Retirement advice for doctors
At Wesleyan Financial Services, we offer specialist advice for medical professionals. From NHS Pension guidance to support with managing your wealth, we’re with you every step of the way.
Planning for life after work is an exciting prospect, but knowing exactly how much you need for a comfortable retirement can be difficult to pin down.
The amount will depend on a number of factors, including your individual circumstances, desired lifestyle, expected outgoings and how long you might be retired.
While there’s no one-size-fits-all retirement income, there are a few things you can consider to help you prepare for your later years.
When it comes to calculating how much you need to save for your retirement, it’s easy to make the mistake of basing the figure on your current lifestyle. However, it’s important to recognise that your spending is likely to look different in your later years as your priorities change.
For example, you’ll have probably partly or fully paid off your mortgage by the time you reach retirement, and your children may have completed their education and left home. You won’t have any work-related expenses to worry about either, such as commuting costs or pension contributions.
Instead, you may be spending more on holidays and leisure activities, as well as things like healthcare, heating bills and insurance. Being aware of how your needs will change throughout the course of your retirement is key to making the right long-term choices for your money.
How much you need in retirement will really depend on what kind of retirement you want. But the Retirement Living Standards, developed by the Pension and Lifetime Savings Association (PLSA), aim to help people picture the kind of retirement lifestyle money can buy.
The latest figures show that a single person (living outside of London) will need:
The PLSA suggests that a minimum retirement income will cover your essential needs, with some funds left over for fun. This might include eating out once a month and a long weekend break in the UK once a year.
A moderate retirement income gives more financial security and flexibility. For example, you may be able to take a two-week holiday in Europe and eat out three times a month.
A comfortable retirement provides more financial freedom and some luxuries. With this income, you could enjoy regular trips to the theatre or a longer amount of time spent on holiday.
According to the same Retirement Living Standards, a couple living in the UK will need:
While these figures can provide a useful starting point for working out what you’ll need for retirement, it’s more important to focus on your individual retirement plans and the type of lifestyle you’re working towards.
If you’ve already paid off your big expenses (for example, your mortgage), or you’re happy with a more modest retirement, you may need less than what is suggested.
If you’re ready to travel around the world or you’re planning a property renovation, you may need more than what is suggested.
Alongside the factors that have already been mentioned (namely lifestyle and expenses), you’ll also need to give some thought to how long your retirement is going to be. This will ultimately depend on when you plan to stop working and your life expectancy.
While life expectancy is something no one can predict, it’s clear that the longer your retirement, the more money you’ll need in your pension pot to sustain a comfortable lifestyle. For example, if the value of your pension pot is £300k, and your retirement is 10 years, that’s £30k a year. However, if your retirement is 30 years, that’s £10k a year.
A luxurious retirement may be more important to you than a long one, but you don’t want to use up your money too quickly and risk not having enough later on. On the other hand, you don’t want to restrict your finances more than you need to.
It’s also worth thinking about how inflation will affect how much money you’ll need to live on, as well as how long your savings will last. With this in mind, you may want to consider leaving some of your pension pot invested, so that it can continue to grow even after you start taking money from it.
Knowing how much of your money to keep invested and how much to take as income can be complicated, which is why it’s sensible to seek financial advice before making a decision.
It's important to remember that any investment comes with risk. All investments can go down as well as up, and you may get back less than you invest.
Dreaming of an early retirement? While you can technically retire at any time, the earliest you can take money from your pension is currently aged 55. If you plan to retire at 55, it’s especially important to review your pension pots to ensure you’re on track to reach your retirement goals.
This is where speaking to a Specialist Financial Adviser from Wesleyan Financial Services could help. With expert knowledge of pensions and retirement planning, they’ll carry out a full analysis of your current pension arrangement and help you make well-informed decisions about your future finances.
Once you have an idea of how much you’ll need to live on when you retire, you can start to consider ways to generate that income. This might include: