The UK might be one of the most developed countries in the world, but the British are having a hard time increasing their savings during retirement years. But then, it also highlights the importance of working with a retirement-planning team such as Mediclub.
Estimating Retirement Expenses
How much you need during retirement varies. There are many factors to consider. These include your lifestyle, debt, financial responsibilities, taxes, and dreams. On average, it is about £26,000 annually. It is roughly £2,200 monthly.
Many doctors and dentists tend to have an active luxurious lifestyle while they’re still working. If you wish to retain this, you need to come up with £4,500 a month or a staggering £54,000 annually.
Considering the inflation, however, it’s possible for these numbers to increase. While many healthcare professionals have already paid their mortgage by this time and are not sending children to school anymore, they have more significant expenses to think about. These include their medical costs.
Another Problem on the Rise: the Value of Pension
The UK government has already phased out the default age of retirement. Back then, it was 65 years old. It means that the organisation, such as a healthcare facility, cannot force you to retire. As long as you’re physically and mentally capable, you can keep working. There are only two reasons to do so. One of these is the age limit for an occupation as defined by the law.
If you don’t have enough pension or savings yet, this is an advantage. You can earn active income and give more time for your money to grow.
But there are two problems. One, during retirement, as many as 53% of individuals withdraw their pension in full. Worse, only 20% of people think about investing their money. About 25% will spend it, while 14% will use it to pay their debt.
Many people are also retiring early due to a pension clampdown, which limits the amount of pension they will receive without paying taxes. It went down from £1.8 million to £1 million.
When it comes to the cost of living in retirement, it’s no longer how much you’re earning that matters. It’s your savings or investments. The sooner you can take care of this, the less likely you are to struggle when you reach your twilight years.