When it comes to the matter of planning for your retirement, there have been countless column inches written in the financial and tabloid press about the various changes to the governing pension legislation. There have been reforms to public sector pensions and changes to the ways that you can take benefits from private pensions. The State pension age has already been raised for women and future increases for both men and women are already planned.
Increasingly I am asked, “what do i need to do so that I can retire early?” Or, “how much do I need to retire at 60?” The answer is always different, as it is of course influenced by a number of factors. However, by assessing your income requirements in retirement and establishing a full financial plan, decisions can then be made on how best to structure future savings.
Over the course of a working lifetime there are many ways you can save money for your retirement outside of traditional Pension Plans. In view of the Income Tax relief afforded to pensions the use of a Pension Plan, particularly for higher and additional rate tax payers, may be an integral part of the strategy. However, you can also begin to build up tax free savings by using your annual ISA allowances. You may develop and sell a business, purchase or acquire a second property, or inherit money from family - the proceeds from all these can be considered as a potential source of income or capital in retirement.
It must appear to most people that in the world of pensions, companies give us a vast amount of investment fund commentary and information on products such as SIPPS, Income Drawdown and Annuities but none of this will help you when deciding if your pension arrangements will meet your own personal needs in retirement. Whilst these products and investment funds may well form part of your plan you should remember that these are merely a way of reaching your goal.
The most important aspect of any retirement planning is having a long term financial plan which is reviewed regularly to ensure that you are still on target to meet your goals. If you have already begun to make plans for your retirement, but don’t quite know whether you are quite on track, then give us a call.