‘I don’t want to work until I’m 75!’ Mum explains how she calculates her retirement fund

Financial adviser discusses calculating pension funds

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On the Rewirement Podcast, Angellica Bell spoke with a single mother about her retirement plans and how she aims to get there. Beverly is in her 50s and wants to retire in the next 10 years but she stopped paying into her pension for around five years.

She was made redundant, then took more time off to take care of her parents when they fell ill.

As she starts looking to the future, she is not sure whether she will be able to retire in the next year and also move into her dream home, nearer to her son.

She asked herself: “What can I do in the next 10 years to set me up ready for retirement? I don’t want to be working until I’m 75 or even 70.”

Phil Anderson, financial expert spoke with Beverly about some options that may be available to her.

He said: “With the cost of living crisis, people are finding things harder, bills are going up a lot, but you have to be mindful for your future as well.

“If you can afford to, pay more in [to a workplace pension] as it’s an important thing.

“If you’ve missed five years of payments, what I would do is try and work out how much I’ve missed going in.

“Although it’s only five years missed, it’s probably more than that because of compounding and the growth so sometimes you’ll have to make sacrifices.”

He suggested how she can work out exactly how much is needed for her retirement.

He said: “Some people will spend a lot when they retire, some people will spend a lot less so I would say look at your ins and outs now, and look at your ins and outs when you retire.

“At that point you might have less outgoings like less commuting costs mortgages might have been paid off, you could look to downsize on your house so that’s why it’s a good reason to review your finances regularly as well.”

Beverly explained to the financial expert that she took the figure of 20 years and divided her pension pot by 20 to see how much that would leave her, and so she would know if she could survive on this figure.

“It was a very simplistic way of looking at it,” she said.

She continued: “As long as I’ve got my finances organised and I can live within that amount, then I should be okay.”

Mr Anderson explained that the hardest thing about planning for retirement is the unknown.

No one knows when they are going to die so people can only go off of averages and data.

For example, women are living longer than men so they need could need a larger pension pot to sustain them, he said.

Additionally, Beverly explained that the only way she can afford her forever home and be closer to her son is by dipping into her pension pot for a contribute, but she was unsure if this was a good idea.

Mr Anderson said: “For some people it is the right thing to do however if you’re taking money out of your pension pot that will have a big impact on your retirement income.”

He gave an example that if someone took a £50,000 lump sum out of their pensions, in the next ten years that money would have grown and it could be worth £100,000 so it would have an impact.

Another option he suggested was taking out a mortgage, however he warned that not all providers will offer mortgages to older people. He suggested that people get a lifetime mortgage which is aimed at Britons aged 65 and above.

Rewirement from Legal & General is available weekly from Thursday 23rd June on all podcast providers.

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