How much do you need to retire comfortably?

Magdelena Harding, dental Specialist Financial Adviser at Wesleyan Financial Services, shares research findings that reveal what you need to aim for…

The golden question asked of a financial adviser by dentists is how much retirement income they need to down tools and enjoy life outside of dentistry.

How much do you need to retire comfortably?

Research conducted by Wesleyan Financial Services revealed that nearly 50% of dentists (48%*) are unsure what amount of retirement income will allow them to live a ‘comfortable’ lifestyle.

The annual Retirement Living Standards (RLS) report by the Pensions and Lifetime Savings Association defines a ‘comfortable’ retirement as having greater-than-average financial freedom and the ability to afford some luxuries each year. As an example, you could have a subscription to a streaming service, regular beauty treatments, a foreign holiday and several UK minibreaks a year alongside utilities and home maintenance costs.

The latest RLS report revealed that a single person requires £43,100 per annum, while couples need £59,000 on average to live this lifestyle. It is important to point out that these figures serve as guidelines and the amount each person needs in retirement will differ depending on their circumstances. They are useful, however, in illustrating how an individual’s desired lifestyle needs to be factored into their long-term financial planning.

Interestingly, this year’s report also revealed a sharp increase in the amount of retirement income required compared to previous years. According to the research, the report’s findings compared to those revealed in the 2019 version have increased by a third (33.5%) for a single person and nearly a quarter (23.7%) for couples.

This is perhaps unsurprising with the increase in living costs we have been experiencing but highlights the importance of creating a projection in your financial planning and how potential future costs may impact your goals.

A financial adviser who is worth their salt will tell you the importance of engaging with your retirement planning sooner rather than later. While it is never too late, the earlier you start, the more room you will have to adjust your planning to get to your retirement goal, potentially allowing you to reach it earlier, or at least keeping you on track when taking into account increasing costs.

Beginning your retirement planning early may also mean it costs you less. Pensions are an incredibly tax-efficient way to save for the future and the longer they have to grow, the less you personally might need to contribute to reach your goal.

Personal pensions, as an example, can benefit from compound interest – meaning not only can you earn money on the principal amount in your pension contributions, you can also receive further interest on the interest you have already earned.

It is important to remember that the value of your personal pension pot can go up and down and its value, when you take benefits, might be less than you paid in.

Want to know where you are on the road to retirement?

To get a clearer view of your financial situation, you can speak to a dental Specialist Financial Adviser at Wesleyan Financial Services by booking a no-obligation financial review here or calling 0800 316 3784.

At Wesleyan Financial Services, a team of specialists focuses solely on dental professionals and their unique financial planning needs. They are there to back you on each stage of life’s journey, from graduation to post-retirement and every step in between.

For access to the full Retirement Living Standards report, visit www.retirementlivingstandards.org.uk.

Tax treatment depends on individual circumstances and may be subject to change in future.

*Findings are based on consumer research of 203 dental professionals conducted in September 2023 by Wesleyan Financial Services.

-ENDS-

About: Magdelena Harding is a dental Specialist Financial Adviser at Wesleyan Financial Services, supporting dentists, their families and their practices with financial planning to secure their financial future.

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Wesleyan Financial Services Ltd (Registered in England and Wales No. 1651212) is authorised and regulated by the Financial Conduct Authority. Registered Office: Colmore Circus, Birmingham B4 6AR. Telephone: 0345 351 2352. Calls may be recorded to help us provide, monitor and improve our services to you.