• I want to know my income will last as long as I need it to

  • Sustaining your pension income for the rest of your life

    Want your pension to pay you an income for your lifetime but not sure how much income you should take to ensure it lasts? Research suggests couples enjoying a comfortable retirement spend £26,000 each year*. Our examples show how contributing more and managing your investments could impact on your pension income.

    *How much will you need to retire? Which? 2017
  • Calculator-greyBefore you make any decision about what to do at retirement it's important to know where you currently stand. Things like your pension's value, what funds you're invested in and your selected retirement date are essential to help you plan. You can get all of this from our free online services.


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    How contributing more and managing investments can impact on your pension income

    • Susan is 40 and has a pension fund value of £50,000.
    • She currently contributes £200 each month (including tax relief).
    • She is invested in a moderate risk investment (with 4.5% returns).
    • Her latest annual statement estimates she'll reach her retirement age of 65 with a pension fund value in the region of £129,000.

     This will provide her with a maximum tax free cash sum of £32,400 and either -

    • A standard lifetime annuity (on a single life basis) of £4,260 each year for the rest of her life, or
    • A regular income by taking income drawdown of £26,000 for only 3 years until 68* (when the money runs out).

    *To illustrate the variables and the type of decisions someone might need to take, this assumes that the remaining fund does not grow. In reality Susan is likely to keep some or all of the funds invested and might factor in some growth into her calculations.

  • Increase in regular contributions Single contribution (top up)
    Selected retirement age  Assumed growth rate (based on investment selection)  Value at retirement  Maximum tax free cash sum  Standard lifetime annuity*  How long Susan could receive £26,000 as an income 
    +£50
    £0
    65
    4.5%
    £109,000
    £36,600
    £4,810
    Until 68
    +£100
    £0
    65
    4.5%
    £122,000
    £40,800
    £5,360
    Until 69


    Now let’s assume that Susan decides to change her investment outlook and invest in higher risk funds and invest a lump sum bonus payment she received from work.

    Increase in regular contributions
    Single contribution (top up)  Selected retirement age  Assumed growth rate (based on investment selection)  Value at retirement  Maximum tax free cash sum  Standard lifetime annuity*  How long Susan could receive £26,000 as an income 
    +£0
    £0
    65
    6%
    £128,000
    £42,600
    £5,600
    Until 69
    +£50
    £0
    65
    6%
    £143,000
    £47,700
    £6,260
    Until 70
    +£100
    £0
    65
    6%
    £158,000
    £52,700
    £6,930
    Until 71
    +£100
    £10,000
    65
    6%
    £171,000
    £57,200
    £7,520
    Until 72


    What the examples above demonstrate is that if Susan was to take £26,000 from her pension savings as a regular income, then she would run out of money quite early into retirement. For it to last her lifetime (estimated to be age 89*) she would either need to retire with pension savings of roughly £383,000 or she would have to be more realistic and take less of an income from her savings. In addition there’s a 1 in 4 chance that Susan would reach the age of 98 meaning her pension income could have to last for 33 years after she retires.

    *http://visual.ons.gov.uk/how-long-will-my-pension-need-to-last/

    To illustrate the variables and the type of decisions someone might need to take, this assumes that the remaining fund does not grow. In reality Susan is likely to keep some or all of the funds invested and might factor in some growth into her calculations.

  • Is there a gap between what you need and what you might get? If there is here are some actions you could consider

    Put more money into your pension

    Putting more money into your pension can help you reach your retirement goals. Find out how much you can top up your pension by and how to do it.

    Reconsider your investment choices

    Making sure you're invested in the right funds is one of the most important parts of retirement planning. So how do your feelings about risk affect how your money is invested?

    Combine your pensions

    If you have more than one pension, bringing them together could help you achieve your targets better than if they sit separately.

    Delay taking your pension

    You might consider delaying when you receive your pension. This gives it more time to potentially grow in value. Call us to discuss.

  • Getting financial advice

    It's important to discuss your retirement options with a financial adviser. They'll be able to help you decide on the right thing to do for your personal circumstances. If you don't have a financial adviser we've outlined reasons why you might benefit from using one and how to find one local to you.