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Retirement: How much should you have in your pension pot?

<strong>Retirement: How much should you have in your pension pot?</strong>

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One of the biggest questions for investors when it comes to their retirement planning is – how much should I have in my pension pot?

There’s not one straightforward answer for every investor, but that doesn’t mean the solution is overly complicated either. You just need to have the right approach to your unique financial situation – ideally with the assistance of a retirement planning service.

To find out exactly how much you might need in your pension pot, there are a few things to consider…

  1. How long your retirement will last – Many investors fail to accurately save for a long retirement, and since they end up living longer than they anticipated, their funds often run out. Try and prepare for the longest possible retirement so you can save accordingly.
  2. The retirement lifestyle you want – It’s good to know how you’d like to spend your retirement as a good indication of how much you’d need to save. For example, you might want to take at least two or three holidays a year, so it’s important to factor in these estimated costs.
  3. Your financial dependents – You might need to financially support individuals, such as friends, or children in your retirement. It’s important to account for this with your savings.
  4. Your drawdown options – A big part of your retirement is how you receive your money, known as a drawdown on your pension. How you plan to do this can alter things like the tax you’ll be charged, so you may need to adjust your savings to match your decisions.

How to build the right amount in your pension pot

If you want to make sure your pension savings are sufficient to achieve your retirement goals, there are three things you can do to improve your chances of success:

Seek financial advice

Financial advice can be useful when trying to save the right amount in your pension. Your adviser will be experienced in how to assess your financial situation, so they can more accurately determine how much you’ll need to save.

They can fully analyse your income, future goals, and any challenges you might be facing, for example, to offer the right recommendations for structuring your pension.

Start retirement planning

With an expert retirement planning service, you can rely on professionals to help you craft the necessary steps to grow your pension savings properly.

For instance, they can help you outline the right investment path to reach your future goals. This can include finding the right levels of risk for your portfolios, so you can efficiently grow your pension savings without compromising your finances.

Constantly track your wealth

It’s also a good idea to find accurate ways of tracking your wealth as you grow your pension.

As always, investments can go up or down, so it’s good to consistently monitor your investment performance. Therefore, if you feel you’ve slightly come off track of your pension target, you can adjust your investment structure accordingly.

Are you more aware of the amount you should be building in your pension pot for retirement? If so, how do you plan to go about it? 

Of all the points mentioned, we recommend consulting a retirement planning service as one of the most beneficial steps to take.

Please note, the value of your investments can go down as well as up.

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