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Your pension - will you have enough?

December 01, 2009 at 12:53 PM

fun.gifWith the current state of the stock market, a frequent topic of conversation with our clients is the value of their investment portfolio and what impact this will have on their retirement.

We can expect to live much longer than any previous generation, so the issue of providing sufficiently for our retirement is of increasing  concern.

The following table shows how much a person needs to put away monthly to get a pension of £10,000 a year in real terms:

  • For a 55 year old, a monthly contribution of £1,215 is needed
  • For a 45 year old, a monthly contribution of £580 is needed
  • For a 35 year old, a monthly contribution of £360 is needed
  • For a 25 year old, a monthly contribution of £245 is needed

Source: The Annuity Bureau

The figures assume contributions are payable throughout the period to retirement at age 65 for a man. Contributions shown are before any tax deduction. Investment returns  are assumed to be 7% a year throughout the period to age 65. The pension incomes shown are £10,000 in real terms, ie with inflation  assumed at 3% pa until age 65. The pensions shown are based on annuity  rates available today.  The pensions shown all provide income monthly in  arrears, no guarantee period, single life and escalation in payment in  line with the retail prices index.

Here are some of our Investment tips, based on our principles of investing:

  • Investing is for the long-term - we are not stock pickers or market timers.
  • Carefully assess each individual’s risk tolerance — you have to be able to sleep soundly at night.
  • Allocating investable funds across the broad spectrum of the market.
  • The composition of a portfolio should reflect the length of  time the funds will stay invested. For example, the closer you are to  retirement, the more conservative your portfolio generally needs to be.

 

Please get in touch if you would like to discuss your investment strategy.



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