Will you have enough income when you stop or cut back working?

Here’s a few steps you can take to help answer this important question:

1. Tot up your savings - You need to consider how much you might get from all your retirement savings, the State Pension and any other savings or investments, which might give you a regular income. You can get an up to date value of your retirement savings from the original provider, or your ex-employer. To get an idea of what State Pension you will receive, go to the government website.

2. Model your likely income - Once you have gathered all the information about your savings and the State Pension, you can use the retirement planning tool to give you an idea of what income you might get from:

        a. your current and any future savings in the Trust; plus

        b. the value of your savings in any other retirement savings plans.

    Any guaranteed income, such as the State Pension, can be added on to give you an idea of the total annual or monthly income you might get.

3. Consider how much income you’ll need – if you’re unsure, you could use the following rule of thumb, which is based on research into people’s income needs, by the Department for Work and Pensions:

Yearly Salary Percentage of salary needed in retirement
Up to £12,199 80%
£12,200 to £22,399 70%
£22,400 to £31,999 67%
£32,000 to £51,299 60%
£51,300 and above 50%

So, for example, if you earn £26,000 a year, you may need an income of roughly £17,500 a year to live off in retirement.

This is just a guideline, what you will need depends on your own circumstances. For many people, their costs go down when they retire. For example, you:

  • Don’t have the costs of travelling to work.
  • May have cleared any debts you had, including a mortgage.
  • Don’t pay National Insurance contributions on retirement income.
  • Are likely to have stopped saving for retirement.

Remember: Any income you receive is taxable. The tax planner can help you see what impact this might have, but the limits and rates will change in the future.