Written By Nicola Glass
When planning for retirement, it is important to have a clear savings goal by calculating how much income you will need to sustain your lifestyle at retirement. The transition from working to retirement is a significant change to adjust to. Most significantly, your salary or wages will stop and you will need to rely on your savings to fund your living expenses that may need to last up to 30-40 years.
A common rule of thumb is that 50-70% of your current annual income will be required for retirement. However, this is just a rough estimate, and it is therefore crucial to calculate the number that best reflects your circumstances and retirement goals.
The first step in this process is to step back and review your current monthly expenses such as food, utilities, mortgage or rent, and other regular expenditure. This will give you a comprehensive picture of what it costs you to live each month. You can then extrapolate this figure to an annual basis to get an idea of your current annual living expenses.
Once you have this annual estimate, you can start thinking about what expenses might decrease in retirement. For example, you may no longer have mortgage payments or childcare costs to consider which can significantly reduce the figure at retirement.
On the other hand, it is important to consider the new expenses you may incur in retirement. You may want to travel more, spend more time with loved ones, or take up that golf membership you have always wanted. These increases in leisure spending should also be factored into your calculation.
By piecing together this puzzle of your current and potential future expenses, you can begin to calculate how much you will need to save for retirement to maintain your desired lifestyle without worrying about financial strain.
By taking the time to calculate your personal income requirements for retirement, you can create a tailored plan to achieve your goals. Remember, there is no one-size-fits-all approach; it’s essential to consider your individual circumstances and aspirations.
Having a clear goal in mind and working with an Independent Financial Adviser can give you peace of mind ahead of this significant life transition into retirement. An adviser can help you navigate the complex financial landscape and provide personalised guidance on how to achieve your retirement goals. They can also help you identify potential risks and opportunities that may impact your financial well-being in retirement, such as inflation, market volatility, and healthcare costs. With their expertise and support, you can feel confident that you are making informed decisions about your financial future and that you are on track to achieve the comfortable retirement you deserve.
If you would like to discuss your retirement planning with an Independent Financial Adviser at Integrity365, please do not hesitate to get in touch on 0117 450 1300.
Written By Nicola Glass
