From their first day of work, right until their last, a majority of people are planning for the future and thinking of life beyond work. People choose to plan their retirement in different ways, with some investing money to form a portfolio and other’s choosing the option of a pension fund. There are the lucky few however that are unexpectedly handed an instant retirement plan……by winning the lottery!
When it was announced earlier this week that a syndicate of seven office workers based in Merseyside had won an astonishing £45m on the Euromillions lottery, the first thing they did was announce their intention to quit their jobs and retire. With a cool £6.5m each to enjoy, each of the lucky winners were left contemplating a life of leisure and luxury. It also left the team at Campbell Harrison wondering that depending on age (the winner’s ages ranged from 19 – 57), how big a win would mean you could bring forward those retirement plans and never have to work again?
Apparently we weren’t the only one’s discussing this, as quite usefully, an economics analyst has recently put together the relevant figures to answer such a question.
The Analysis
Taking into account the average life expectancy of males and females and the national average wage for both sexes, which is currently £21,244 for men and £17,104 for women (after tax and National Insurance contributions), the results showed that a win of £554,676 for a 40 year old woman willing to take a risk on investments, would provide a pension scheme large enough to provide her with an average wage every year until she died. In comparison, for a 21 year old man wanting a risk free return, the size of the win would need to be just over £2 million.
The rest of the results concluded that:
· A 21 year old man would need a win of £2,019,117
· A 40 year old man would need a win of £1,268,780
· A 21 year old woman would need a win of £1,658,201
· A 40 year old woman would need a win of £1,069,225
Which Retirement Plan?
Not everybody will be lucky enough to win the lottery so they have to plan for their future a lot more carefully. Different people have differing attitudes towards financial risk. Some are willing to make high risk investments in the hope of even higher rewards, whilst others like to make low risk investments for a guaranteed rate of return.
So which investment plan would suit your needs and future aspirations regarding retirement? The most common form of investment made for retirement is a pension plan.
Pension Schemes
Pensions are the most common form of retirement plans in the UK and are taken out to provide a steady income for the policy holder beyond their working life. The amount of money contributed varies between individuals, depending on income, attitude to risk and any plans for retirement.
Investment Portfolios
A common alternative (sometimes as well as) to taking out a pension is by creating an investment portfolio. This form of retirement plan centres on the individual’s attitude to risk as the uncertainty regarding future income is greater, but the potential financial rewards make investment an attractive proposition. Investment portfolios are also preferred by others as they can be handed down to family members and so is viewed as providing for your family’s future as well as your own.
At Campbell Harrison, we are proud to boast a speciality in retirement plans. Our dedicated team take the time to find out your hopes for the future and help find the best retirement plan to help meet these aspirations.
As famous American clergyman Harry Emerson Fosdick once said, “Don’t simply retire; Have something to retire to”.
