When you consider your retirement funding and read the pension fund plan provided by the company you work for, you may be initially quite relieved to read that your retirement savings are designed to cover 80% of your salary at retirement. What you really need to look at is that this 80% is the percentage of your salary excluding benefits like a car allowance or bonus which can be very significant amounts of money in many cases.

Do the exercise yourself, take your income for the entire year, exclude any perks and allowances to determine your actual salary and then devise a retirement plan to cover the difference between the two. By doing this and putting a little more away every month towards your retirement plan, you will be assured that your lifestyle can be maintained at a level you are accustomed to.

Unfortunately many people to not take into consideration the difference and get quite a shock when they retire, resulting in either a dramatic lifestyle shift or many years of working still ahead, this of course if there is work available for a retired person in your position or with your qualifications.

The answer to covering the gap between your pensionable income and your total income is to invest in retirement annuities which offer a sound tax advantage, allowing you to deduct as much as 15% of your taxable income less your pensionable income.

Perhaps the most important thing to consider is the length of time you have been contributing to a pension fund. Most pension funds are designed to produce the 80% retirement income after at least 40 years as a contributor and in the working environment today, people are far less likely to work for the same company and contribute to the same pension fund for the period. This however can be preserved by transferring your pension fund to a preservation fund when you leave your employment. This ensures that both the capital and tax benefits are preserved.

The transfer of funds to preservation fund then simply stays as a separate fund that you are unable to further contribute to and any other pension funds owing to you should you leave your next employer would simply end up in another preservation fund. By preserving your retirement savings in this manner and making further contributions to cover the gap, after 40 years of working you will retire without any surprises and enjoy the retirement you envisaged.