![]() ![]() The next step is working out how much you'll need to save in your pension to generate the gross (before tax) annual income you want. Our targets are designed to give you a better idea of how much you might need to spend each year in retirement. How much do you need to save to reach your retirement income target? ![]() Pension drawdown, where you leave your pension invested and take income as you need it.Buying an annuity, which guarantees an income each year for life.Your options for accessing this money are: The amount you get when you retire depends on how much you've contributed, how well the investments have performed, and how you decide to access your pot. You (and your employer, if it's a workplace scheme) pay money in, which is then invested. Defined contribution pensionĭefined contribution pensions are the most common type of private pension. You should receive annual updates telling you how much you can expect to get. Deduct tax and you should have a good idea how close you are to your target amount. If you have a final salary (also known as defined benefit) pension, you’ll receive a guaranteed income, which is calculated based on your length of service and your earnings while you were working. Find out more in our guide to how much state pension will I get? Final salary pension In 2023-24, the full level of new state pension (for people who reach state pension age on or after 6 April 2016) is £203.85 a week (£10,600 a year), but not everyone gets that much. You'll qualify for payments when you reach 66, but this is scheduled to rise to 67 between 20. Where will your retirement income come from?Ī combination of the state pension and private pensions (which you can access when you turn 55) are the building blocks of most people's retirement income. Here's a breakdown of how much retirees in our survey said they spent on average on different products and services over a year.īy switching between the three tabs you can see which spending categories are included in each of our retirement income levels ('essential', 'comfortable' and 'luxury'). That's because many expenses - such as council tax, energy bills and insurance premiums - aren't simply halved when you live alone. The targets for single retirees might seem high compared to couples. These income targets are the amount you'll need your pensions (the state pension and private pensions combined) to generate after tax is deducted. To get a detailed understanding of retired households' spending habits, we carry out an annual survey of retired Which? members, where we ask about their monthly expenditure in different areas.īy grouping individual spending categories together, we've put a figure on the annual amount needed to achieve three different standards of living in retirement. Our 'luxury' income target covers all the spending above, plus: extended or long-haul holidays, health club memberships, home improvements, private healthcare and a new car every five years.Our 'comfortable' income target includes the essentials above, plus: regular short-haul holidays, recreation and leisure, tobacco, gifts to family and friends, alcohol and charity donations.Our 'essential' income target covers spending on: food and drink (excluding meals out), housing payments (mortgage payments, rent or council tax), transport, utility bills, insurance, household goods, phone broadband, clothes, shoes and health products. ![]()
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