How much is enough in retirement?

Whether it's enjoying more quality time with friends and family or travelling the world, retirement can be a fulfilling and rewarding time of life – but only if you save enough.

How much is enough in retirement savings? According to the Centre for Research in Social Policy minimum income calculator, roughly £14,400 a year will provide a minimum decent standard of living in retirement. But you’ll probably want more than the minimum. The State Pension you receive should cover some of the basics in retirement like housing, utility bills and groceries, but it may not cover other costs such as clothes, travel and a mobile phone.

Your Plan savings are a great way to save for these essentials and any additional expenses that you may have in retirement.

Once you have a figure in mind, you need to work out how much you'll need to save throughout your working life. For example, suppose you want £20,000 a year and you plan to retire at age 67. If you receive the maximum State Pension, in current investment conditions, you will need around £450,000 of savings to provide the remaining £10,900 a year. If you're an active member the Company pays in too, and over time investment returns can help your savings grow. You benefit from investment returns on your contributions in addition to further returns on your investments (interest on your interest).

How tax relief works

You may be able to take a portion of your benefits as a tax-free cash lump sum at retirement. If you take a lump sum, any pension you may wish to buy from an insurer will be reduced. However, due to the requirement to provide the guaranteed pension, the maximum tax-free lump sum you can take may be less than 25% of the value of your Plan account (the statutory minimum level). If you want to access the full 25% tax-free cash you may wish to consider transferring out of the Plan. Contact the administration team to request a transfer quote:

• 01737 788120
• bnyhelpline@willistowerswatson.com