When approaching retirement, life can be full of opportunities and choice. It could be a good time to reassess your priorities and what you want to get out of your retirement. Good financial planning and forward thinking can be the difference between a good retirement and a great one.
Retirement brings many opportunities, however there are also lots of responsibilities. Making the right choices on how to take your retirement income and making sure that you do outlive your retirement savings is your responsibility.
At Four Wealth Management, we work with our clients to create a bespoke retirement plan tailored to them. This will let them know how much income they can take per month or year from their retirement pot while making sure that they have sufficient assets for their lifetime so they do not run out of money at retirement.
When can I access my pension?
Once you have reached the age of 55 (rising to 57 from 2028) you will be entitled to take a monthly sum from your private pension pot.
Your retirement could last 20-30 years or more so you need to plan ahead to make sure that your pension pot can provide you with income for that amount of time.
If you are not sure how much you have already saved for retirement or where all your pensions are held, a financial adviser at Four Wealth Management can help you with this.
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Find your old pension pots before you retire
Over your lifetime you are likely to have accumulated various pensions when you have changed job. At Four Wealth Management, we can help you to locate your old pensions. A financial adviser can then review the underlying investments, performance and charges you are paying as the investments may not be in line with your individual goals or attitude to risk.
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Understanding your retirement options
There is now more choice than ever when it comes to taking an income at retirement. You will also need to consider how much income you might need along with how to preserve your assets. There will also be various tax implications of your decisions.
Unfortunately, there is no ‘one size fits all’ solution as everyone’s financial circumstances and goals at retirement are different.
Your retirement income can come from various sources over the course of your retirement. Many people will take income from a pension, however if you have accumulated different investments and savings as well then it might be more tax-efficient to take income from these before your pension. This is because your pension is outside of your estate for Inheritance Tax purposes so preserving your pension pot might mean that you can leave more to your loved ones when you die.
At Four Wealth Management, we can work with you to create a tax-efficient retirement income plan.
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Delay your state pension
Many people take their State Pension income as soon as they reach state pension age. However, if you do not need the income at the time it becomes available then you can choose to defer it.
Your State Pension increases by the equivalent of 1% for every 9 weeks you defer. This works out as just under 5.8% for every 52 weeks.*
When you choose to claim your State Pension then the extra amount is paid with your regular State Pension payment.
If you choose to defer it, then you do not have to do anything. Your pension will be automatically deferred until you contact the government to claim it.
Consider your changing income needs
When you retire your income needs are likely to change over time depending on your personal circumstances, you might find yourself with costly care bills in the future that you need to account for. At Four Wealth Management, a financial adviser can discuss your options with you and help you create a financial plan for the future.
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Review your financial goals
Even after you have retired, it is important to review your financial goals regularly as your lifestyle and financial circumstances change. For example, you might be looking to downsize your property or be looking at options to pass on your wealth to your loved ones.
At Four Wealth Management, all of our clients have a review meeting with their financial adviser at least once a year to discuss if their goals or circumstances have changed so that their portfolio can be updated accordingly.
Your financial adviser can help you to create a plan to achieve new goals. For example, they can look at tax implications of selling your property or ways to fund long-term care if it is needed in the future. They can also help you to create a long-term plan to leave your assets to your loved ones while mitigating Inheritance Tax.
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The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.
The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief is generally dependent on individual circumstances.
*Gov, UK (2022) ‘Delay (defer) your state pension’
