Planning For Retirement: How Much Will You Need?

Everybody knows that we should start planning for our retirement as early as possible and the days of the state pension providing for us in old age are well and truly behind us (in 2008-2009, the full basic State Pension is just £90.70 a week for a single person and £145.05 a week for a couple).

We'd all like to imagine that we'll be able to spend our retirements sunning ourselves on foreign beaches or pottering away in our gardens, but unless we make provision above and beyond what the state offers, there's not much chance of that.

So how much do you really need in retirement and what steps should you take now to make sure you have enough?

How much will you need in retirement?

Of course the answer to this question will be based on your own lifestyle expectations. If you want the sunny beaches then you're going to need and awful lot more than someone who is content with the pottering around the garden.

If you're just starting to consider a pension

If you're just starting to look at your retirement needs, it's easy enough to plan out the amount that you'll hope to have available to you in retirement - and then work backwards to see how much you'll need to save each month to achieve that.

For example, if you want an income of £35,000 a year, an annuity at 7% would need a pension pot of £1/2 million to deliver that level of income. That doesn't necessarily mean that you'll need to save £500,000 before you retire - interest on your pension fund through saving and investments should help - but it does mean the earlier you start the better.

The growth of pension funds can vary, as can factors like inflation, but your independent financial adviser should be able to help you get a good working figure to base your plans on - and find you the best pension product to get you started.

If you already have a pension

If you're already saving for your retirement through a personal pension, stakeholder pension or SIPP of some variety then it's important that you keep an eye on the performance of your pension to ensure that your initial calculations are still working out.

Many people are not aware that they can change their pension arrangements and pension providers if their pension fund is not performing as well as they had hoped - or not on course to deliver the retirement income they need.

An independent financial adviser can help you shop around for the best fund for you - and ensure you get the most from your money.

If you're just about to retire

The decisions you make just before retirement can have a huge effect on the amount of money you have at your disposal in retirement. If you've been regularly paying into a pension you have two basic choices; either buy an annuity to provide you with an income for life or an unsecured pension - whereby you take an annual income but invest the remainder.

Even something as simple as choosing the right annuity for you can make a massive difference to the amount of annual income you can expect - so it's vital to get the best, unbiased advice you can.

If you've already retired

If you have already retired then it's certainly worthwhile taking an occasional look at your income and any other savings or investments you may have. If their performance can be improved then you'll see an immediate impact on the amount you have to enjoy in your retirement.

No matter what your current situation, if you want to get the most from your money in your retirement it's important that you get the best possible advice and have access to the best possible products - and the earlier you do that the better.

An independent financial adviser, especially one who specialises in retirement planning or has pension advisers on staff, is well placed to deliver just that.