SJP Retirement Investments still on track

This can often feel like the time of life when finances become ever more challenging. 

You may be repaying debts, perhaps moving to a bigger house, raising a family, keeping on top of living costs, and all while trying to save for your retirement.

It’s always a good idea to talk to your St. James’s Place Partner, as your financial circumstances will change all the time, which means your financial objectives need to be constantly reviewed to ensure that your plans remain realistic and achievable.

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Is your retirement investment strategy still fit for purpose?

When it comes to reviewing your retirement investment strategy, your pension investments should have a focussed purpose. Having a goal or objectives to aim for helps to determine whether your plans remain on track.

Your retirement wealth is ultimately likely to include a range of assets and investments in addition to your pensions, that you will be able to draw on for your eventual retirement needs. Although it may seem obvious, any changes in your retirement strategy need to consider all of your assets, not just your pensions.

As your retirement is bespoke to you, then your plans for getting there should be as well. Understanding whether your retirement investment strategy is fit for purpose can be complex, and this is where a financial adviser can help make sense of everything. Some of the areas they can help to address are:

  • Whether all of your investments are diversified enough
  • Do your investments and assets meet your view of acceptable risk for this specific objective?
  • Do your retirement investments align with your retirement plans, especially if you have changed your goals?

Your  St. James’s Place Partner can discuss all of your investment and retirement needs, and help you to stay on track to meet your retirement objectives.

How much income will you need in retirement?

As you gradually near retirement, knowing how much income you might need can be a challenge. You will want to maintain a certain standard of living, and this goes hand in hand with understanding where your income will come from, when and how. 

The Pensions and Lifetime Savings Association (PLSA) devised a set of ‘retirement living standards (2023)’. These considered three different levels of lifestyle, including the associated costs of goods and services, and came up with suggested minimum levels of required annual retirement income.

  SINGLE COUPLE
  OUTSIDE LONDON INSIDE LONDON OUTSIDE LONDON INSIDE LONDON
MINIMUM Covers all of your needs, 
with some left over for fun
£12,800 - £19,900 -
MODERATE More financial flexibility 
and security
£23,300 £28,300 £34,000 £41,400
COMFORTABLE More financial freedom and 
some luxuries
£37,300 £40,900 £54,500 £56,500

Source: PLSA, 2023

Of course, this is simply a guide, and not necessarily reflective of your individual needs. But it does help provide a useful indicator of the typical minimum cost of living depending on the lifestyle you might want in retirement. 

how much income

Are you saving enough?

Knowing whether you are saving enough to get you to where you want to be in retirement can be difficult to guess. 

Your St. James’s Place Partner will use sophisticated cashflow modelling software to forecast your future income requirements, and be able to see if you’re saving enough to keep on track to reach your goals. 

If you are looking for an approximation, there are a few rudimentary approaches, which can help inform your thinking and discussions with your adviser.

St. James’s Place Partner

Percentage method

This works on saving a percentage of your earnings by using your age and then halving it:

  • So, if you are 34, then pay in 17%

  • If you are 40, contribute 20%, and so on.

Don’t forget, that you will receive tax relief on your contributions, and if you are employed, then your employer may also pay in, which can make it a little easier to hit your target.

 

Multiple of earnings

Another idea is to use a multiple of your earnings as the amount of retirement savings built up, depending on your age:

For example:

  • 1 x annual earnings by 30
  • 3 x annual earnings by 40
  • 6 x annual earnings by 50
  • 8 x annual earnings by 60

This method helps to provide a benchmark in the amount of capital you need to have saved.

If you have a mix of Defined Benefit (DB) and Defined Contribution (DC) pensions, it might be worth obtaining a valuation of your DB schemes to understand the value of your total retirement savings.

The value of an investment with St. James's Place will be directly linked to the performance of the funds selected and may fall as well as rise.  You may get back less than the amount invested.

The levels and bases of taxation and reliefs from taxation can change at any time.  Tax relief is dependent on individual circumstances.

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Business, News , Investing
5m read
6 Feb 2025
SJP Approved 05/04/2024