Home Information Online Services About Us Contact Us Blog What is an adequate retirement income? Posted by siteadmin on Friday 23rd of July 2021. A leading pension think tank has examined this question – but the findings aren’t straightforward. Over the years, there has been much focus on the tax treatment of pensions and ways to encourage greater saving for retirement. Arguably, there has been less attention paid to the question of how much income you will need once work ceases. The Pension Policy Institute (PPI) recently published a paper examining what an adequate retirement income means today in dollar terms. The paper notes that the last serious effort to address the issue was undertaken by the Pensions Commission nearly two decades ago, leading eventually to the introduction of automatic enrolment. The PPI makes the following points: Individuals, employers, the state and society generally all have differing views on what constitutes adequacy. For example, the state view is set by the Guarantee Credit element of Pension Credit (£177.10 a week for a single person and £270.30 for a couple). Changes to the pensions landscape since 2000 have altered the retirement picture both positively and negatively. For example, the new state pension is higher than its basic state pension predecessor, but state pension age has increased (to 66 for men and women) and will continue to increase. The demands made on assets originally saved to provide a retirement income have increased, for example: For some people, there is a widening gap between leaving work and receiving their state pension, a situation exacerbated by pandemic-prompted early retirements; More often now debts, including mortgages, will be carried over into retirement; The shrinking of home ownership will see more retirees having to pay rent; and There may be a need to support other family members – the Bank of Mum and Dad may not be able to close at retirement. The traditional emphasis on retirement income ignores the need to deal with ‘personal financial shocks’, which are better addressed by considering retirement capital. The PPI says that many people make their retirement planning decisions ‘without support’. It goes on to warn that “As a result, many people struggle to make pensions and savings decisions which offer them the best chance of both achieving their aspirations for retirement and protecting themselves against future risk.” Don’t let that be you – talk to us about assessing what an adequate retirement income means for you and how it can be achieved. The value of your investment and the income from it can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. « A recent survey of people who have or plan to retire in 2021 provides interesting insights, whatever your intended retirement year Blog The wrong type of ISA? » Archive November The Pension Annual Allowance Trap Placing a cost on retirement Are your young adults missing out on their Child Trust Fund? October The not-quite post-pandemic Budget The September Mini-Budget September So, farewell then 6 April? Managing the next stages of recovery A hint of rising interest rates? Detailed proposals to tackle social care funding launched Social Care Rises Up The Agenda August The £9 billion Child Trust Funds backwater The wrong type of ISA? July What is an adequate retirement income? May A recent survey of people who have or plan to retire in 2021 provides interesting insights, whatever your intended retirement year April Were you born after 5 April 1971? March A quiet turning of the tax screw The mid-pandemic Budget The average deposit paid by first-time homebuyers jumped by £10,000 in 2020 February Diminishing savings’ returns from negative interest rates January Tax year end planning and the effect of the pandemic Unique Financial Planning Ltd is Registered in England & Wales: Company Number 08996066. Registered Office: 1 Cricklade Court, Old Town, Swindon,Wiltshire,SN1 3EY The information on this website is subject to the UK regulatory regime and is therefore targeted at consumers in the UK. Copyright © 2021 Unique Financial Planning LOG IN