Plan For Your Retirement
Everyone dreams of an easy retirement, but many of us avoid planning for it until it’s too late. It’s never too early to start – and the earlier you do, the better
We’re not saying that’s an easy task though. Pensions can be complicated to get your head around but they’re one key to providing a source of income in retirement. Your employer might arrange a workplace pension as part of a defined benefit scheme (which pays you a specific income when you retire) or a defined contribution scheme (a pot of money that can change depending on how much you or your employer pay in and investments). You could also set up a private pension outside the workplace.
It’s easy to assume that you have plenty of time to get your pension arrangements ready for retirement, but many independent financial advisers will offer ongoing reviews so you can be sure your finances will stay on track. Since 2015, it has been a legal requirement that transfers from defined benefit or final salary pensions worth more than £30,000 need to be signed off by a financial advisor. They’ll make sure that you’re aware of the benefits and pitfalls of transferring.
Don’t forget to make sure you’re aware of everything you should know about your State Pension too. You usually need a total of 30 qualifying years of National Insurance contributions or credits to get the full basic State Pension. Even if that’s a while away for you, it’s worth checking what to expect now so you can add this to your future financial plan.
‘One of the most common ways of organising different pensions is by consolidating older frozen/ paid up pensions into one pot,’ Steve adds. ‘If you’ve had more than one employer, you’re likely to have more than one pension pot. If you are unsure of the details of previous pensions, we can often assist with tracing them. As you approach retirement it’s important that you are in control of your pension savings, this will give you a better view of your overall funds and allow you to access them more easily on retirement.
Of course, personal savings are just as important when it comes to planning for your retirement. Making sure you have sufficient savings is vital for your peace of mind and a future with less stress. ‘It’s often good to start with looking at income and expenditure, something we discuss with all clients,’ Steve says. ‘Take a look at surplus funds and any disposable income that can be set aside for both short term and long-term saving and investing. Even starting with a small amount of savings can make a big difference if it’s left to grow over a few years.’
You could start your own retirement pot by using an ISA or alternative savings account. You can choose to pay into a cash ISA (either fixed for a set time or to take cash out whenever you wish) or you could consider investing in a stocks and shares ISA – but remember the income from this could go up or down at any time. A lifetime ISA may be the best option if you’re under 40 years old, as it helps you build up a long-term fund. You can pay in up to £4,000 a year, and the government will contribute 25 percent up to a maximum of £1,000 per year. When you turn 50, you can’t add any more money in, but you’ll still earn interest and investment returns. If you set a goal in mind in regards to how much you hope to save, that will give you something to strive towards.
Good financial planning is key to ensure a stable future for both you and your family but there’s more to consider: ‘It is also best to consider intergenerational financial planning and estate planning, which can help put in place financial measures which can benefit your children and even grandchildren later in life,’ says Steve. ‘It can be complex as rules around tax can change. However, when we discuss intergenerational wealth with clients we also cover wills, trusts and successor drawdown pensions. All of which can help secure a family’s financial future.’
There’s certainly lots to take in, and we told you it wasn’t going to be easy! But a financial advisor can lead the way. For anyone worried about retiring and how to best prepare, Steve’s advice is to speak to an advisor sooner rather than later. ‘It’s never too late (or too early),’ Steve says. ‘Advisors can provide expert guidance when you have difficult financial decisions to make, such as approaching retirement.’ They look at your needs, objectives and goals to get a full understanding of your individual circumstances to help put a plan together for your future retirement.
To book a free no obligation appointment with Carter Thompson Wealth Management, who have offices in Darlington and Bishop Auckland, call 01325 245288 or email info@ctwealth.co.uk.
The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.
