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Funding your retirement
Even if you have just begun your career, it is important to take some time to plan your retirement, and how you will handle the finances at that time. You simply cannot leave everything for the last minute. This might come as a shock to you, but people of Britain might get lower incomes in their later years. According to the studies carried out by Prudential, people retiring in 2008 will have approximately 18,000 as an average annual income.
These studies also show that women will have even lower income than men. Average annual income of women, after retirement, would be approximately 11,000, and of men, approximately 20,000.
With these figures, it is very important that you start funding your retirement at an early age. If you want to know the amount of money that you will receive after retirement, based on your current salary, you can use a retirement pension calculator. It s an online tool that will ask for details about your current salary, savings, and time left to retire- and will return an approximate amount regarding your retirement pension.
After deciding the amount, you also have to decide on the method of payment- how would you like to receive your pension. Many experts say that it is best to invest in an annuity. You can do that by paying some money from your retirement fund, to an annuity provider. This will turn into income, and will carry on for the rest of your life.
You can select from many types of annuities- immediate annuity, guaranteed annuity, deferred annuity, temporary annuity etc. But you should be careful, because once you get an annuity, you cannot change it. So it is advised to go through each option carefully and wisely, before purchasing one.
However, if you do not want to go for an annuity, you can take a cash sum, which is free of tax. Generally, you can take out utmost 25% tax free sum from your retirement plan. Though it will lower your retirement pension, but you can use it to invest money in any scheme.
Apart from these methods, you can also get an equity release scheme. This means that you can sell a part of your house, and get cash, or regular income, but it might not be the best option for everyone.
Whatever option you want to go for, you need to think it over at least twice, because this decision will affect your life in later stages. Plan your retirement very wisely.
Frank Samner writes about
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