- Worker earning £60,000 p.a. may only need £28,075 p.a. in retirement to have the same disposable income
- WEALTH at work provide four examples for those earning £30,000, £45,000, £60,000 and £75,000
The finances of many are being impacted by COVID-19, especially those who are unfortunately facing redundancy and are approaching retirement. The over 50s are far more likely to slip into long-term unemployment, with just one in three (35%) returning to work quickly, compared to two in three (63%) workers aged 25-34.
The current crisis has caused one in eight (13%) older workers to alter their retirement plans with 8% planning to retire later, and 5% planning to retire earlier. Understandably, many are concerned about whether they can actually afford to retire without really realising that they may not need as much as they think.
WEALTH at work, a specialist provider of financial education and guidance in the workplace supported by regulated advice for individuals, has created the four examples below to demonstrate how affording retirement may be possible. The examples show how you may be able to achieve the same disposable income levels in retirement, or at least similar, as to what you’d get from your wages, even if your pension income is half of your salary.
This is because for some people once they retire, they will be paying significantly less Income Tax, have no National Insurance or pension contributions to make, mortgages and loans may be paid off and children could be financially independent.
The following examples are for illustrative purposes only and are based on an active individual with no health issues, contributing towards their workplace pension through salary sacrifice for the tax year 2020/21, who will have paid off their mortgage and loans by the time they retire, and took their 25% tax free lump sum at-retirement (possibly to pay off the mortgage and any other debts) – meaning that all pension income is now liable for Income Tax.