Retirement

Planning for retirement means building enough resources to replace a salary for what may be twenty or thirty years. Because people are living longer, retirement can last a long time, and the money needs to last throughout.

Retirement income usually comes from several sources: a state or government pension, workplace pensions, personal savings and investments, and sometimes property or part-time work. The mix varies greatly between countries and individuals.

A common way to plan is to estimate the income you will need and work backwards. For example, someone who expects to need 30,000 a year and will receive 12,000 from a state pension must find the other 18,000 from savings and investments each year.

Starting early makes a large difference, because money invested for longer has more time to grow through compounding. Key risks in retirement include inflation reducing the value of fixed income, investment losses early in retirement, rising healthcare costs and simply living longer than expected. Reviewing plans regularly helps keep them on track.