It is important to always be aware of your pension/retirement savings as you will be able to predict if you are on track for your financial goals. By keeping an eye on them, you will be able to see if there is a problem and fix it early.

This sounds good, but how do you start and what figures do you use? Take a look at the best way to estimate your potential sources of income and understand what you may be entitled to.

State Pension

One of the easiest ways to keep a track of this total is by regularly requesting a statement to see how much is building up. You can apply online, via phone or post as long as you are over 16 and over 30 days away from state pension age.

Final Salary Pension

This is a retirement income that is based on how much your salary is and how long you have been part of the scheme. These are usually known as defined benefit or career average pension schemes, and if you belong to one you will usually be sent an annual benefit statement.

However, if you don’t receive one then you should request it. The statement will show how much pension you might get and might assume you will choose to take your tax-free lump sum.

Defined Contribution Pensions

With these schemes, you get to build up a pot of money that you will then use as income when you retire. The value of your pot will be based on your contributions, any employer contribution plus your investment returns/tax relief.

Your annual statements estimate the monthly retirement income you are likely to receive with this pension if you were to generate it into income for life aka annuity. You have complete freedom over how you can access your pension funds if you’re 55 or over with this type of scheme.

Other Sources

Pensions aside, you might have other forms of savings or investments that will generate an income for your retirement. Things like cash deposits, property for rent and shares will also give you financial returns.

It is beneficial to work out a retirement budget to put some of these earnings aside for the future. When you see all your income/projected forecast all laid out then you will be able to reach your retirement income goals more easily.