hours instead of retiring, a survey has found.

Further research from Scottish Widows has revealed that women from Black and minority ethnic backgrounds are less prepared for retirement and are opting out of pension schemes as they don’t believe that they can afford it, and think it is better to save money in other ways.

The research also found that half of Black women (52%) and two-thirds of Asian women (66%) worry about running out of money in retirement.

The Social Market Foundation (SMF) think-tank found that just 25% of people from ethnic minorities have a workplace pension, this is well below the national rate of 38%.

Further research supported by the consumer group Which? the SMF found that ethnic minorities are more sceptical than others about the value of private pension savings.

At the same time, ethnic minorities are more likely than others to believe that the State pension will be enough to provide a decent retirement.

The SMF said ‘’This combination of scepticism about private pensions and faith in public provision may put many ethnic minorities in the UK at “greater risk of hardship in old age as the state pension and their savings may turn out to be insufficient for their needs.”

Preparing for retirement is a crucial aspect of financial planning. It involves various steps, such as calculating retirement savings, determining living expenses, and considering social security benefits. It is essential to start planning as early as possible to ensure a comfortable retirement life. Know the value of your pensions.

Start by making sure you have a clear idea of the current value of your retirement savings.

This will usually change over time, as the value of the investments your retirement savings are invested in can go up and down. But knowing how much you have now can help you decide whether you need to save more or if you are on track for retirement.

1. Check where your pension is invested.

You should be sent a statement every year by your pension provider, which tells you how much you have got in your pension. If you cannot find yours, ask your provider for a current value.

Make sure you track down any pensions form jobs you have held in the past. According to data from the Department for Work and Pensions (DWP), the average person has 11 jobs in their lifetime, that is a lot of pensions if you have signed up to your company pension scheme each time. There is a dedicated section of the government’s Gov.uk website which can help you find contact details for your workplace or personal pension scheme if you no longer have them.

Once you have located all your pensions, have a look, and see where your savings are invested. Again, you should be able to find this information on your pension statement.

2. Work out how much income you will need.

You can give yourself an estimate of what sort of income you will need when you retire by sitting down with your latest bank statement and adding up how much goes out of your account each month on all the essentials such as food, utility bills, and Council Tax. You will then need to add some extra perks such as holidays and eating out.

You will then need to add some extra perks such as holidays and eating out. You should then have an estimate of what sort of income you will need when you retire.

Do not forget that the amount you will need often falls once you stop work, as you will no longer have to fork out for things like travel costs or work clothes and, if you are a homeowner, hopefully you might have finished paying off your mortgage by then.

Income & Expenditure Form – Debt Today Free Tomorrow (debt2day3tomorrow.com)

3. Remember to factor in the State Pension

It is not just your workplace and any personal pensions that you need to factor in when planning for retirement. You will usually be entitled to a State Pension too.

You will need to have at least 10 years of National Insurance Contributions (NICs) to be eligible for a State Pension. To be entitled to the full State Pension, which is £221.20 a week in the 2024/25 tax year, you will need to have at least 35 years of NICs to receive the maximum state pension. To find out how much you might get and whether you qualify for a State Pension on the Government website.  Check your National Insurance record - GOV.UK (www.gov.uk)

You can also request a statement from the Government detailing your National Insurance contributions to date and the number of qualifying years you have built up by calling them on 0300 200 3500 or by filling in their online form – it will be useful to have your National Insurance number to hand.

If you cannot recall all your previous employment details, you can use the link below to obtain full details of your employment>

https://www.gov.uk/get-proof-employment-history

4. Think about when you want to retire.

Having an idea of when you would like to retire can help you work out how many years of income you will need in the future.

For example, you might decide you want to continue working beyond the usual retirement age or to work part-time for a few years before you stop working completely. No one knows exactly how long we are going to live, but according to the Office for National Statistics, current life expectancy for men is 79.2 years and 82.9 for women.

This means if you are planning to stop working when you are 66, you will need a retirement income for up to 20 years, it can make sense to overestimate your life expectancy as you do not want to end up in a position where you do not have sufficient income.

5. Can you afford to retire?

Once you have your retirement date in mind, you will need to consider whether your savings will be enough to provide you with the income you want. According to the Pensions and Lifetime Savings Association (PLSA) the minimum required during retirement for a single person is £14K and for a couple £22K please see the table below.

Start considering your options at retirement.

Many pensions nowadays are defined contribution schemes, where your money is invested and the amount you get when you retire will depend on how much contributions you have made how your investments have performed.

If you have a defined contribution or money purchase pension, there are lots of different options available when it comes to taking an income from your pension, including drawdown and annuities.

If you are looking for free information and advice the Government’s Pension Wise service, this is run by the Pensions Advisory Service and Citizens Advice Service they provide individuals aged 50 and over with free guidance on their pension choices at retirement. They may be contacted on 0800 138 3944 to book a free appointment, or you can book one via their website.

Legal and General also offer Free retirement planning training courses see below:

Retirement planning made easy | OpenLearn - Open University

Remember Plan today for tomorrow!!