Are you one of the six million people who will now have to work a year longer following today’s changes to the State Pension?
Today, the Secretary of State for Work and Pensions, David Gauke announced that the State Pension age is to rise to 68 from 2037, seven years earlier than originally proposed. Those affected are currently between the ages of 39 and 47, and men and women will be affected equally as, by then, the State Pension Age will have been equalised.
With pension ages rising and funding under constant pressure, many people fear they will have to work until they drop. According to Prof David Blake, Director of the Pensions Institute at Cass Business School: “The danger now is we will have a generation who really can’t afford to retire.” (1) A scary thought!
There are many online tools and calculators to help you determine when you can retire and how much money you may need in order achieve your desired retirement lifestyle.
Standard Life’s retirement calculator suggests that to fund a minimum acceptable standard of living during retirement (meaning to just cover your basis living costs), you’ll need £9,700 per year before tax. (2)
Pensioners entitled to the new State Pension following the rise in April 2017, will receive £8,296.60 per year. (3) So, depending on your circumstances, it’s possible that this would leave you with an annual shortfall of over £1,400; and this doesn’t take into account inflation and the inevitable increase to the cost of living. Please note: these figures are to be used as a guide only
It therefore may be more important than ever to consider ways to supplement your pension with other forms of income. In fact, a document published by the government explaining the State Pension states, “For many people, the State Pension is only part of their retirement income.” (4) As a result, it is likely that you may need to invest or save independently allowing you to adjust your pension accordingly.
Whether it feels like your retirement is light years away, or just around the corner, it’s never too late or too early to start planning. Investment opportunities with Hubb Property Group start from just £10,000 for periods as short as six months up to five years.
If you’re interested in finding out more, contact us for an initial chat on +44 (0)117 422 0122 or email enquiries@hubb.co.uk
Sources:
- https://www.theguardian.com/membership/2017/jan/23/saving-retirement-pension-generation-old-age
- https://www.standardlife.co.uk/c1/guides-and-calculators/retirement-how-much-may-i-need.page
- https://www.lovemoney.com/news/61140/how-much-state-pension-pay-2017-2018
- https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/607128/your-state-pension-explained-apr-2017.pdf