It’s my birthday tomorrow and I am turning 37. Just 3 years until I’m 40 and about another 31 years until I reach state pension age (if I am lucky). I spend my whole life advising on other people’s money. Like many who work within their own profession, it is often easy to neglect your own situation. My husband is an electrician and until recently all of our light switches were hanging off the walls. We currently have wires instead of wall lights but that’s a different story!
As it is my birthday tomorrow I thought I would take this opportunity to have a look at my retirement plans and what I need to do to have the retirement I would like. I have a reasonable amount in my pension plan. This is because I have been lucky enough to work for companies who have been generous with their contributions. When I joined Grosvenor as a self-employed adviser, nearly 3 years ago, I took the opportunity to consolidate my pensions into one plan and update my investment strategy. I have recently recommenced paying into my pension on a regular basis.
So, I have just calculated how much I need to contribute into my pension to achieve the retirement income I would like. Based upon the current value within my plan and my ideal term to retirement (I think I would like to stop working at 60 – my husband is 10 years older than me so retiring before 60 would be lovely). I need to be paying in £550 per month more than I am currently to have the level of income that I would like in retirement. This would enable me to stop working at 60 and take more income in the early years to bridge my income until the state pension kicks in at 68 (currently). This would last me up to age 93 which apparently is my life expectancy (another 56 years). I have factored in taking my tax free lump sum entitlement as income rather than as a lump sum.
Without the state pension, my money would run out at age 85, leaving me with nothing for 8 years to age 93. If I paid in another £400 per month on top of the additional £550 I should be paying, I could take my desired retirement income which would last until 93.
Although these figures look bleak, I am pragmatic. I am going to increase my monthly contributions to my pension as and when I can afford to do so. I will also pay in lump sum payments when it’s affordable. I may also downsize my house in the future and although it’s never nice to think about, I may also inherit some money. At least now I know what I have to do and this is something I will at least review annually going forward. Happy birthday to me!
If you would like to find out whether you are on track to achieve the retirement you would like, contact me for a complimentary intitial meeting.