Retirement

Britain’s biggest pension taxpayers

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There are ways to make withdrawing your retirement savings more tax-efficient, and it’s possible to spread your withdrawals over many years, which can be more efficient.

Taking just one option at retirement, such as cash or an annuity, could mean you miss out on an opportunity to maximise tax efficiency and consider your financial needs in the future.

We have produced a helpful guide on how to avoid becoming one of Britain’s biggest taxpayers, which you can download below:

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Only two-fifths of Britons know how to boost their pension

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How much money will you have for retirement, where it’s invested, and what are you being charged?

According to new research[1], just two-fifths (42%) of the UK population know how to contribute more to their pension. The study also found that a quarter of those with multiple pots would not know where to start consolidating multiple pension pots accrued throughout their working life.

The Financial Conduct Authority (FCA) Financial Lives Survey reported that 47% have not reviewed how much their pension pot is worth in the last 12 months. Pension saving can seem complicated and inaccessible for many people, but we should all be doing it as soon as we start working.

Understanding Pension Consolidation

Pension consolidation is a process that can gather up your previous pensions and bring them together. As you move from job to job and change addresses, it can be tricky to manage pensions. With every new one, there’s more admin to deal with.

By combining them, you can have a clearer view of how much money you have for retirement, where it’s invested, and what you’re being charged. This consolidation can simplify your financial landscape.

It’s important to remember that a pension is an investment. Its value can go down as well as up and could be worth less than what was paid in. Pension consolidation won’t be right for everyone.

Managing Your Retirement Savings

Gathering up your pensions could give you a better idea of your overall pension pot and what it could be worth when it’s time to retire. Lower charges are another benefit; you could potentially save on management fees, which can help your pension pot grow faster.

The more pensions you have, the harder it can be to track them and how they’re performing for you. With just one pension, managing your retirement savings becomes much easier.

 

Simplifying Your Financial Future

Consolidating your pensions can provide peace of mind by offering a straightforward overview of your retirement funds. This reduces the administrative burden and makes making informed decisions about your financial future easier.

It’s crucial to stay informed about the value of your pension pot and the different options available to boost your retirement savings.

Taking proactive steps now can ensure a more secure and comfortable retirement.

 

Role of Professional Financial Advice

Obtaining professional financial advice is invaluable when considering pension consolidation. We can provide tailored recommendations based on your unique

circumstances and long-term goals. We’ll help you navigate the complexities of pension schemes and select the right options for consolidating your pensions effectively.

Engaging with us also ensures that you are making well-informed decisions, maximising the potential of your pension savings, and preparing for a financially stable retirement.

At any stage in your career, you may want to determine precisely how much you have saved in your pension and begin managing these funds more effectively. If you require further information on consolidating your pensions or need assistance understanding your options, please contact us for more detailed guidance.

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Source data:

[1] Lloyds Bank research 09.05.24

 

 

Why should someone invest in a retirement plan?

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Portrait of multiethnic couple embracing and looking at camera sitting on sofa.

Pensions may not be the most exciting thing to think about, but they are an essential part of planning for your long-term future. In fact, your pension has the potential to be one of your most valuable assets, even more than your property. It’s something that could make a significant difference to your lifestyle in later life.

When it comes to retirement planning, it’s best to start thinking ahead at least two years before you plan to stop working. To prepare for this next chapter in your life, our handy checklist can guide you through the important choices you’ll need to make to ensure you’re fully prepared for a comfortable retirement.

Today’s savers face unique challenges

Although retirement planning may seem familiar and straightforward, the truth is that today’s savers face unique challenges that previous generations did not encounter. While the basic concept of working, saving and retiring remains constant, there are new factors at play that can complicate one’s retirement savings efforts.

Planning for your retirement means carefully considering whether you will have enough funds to cover your desired lifestyle after you stop working. While you might be eligible for the State Pension, this might not be enough to sustain your retirement goals.

You may want to take early retirement

Additionally, you may want to retire earlier than the State Pension age, which requires additional savings planning to ensure you can afford the retirement lifestyle you envisioned. Careful planning and forward-thinking can ensure that you’ll have the financial security to enjoy your retirement without worrying about money matters.

There are many important things to keep in mind as your retirement approaches.

How can I locate all my pensions?

It’s crucial to determine how much income you’ll receive from all your pensions to properly plan your retirement. If you’ve misplaced any pensions over the years, you can use the UK government’s pension tracking service to locate them https://www.gov.uk/find-pension-contact-details

What is the value of my pension?

Keep track of your pension’s value regularly as retirement nears, ensuring that you’re aware of how much money you’ll have during your retirement phase.

When can I take my pension?

With a defined contribution pension, you can start taking money out from the age of 55, moving to 57 in 2028. However, it’s important to keep in mind that the earlier you start taking money out, the longer your pension will need to last. For those with a defined benefit pension, you can usually begin taking it from the age of 60 or 65. However, if you have a defined benefit pension, you might be able to start receiving an income from it from the age of 55. You may be able to take money out before this if you’re retiring early because of ill health.

How much State Pension will I get?

While it may not be your primary retirement income, it’s worth checking to ensure that you qualify for the full amount. You can quickly do this online through the government’s website https://www.gov.uk/check-state-pension

How much are my other investments worth?

If you have additional investments or savings, such as Individual Savings Accounts (ISAs), it’s important to check their worth as you approach your retirement age because they could supplement your pension.

How do I access my pension?

There are various ways to access your pension, including buying an annuity for guaranteed income, taking lump sums, or combining both. Your decision depends on your circumstances and what outcomes you expect.

What is my pensions investment strategy?

Take the time to analyse your investment approach as you approach your targeted retirement age and see if it still adheres to your risk tolerance. You could discuss potential strategies to reduce your exposure to higher risk investments over time with your financial advisor if you’re planning to receive a lump sum or purchase an annuity.

Seek professional financial advice

Accessing your pension is a critical decision that could impact your income and retirement significantly. That’s why it’s essential to seek professional financial advice before making any decisions.

Planning for retirement is not just about saving money. It’s also about envisioning your future and understanding your lifestyle priorities. By identifying your retirement goals and understanding your income needs, we can help you create a retirement plan that provides for your desired lifestyle and ensures your long-term financial stability. Don’t leave it to chance. Please contact us for more information on our pension planning services.

Important information: This article does not constitute tax or legal advice and should not be relied upon as such. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. For guidance, seek professional advice. A pension is a long-term investment not normally accessible until age 55 (57 from April 2028 unless plan has a protected pension age). The value of your investments (and any income from them) can go down as well as up, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits.

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Financial advice when planning retirement

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People who are confident about their retirement are most likely to have specific retirement goals and know what steps they need to take to reach them. But sadly, we see many people do not feel confident that they will have enough savings to live comfortably after they retire.

Many people have a fear of outliving their money, but most don’t have a clear idea of how much money they need during retirement. It’s important to remember that retirement doesn’t happen at a certain age, it happens when you have enough money to live on.

Seeking professional financial advice can help create a clear direction and understanding which will give you peace of mind that you are on the right track.

If you’d like to discuss your retirement, and would like to speak to an expert Financial Adviser, please get in touch:

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Free Guide: Retirement Planning

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There’s no fixed path to retirement or finite end point. Everyone has a different journey through life, with their own experiences along the way, and there’s no need for it to become stressful. You can reduce any anxiety by planning how much you’ll need to retire and working out how best to build up your pension pot.

We have produced a Guide to Retirement Planning to help you navigate the ins and outs of planning your retirement which you can Download Here

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Planning for an early retirement  

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Living life to the fullest and accomplishing long-held dreams. 

It’s common for individuals to either overestimate or underestimate their lifespan. As average life expectancy gets longer, some people may spend over 20 years or more in retirement. 

Early retirement typically signifies reaching financial autonomy before the statutory pension age, usually in the mid-60s. In the United Kingdom, retirees can begin drawing their State Pension at age 66. However, this retirement benchmark is set to increase to age 67 by 6 April 2028. 

Consequently, the early retirement age could be anywhere in your early 60s. Yet, for most, the concept of early retirement begins at age 55, when individuals can start drawing on their personal or workplace pension savings. However, this age is also due to increase to 57 from 6 April 2028. 

Aspects of Life 

During the early retirement phase, the focus tends to be on living life to the fullest and accomplishing long-held dreams. One’s spending might then reduce as activity levels decline, only to surge again later, possibly due to rising care needs. 

It’s common for individuals to either overestimate their health or underestimate their lifespan. As average life expectancy gets longer, some people may spend over 20 years or more in retirement – over twice our grandparents’ duration. Yet, as with many aspects of life, this depends on luck. 

Complex Calculation 

In fundamental terms, full retirement implies that your lifetime expenses should not surpass your income plus any remaining assets, such as savings and investments. This can be a complex calculation in many instances. It will require you to weigh your pension and other income sources against your expenditure and evolving needs as you age. 

Simultaneously, it’s crucial to consider investment returns and inflation, which refers to the rising cost of living. As we have recently witnessed, everyday prices can escalate rapidly, significantly diminishing the purchasing power of a fixed income or cash savings. 

Multiple Factors 

Embracing early retirement doesn’t necessarily translate to a full-stop on professional life. Instead, many individuals transition into more flexible, part-time roles or switch towards volunteering. This shift allows retirees to sidestep less appealing aspects of working life, such as long commutes or stressful work environments while reaping employment benefits. 

Unfortunately, early retirement due to ill health isn’t a choice but a necessity, creating unique challenges for some. Time constraints limit opportunities to plan and build retirement finances. Additionally, careful planning for care and support becomes a priority. Making the decision to retire early is significant and requires thorough consideration of multiple factors. 

To determine whether you can retire early, you will need to assess your financial standing. This means calculating your total pension pots, tracking lost ones and considering other possible income sources or debts. Additionally, you need to envision your ideal early retirement lifestyle and estimate its costs. 

Assessing your Financial Health 

To begin, you need to calculate your total pension pots. This includes private or workplace pensions and any final salary pensions you might have. If you’re considering early retirement, remember that the State Pension won’t be included in this income. 

Reclaiming Lost Pensions 

It’s not uncommon to lose track of pensions over time. The government’s free Pension Tracing Service can assist if you suspect a missing pension but lack any supporting information. Visit their gov.uk website or phone them on 0345 600 2537. Consolidating your pensions might also be a sensible strategy. 

Understanding your State Pension 

Check up on your State Pension to understand how much you’ll receive and when the payments will start. This is crucial for your overall retirement planning. 

Identifying Additional Income Sources 

Consider other potential income sources after retirement. This could include savings and investments, property ownership, or even starting a part-time job or your own business. 

Managing Debts and Loans 

Take stock of any outstanding debts or loans. Consolidating them could potentially expedite their clearance. Set a specific date to pay them off entirely. 

Estimating Retirement Income 

We can help you estimate your retirement income and offer valuable insights into your financial future. 

Envisioning Your Retirement Lifestyle 

Next, plan your essential retirement spending by mapping out mortgage repayments, utility bills and other necessary expenses. Then, envision your ideal retirement lifestyle. What do you want your life to look like once you’ve retired? How much will it cost? 

Factoring in Responsibilities 

Consider any responsibilities that might impact your retirement plans. Will your children still be dependent on you? Might you need to care for older parents or relatives? Are there any other responsibilities you should bear in mind? 

Deciding Where To Live 

Housing decisions are a crucial part of retirement planning. Do you want to stay in the same house, release equity with a lifetime mortgage, move somewhere new, downsize and release some money, or even move to a cheaper region and upscale? 

Estimate Retirement Spending 

Finally, combine all the above factors to estimate your total retirement spending. There’s a lot to consider here. But as you work through it, you might realise that you’re more prepared to retire early than you initially thought. 

If you are considering early retirement and would like professional retirement advice, please get in touch:

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When am I financially ready to retire?

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The earlier you start retirement planning, the better. However, with the demands of managing a busy working and personal life, this is something that can understandably be neglected. But it’s never too late to think about saving for retirement – even if you are planning to give up work in just a few years’ time, you will have options to add to your nest egg.

In our latest video, Financial Adviser Gary Davies discusses how to know if you are financially ready to retire.

If you are considering early retirement and would like to speak to a Financial Adviser, please get in touch:

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Considering an early retirement?

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There’s a lot to consider if you are planning an early retirement. But as you work through it, you might realise that you’re more prepared to retire early than you initially thought. 

If you aspire to retire early, it’s vital you plan your finances to be sustainable for the long term and our expert team of Financial Advisors are here to help you every step of the way.

If you’d like to speak to us about early retirement, please get in touch:

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Navigating the ins and outs of Retirement Planning

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The past few decades have witnessed significant transformations in retirement planning. The security of a fixed income from a final salary pension is now a rarity, and eligibility for the State Pension now comes at a later age.

The sooner you initiate your retirement planning, the higher your chances are of amassing sufficient savings to maintain your desired lifestyle post-retirement.

We have produced a guide to Navigating the ins and outs of Retirement Planning to help you begin your financial journey:

To download the guide, fill out your details:

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Achieve your financial goals in your lifetime

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People who are confident about their retirement are most likely to have specific retirement goals and know what steps they need to take to reach them. But sadly, we see many people do not feel confident that they will have enough savings to live comfortably after they retire.

Many people have a fear of outliving their money, but most don’t have a clear idea of how much money they need during retirement. It’s important to remember that retirement doesn’t happen at a certain age, it happens when you have enough money to live on.

We are here to help create a clear direction and understanding which will give you peace of mind that you are on the right track.

If you’d like to discuss how to reach your retirement goal, please get in touch:

Find Your Local Adviser