2 November 2018
What are Future Pensioners’ burning questions, and what else should they be asking? Tim Box answers the most commonly Googled queries – plus some overlooked and more complex ones too.
An internet search engine is often the first port-of-call when people want to find out about something, and it’s no different for pensions.
Not only can it help you find answers to almost any question, you can also see what others are asking on the same subject, highlighting common areas of interest or uncertainty. So what are the pensions questions people frequently ask on Google – and what are the answers? And perhaps even more importantly, what other issues should Future Pensioners be focusing on?
• FAQs - suggested by Google’s ‘People also ask’ section*
Q: How much do you get for a state pension?
A: Currently £164.35 per week, which equates to just over £8,500 per year**
Q: How long do you receive a pension?
A: Once you start receiving your pension you receive it for life in almost all cases (there are a few rare exceptions)
Q: How many years’ NI do I need for a full pension?
A: You need a 35 year record of National Insurance Contributions to qualify for a full state pension**
• Not-so-FAQs – that don’t appear in top Google searches
Q: Will I have enough money to last my whole retirement?
A: Research suggests that many people underestimate how long they’ll live post-retirement, and therefore they risk depleting disposable assets like savings too quickly. The benefit of buying a pension with the same money is that it won’t run out – income will be distributed to you regularly for the rest of your life, no matter how long that is.
Q: How much money will I get in my pension?
A: People’s expectations of their future retirement income may sometimes be higher than the reality.
Future Pensioners may not realise that – as an example – to enjoy a pension of £25k per year they may need to save as much as £500k! Though the cost of buying an annuity varies due to a number of factors like age, health, size of fund etc, as a general rule of thumb, a reasonable estimate is that it broadly costs around £20 to purchase £1 of pension per annum.
A good approach to planning for retirement is to start by thinking about how much income you want (or need) in retirement, and then work backwards to work out how much you will need to save to get there. See our handy guide below:
|Target pension income (per year)||Approximate level of savings required|
Q: How can I make my pensions savings go further?
A: Start saving early. Thanks to the multiplier effect of compound interest (which we will go into in more detail in another blog), every little you can spare when you’re young could pay huge dividends when you’re older.
Of course, pensions is a complex subject, and this is just an overview of some of the key issues that are (or should be) on Future Pensioners’ minds. Knowing the answers should help focus attention on what’s important – laying the foundations for many comfortable years ahead in retirement.
*Suggested by Google’s ‘People also ask’ section, which appears when you type in ‘pensions’. Research conducted in September and October 2018
**If you reach state pension age after April 2016