We all look forward to the day where we can retire to enjoy the fruits of a lifetime of working. But if you are asking yourself “how long will I have to work for,” there is one big issue you should consider – your income, before deciding when to retire. Prestige Tax and Trust Services discusses this below.
Planning your income
It is wise to plan your retirement income now. This is because in your golden years, you are going to need money both to support your lifestyle and to fund the cost of care. If you do not have enough cash to meet cost of care needs, you could be required, under UK law, to use your house to finance your place in a care home, preventing you from passing this property onto your loved ones when you die.
There are a lot of moving parts here. We all have a state pension, which supplies you £155.65 per week. But as experts believe that you will need at least £15,000 per year to live comfortably in old age this is not enough, so it is a good tactic to get enrolled in workplace pensions and open a private pension, to supplement this income. All of this can affect the age that you decide to stop working.
It is important to note that although in theory you can retire at any age you want, unless you have a lot of savings, this is not the case in practise. You must reach the state pension age, before you can start accessing your state pension. The state pension age varies depending on factors such as when you were born, but currently falls in the mid-60s, and you can use this calculator to check yours.
This is the minimum age at which you can reasonably retire – as long as you have enough pension savings to support your lifestyle. However, experts recently warned the government that in future, we might be expected to work into our 80s. This is because many people do not have enough pension savings, and there could be changes to the state pension, so you may be expected to work far longer.
We should point out that you can retire and keep working in certain circumstances, to boost your retirement income. You can keep claiming your state pension, as long as you have reached your state pension age, and depending on the nature of the agreement, you can even start claiming your private pension. Alternatively, you could reduce your claims and devote more money to cost of care issues.
Prestige Tax and Trust Services
It is only natural that you want to enjoy what years you have left, but be able to pass some money onto your loved ones when you are no longer here. This is what it is so important to look at cost of acre now, so you can stop working – or reduce how much you work, when you want. At Prestige Tax and Trust Services we are experts in cost of care matters and we would be happy to help you with this.