Will you be able to live comfortably on your retirement income? With more of us living longer, healthier lives, you could say that 90 has become the new 70. That’s a lot more leisure time to look forward to.
Thanks to improved healthcare and higher standards of living, as a nation we’re living longer.
Estimating the cost of your retirement
When you retire, you’ll probably have to pay for the same things as you do now. If you’ve paid off your mortgage, you might think you’ll have some extra money — but bills such as gas, electricity, food and car and property insurance costs could significantly increase. The table below shows what some basic items might cost in 20 years’ time¹:
- Item Cost in 2009 - Cost in 2029
- Loaf of bread £1.10 – £1.99
- Sunday newspaper £1.00 – £1.81
- Pint of milk 55p - 99p
- Litre of petrol £1.20 – £2.17
If your income in retirement is low, you’ll have to spend a larger proportion of it on the essentials, and less on things like entertainment and travel. So although you’ll have plenty of free time, you may not have the money to enjoy it as you’d like.
It’s worthwhile looking at what retirement income you’ll need before making any decisions on how to take your income in retirement. You can also look at splitting your expenses into essentials, desirables and luxuries. This means you can think about covering your essentials and desirables with a guaranteed income, so you have the comfort of knowing they’ll always be paid for. You can then look at using other retirement products to fund your luxury expenses.
There’s a wide range of products available for taking your income when you retire. The more prepared you are now, the more you canlook forward to your retirement.
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¹ (source: www.whatsthecost.com, the table assumes an inflation rate of 3% every year until 2029)