We all have a dream or plans with what we’ll do when we retire. For Gloria, she dreams of spending her time in the garden, growing her own vegetables, rearing chickens and generally living the good life.
Gloria is not alone, as more and more of us are focusing on a healthy lifestyle to ensure that we are fit and healthy for as long as possible.
According to the Office of National Statistics, by 2035 there will be 125,000 people over the age of 100. Compared to just 13,350 currently, so a healthy lifestyle is likely to pay off.
So, if we are living longer, what does this mean for our retirement plans?
Stuart Hudson, Wealth Manager at AAG, shares his thoughts.
“If more of us are going to be spending in excess of 35 years in retirement, then we clearly need our pensions and investments to last longer and work harder.”
“Take Gloria, at 45 years old and with a young family, she’s working long hours as an Accountant whilst dreaming of spending her days in the garden. Growing fruit and vegetables, collecting eggs from her chickens and relaxing with a glass of Chablis after a hard days toil.”
“She loves taking the family on holiday to France and Italy, hunting down little known vineyards, olive oil producers and sampling the local dishes. She doesn’t want to give this up when she retires, in fact she would love to do it more!”
Whilst Gloria might dream of living the ‘good life’, she still wants to maintain the lifestyle she’s become accustomed too. Because, like all dreams, living frugally doesn’t feature.
So, how do you prepare?
Essentially, you really need to start making provisions as early as possible; giving yourself time to build an adequate fund to retire on.
Gloria was prudent, and started her pension when she was 25. She has been contributing every month into her pension, ISA and other investments. She’s in good shape to realise her dream, simply because she has a clear plan.
Planning and timing is everything when it comes to long term saving, as compound interest plays a huge part – as the scenarios below show:
Gloria starts her pension at 25. Paying in £100 per month for 40 years. In total she invests £48,000.
Gloria delays starting her pension until she is 45. She pays in £200 per month for 20 years. Again, in total she invests £48,000.
If we take a 7% annual return for both examples, when Gloria comes to retire at 65 her pension pots would look like this:
Clearly, as the example shows, it’s never too early to start planning for your retirement. But, crucially it’s never too late either. If you haven’t made any plans or aren’t sure what you have, or what it’s doing for you, you should act now.
Take Action Today!
1. Do you know what your pension is currently worth?
2. What funds are you in?
3. Do you have a retirement dream?
4. Have you evaluated your pension pot to find out if you can live your dream retirement?