Scroll through to find out more about Amy and her plan's for retirement. With retirement a long way off you'll see what her current contributions will mean for her when she does reach retirement and if she's on track to reach the suggested level of savings she might need. The following is based on a number of assumptions including future fund performance, salary growth and future inflation. To the extent that future market conditions do not match those assumptions, the position will be different in practice.
What does this mean for Amy?
Based on her circumstances, even assuming a full state pension, Amy is not on track to receive the target level of retirement income of up to £11,900 (70% of her £17,000 salary) that she may require. Amy therefore needs to take action now and the sooner she makes changes the more likely it is she can have a comfortable retirement. The following is based on a number of assumptions including future fund performance, salary growth and future inflation. To the extent that future market conditions do not match those assumptions, the position will be different in practice.
What can Amy do?
Amy should check any other sources of retirement savings she has and take account of these when considering her target level of retirement income. If there still looks to be a shortfall, she could consider increasing her contributions or delaying her retirement. By way of illustration, with the recent change to contributions in the Plan to meet legislative minimum levels, Amy will now pay 3% each year in contributions and Heinz will pay 5% each year in contributions.
As a result, her fund value would increase to £119,100 with an annual projected retirement income of £5,900 per year. This is an increase of £4,400 each year and allowing for the State Pension, Amy may now have sufficient income in retirement to live comfortably. She should think very carefully, however, about whether this is likely to be enough for her and what she needs to do about it if she would like to live off a higher amount.
Important Note
These figures are intended for illustration only and the level of income you need will vary depending on your circumstances. You should take independent financial advice if you are unsure. Most people will qualify for a state pension in addition to any workplace or personal pension savings. The full state pension is currently worth around £11,502 per year. More information on the state pension can be found at www.gov.uk/check-state-pension