Recent studies from the Pensions Policy Institute and other think tanks have suggested millions of workers will need to work at least 10 years over the state pension age in order to afford retirement. Proportionally, the PPI has stated that this equals around half of all of Britain’s over-50s.
However, no matter what your age, there is still time to take pension planning into your own hands. Tools like a pension calculator can help you understand how much you have already saved, and how much you will need to save each month in order to retire comfortably at an age that is right for you.
Pension calculator basics
A pension calculator gives you a projection of how much your pension fund will be worth at retirement by looking at how much you already have in current pension savings, as well as how much you expect to save in the future. The pension calculator can then use this information, coupled with expected increases in interest rates and inflation, to give you a projection of your retirement income at whatever age you choose.
If you don’t have any pension savings, a pension calculator can is still useful in the respect that you can enter your current wages and expected wage increases to find out how much you should be saving each month.
Taking small steps like using a pension calculator can ensure that the prospect of retirement does not creep up on you, unlike so many others that experts refer to as ‘sleepwalking’ into retirement.
Living longer
Despite the fact that we are living longer, the age at which Britons retire (generally in their mid-60s) has not changed very much in the past 3 decades. According to some pension experts, this reflects the fact that Britons are not being realistic about their retirement expectations. As a result of this refusal to understand or acknowledge the harsh situation that many of us face by not making proper retirement provisions, the growing trend is to forego any pension planning at all. However, doing so means that many of us become reliant on the state pension or other government-funded benefits in retirement, using what is meant to be a minimum standard safety net for our entire income.
Don’t let yourself become one of the millions of ‘sleepwalkers’ who are facing poverty or 10 extra years of working just because they have not been proactive enough to save for the future. Instead, use a pension calculator, see an independent financial adviser, or simply take it upon yourself to know exactly how much you are making in contributions and whether you should be making more.