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PENSIONS

Pension Planning

The income you will need when you retire will be higher than the income needed if you could retire today because inflation increases the cost of living. This guide will help you work out the following.

1	The annual income you will need when you retire
2	The amount of money you will need to invest when you retire to give you enough income
3	The monthly amount you must save to achieve your goal

To use this guide first decide

1	What age do you want to retire
2	What annual income would you need if you could retire today
3	What do you think the annual average rate of inflation will be

Now replace the red example figures below with your own and use the formula in the example beneath to calculate the retirement income you will need.

1	You want to retire in 20 years
2	You would need an income today of £25,000
3	You think the annual rate of inflation will be 3.5%

Example

Multiply the amount you would need if you could retire today by the rate of inflation plus an additional one hundred percent as shown below using the red example figures.

£25,000 x 103.5% equals £25,875

Now multiply the answer £25,875 again by 103.5%

£25,875 x 103.5% equals £26,780.6

Now lets say you plan to retire in twenty years as shown in the example all you need do is repeat the calculation a further 18 times until you have completed a total of 20 multiplications. One for each year before you retire.

Your final answer will be the amount you need when you retire taking into account inflation. The final answer using the example comes to £50,000.

£50,000 will therefore be the equivalent of £25,000 today if annual inflation increases by 3.5% pa over the next 20 years.

Calculate how much money you will need to provide the income

Now you know the annual income you need you can work out the amount of money required to provide the income by simply replacing the red income figure in one of the examples below with your own and making the calculation.

This guide is based on you investing when you retire all of the money you have saved and using the annual interest from your investments as your only source of income. The amount you need to invest will depend on whether you are going to be a medium or low risk investor when you retire.

Medium risk investor example

A medium risk investor expecting an annual return of 10% to provide an income of £50,000 will need to invest £500,000 when they retire. You can refer to the chart below to see approximately how much you would need to save monthly to achieve £500,000.

Your age	Years to save	Approximate monthly savings needed to achieve target fund assuming 9% pa average investment growth	Target fund at age 60
30	30	£344	£500,000
35	25	£531	£500,000
40	20	£842	£500,000
45	15	£1,454	£500,000
50	10	£2,845	£500,000

Low risk investor example

A low risk investor expecting an annual return of 5% to provide an income of £50,000 will need to invest £1,000,000 when they retire. You can refer to the chart below to see approximately how much you would need to save monthly to achieve £1,000,000.

Your age	Years to save	Approximate monthly savings needed to achieve target fund assuming 9% pa average investment growth	Target fund at age 60
30	30	£670	£1,000,000
35	25	£1,036	£1,000,000
40	20	£1,681	£1,000,000
45	15	£2,905	£1,000,000
50	10	£5,689	£1,000,000

Send us your objectives

If you would like our help to find and set up a suitable offshore savings plan for your pension savings requirements simply use the pension enquiry form to send us your objectives. Our service is provided free of obligation and fee.

Find out how much you need to save

If you tell us the amount you will need to invest to provide a suitable income, how many years you plan to save and if you want to save monthly, quarterly, six monthly or annually we will send you an illustration showing you the regular amount you need to save to achieve your target..

Tell us how much you can afford to save

If you tell us the amount you can afford to save, how many years you plan to save and if you want to save monthly, quarterly, six monthly or annually we will send you the follow type of illustration.

Savings of £200 per month for eighteen years will give you £90,850.

When we receive your enquiry one of our British qualified consultants with send you an email with their full contact details and information about the products that appear to suit your objectives.

If more than one product appears suitable they will send you the material in separate messages to avoid confusion.

You can read more about our service and how we help you on the about us pages.

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