Almost half of UK retirees fear they will eventually run out of money, with many relying on receiving an inheritance or downsizing to top up their pensions. A study revealed that a quarter of retirees plan to top up their retirement fund with an inheritance from a family member or friend, while a third will downsize to a smaller home to free up some cash. With an estimated 12.5 million people over the age of 65 in the UK, this suggests around three million retirees are relying on inheritance and more than four million retirees are planning to downsize to cover costs. More than half of retirees polled planned to reduce their cost of living in later years to pay for retirement, while 3 in 10 said they would save money as they would no longer need to support their family. More concerningly, two fifths of retirees surveyed said they had no plan regarding how much they should spend each year to ensure they did not run out of money. The amount you will need in retirement will depend on a multitude of variables, including the type of lifestyle you want, the state of your health and who else you live with. The necessary income for a minimum, moderate and comfortable retirement have been calculated by the Pensions and Lifetime Savings Association. It suggests annual amounts of £10,900, £20,800 and £33,600 a year respectively for a single person. These figures assume a full state pension worth £9,339 a year. A minimum income would cover all your needs with a little left over for fun; a moderate one offers more financial security and flexibility; and a comfortable income would provide even more financial freedom and some luxuries.

Past performance is not a reliable guide to the future. The value of investments and the income from them can go down as well as up. The value of tax reliefs depend upon individual circumstances and tax rules may change. The FCA does not regulate tax advice. This newsletter is provided strictly for general consideration only and is based on our understanding of law and HM Revenue & Customs practice as of January 2022 and the contents of the Finance Bill. No action must be taken or refrained from based on its contents alone. Accordingly, no responsibility can be assumed for any loss occasioned in connection with the content hereof and any such action or inaction. Professional advice is necessary for every case.