The main sources of income in retirement are from state pensions, personal pensions, occupational pensions, savings and investment income.

However, the shape of retirement is changing.

It is becoming more common for individuals to adopt semi-retirement and phase in to full retirement over a number of years, rather than the traditional route of stopping work completely at 60 or 65 and starting to draw your pension. Therefore, some employment income may also be available to top up your pension in the early years.

State pensions:

Do you know what your state pension age is?

This has gradually been increasing and under the current rules most working age people will be 66 - 68 before they can claim their state pension.

Do you know what your state pension will be?

If you have paid National Insurance in in the UK you will also have to make a claim in the UK for some of your state pension.

Under the proposed changes to the Isle of Man state pension, a full pension could be in the region of £170 per week (although if you are expected to receive more under the existing rules, this will be protected).

Personal pensions:

If you have saved in to an Isle of Man personal pension, these funds can be accessed at retirement with 30% of the value providing a tax free sum and the remaining value drawn throughout your retirement as pension income. The amount available to you will depend on the value of your pension plan.

Occupational pensions:

If you are fortunate enough to be a member of a Final Salary Pension Scheme, your pension income from the scheme will depend on the length of time you worked for the employer and your salary during that time. At retirement you will be entitled to a pension for the rest of your life and should you be survived by your spouse, a survivor’s pension is also usually available. Your employer will provide you with confirmation of the benefits you have accrued in the scheme.

For other types of Occupational Pension, the benefits at retirement will depend on the value of your pension pot.

If you would like to understand more about your potential income in retirement we can help you.

At Hockney Stevens we use cashflow forecast analysis to help estimate pension income, understand if you need to start saving more for your retirement, project the sustainable rate at which you can draw from your pensions or savings so that you do not run out of money.