The cheapest places to retire!

How much you need to retire in comfort can vary wildly depending on your location.

The issue of paying for retirement has been at the forefront of the news recently, due in no small part to the severe changes the Government has made to pensions. The amount of tax-free income you can put into a pension each year will be sharply cut, from £255,000 to £50,000 in April.

The change will only affect around 100,000 pension savers a year, and has won praise for its simplicity, compared to proposed changes by the previous government.

However, it has brought the UK's pension difficulties back to the attention of many. And while it’s important to ensure you have a decent amount of money put aside in a pension for when the time comes to retire, where you retire to can have a big impact on just how much money you will need to 0remain comfortable.

It pays to retire in Wales!

MGM Advantage, a retirement income specialist, has put together some very interesting research looking at the 20 largest cities in the UK, the average life expectancy for retirees in that region, and how much you’d need to retire there.

Let’s have a look at how the UK’s top 20 major cities performed according to the research.

Now there’s no great surprise that London comes bottom of this particular league table, though the scale of the difference between London and Cardiff – an astonishing £8,939 a year – is pretty remarkable.

And it all comes down to the cost of living. According to MGM’s research, the cost of living in Cardiff is 11.53% less than the UK’s average, whereas London boasts living costs of 18.49% above the UK’s national average.

The trouble is, while such regional variations play a huge difference in just how much money you’ll need when you retire, things like the State Pension and pension credits do not at present take location into account.

If you want to ensure you have enough cash set aside in your pension to retire to a decent standard of living, the onus is on you to lay the groundwork. Here’s a few other things you should consider in order to bump up your retirement pot.

The early bird

With pensions, it’s certainly a fact that the early bird catches the worm - the earlier you start paying regularly into your pension, the better off you’ll be in the long run. After all, you don’t want to reach middle age with little set aside for when you pack up work, and have to make up for lost time.

Similarly, if your employer offers a pension scheme, you’d be daft not to take part straight away. Generally your employer will match your contribution up to a certain percentage, so by ignoring it you’re turning your back on free money which could prove invaluable in the long run.

Leaving it late

Just as getting started early makes a difference to the size of your pension pot, leaving it late to actually cash in your pension can give your pension income a serious boost.

If you put off claiming your State Pension by five years, you have two options. You can enjoy a higher weekly state pension when you do start to claim the pension, or else enjoy a lump sum payment now. For more on how deferring your State Pension works, be sure to read Boost your pension by 52%.

The Open Market Option

When the time comes to retire, the vast majority of us will simply cash in our pension pot for an annuity, giving us a regular income for the rest of our lives. However, annuity rates have been on a downward curve for some time now, making it all the more important to make the right decision on which one to go for.

Going with the Open Market Option - in other words, shopping around for the most competitive option - is the best way to ensure your retirement is as comfortable as possible. To find out more, check out Get more money from your pension.

Your property can be your pension

Over the long-term, property is not just useful in providing a roof over your head – it can work out as a pretty good investment too.

It’s all very well for the Housing Minister Grant Shapps to say “Your home is your home, not your pension” as he did in a speech recently, but that ignores the fact that for many people property is the biggest asset they will ever own, and can play a part alongside (rather than instead of) traditional pension planning.

You can release the equity you’ve built up in a property in two ways. First, you can downsize to a smaller property as you get older. However, many older people don’t want to leave their home, which is where equity release schemes come in.

Equity release still suffers from a poor reputation due to the actions of cowboys in the 80s, but is a much safer option these days. It’s certainly not for everybody, but it should not be ruled out based on some out of date prejudices. For more on how equity release works, have a read of Over 65? You're sitting on a £765bn goldmine!

More: Don’t miss the new market-leading savings account! | 65% of you can boost your pension this way