How much do you need for a comfortable retirement?

Amanda Holden IFA

With more of us paying higher amounts of income tax, combined with the effects of inflation, it is incredibly important to build up the best pension pot you can for your retirement.

For every £80 contributed to a pension, the government adds £20 in tax relief for basic rate taxpayers. Higher-rate taxpayers get even more tax relief. Businesses can also benefit from corporation tax relief when contributing to employee’s schemes.

What’s your goal?

The magic retirement number varies, but a common rule is to aim for a pot that can replace 70-80% of your pre-retirement income. So, if you’re earning £40,000 a year before retiring, target a pension pot of £28,000 to £32,000 per year.

Next, consider when you want to retire. If the dream is to retire at 55, you’ll need a bigger pot than someone planning to retire at 70 as you’ll be using your savings for longer.

Age matters too! A 30 year old contributing £320 per month, if delayed until age 40 would then need to contribute £640 a month to achieve the same pot value.

Lastly, life expectancy plays a role. So if your family live to ripe old ages, plan for a longer retirement and larger pot.

Pension contributions offer tax perks, and financial security. Speak with an independent financial adviser who can help you crunch those numbers, make your contributions, and help you reach your goal.

Amanda Holden

Independent Financial Adviser

07710 236331

amandaholdenifa@gmail.com