Are You Retirement Ready?

Insight | by Stephen Kiggins
Woman on laptop

Planning for retirement can seem like a daunting task, and many people put it off until ‘one day’ that never comes.

But the earlier you start planning for this important stage of life the better, as it will give you more chance of enjoying the lifestyle you truly want – and help you to stop worrying about the future.

So, what’s the solution? Well, as with any unpopular task, the secret is to break it down into smaller, easier-to-manage chunks that can be worked through one step at a time.

But who knows, you might be on top of these already! To determine how ‘retirement ready’ you already are, take a look at the questions below:

What do you want your retirement to look like?

Do you want to travel the world on luxury cruises? Perhaps you want to get your hands dirty growing your own fruit and veg on an allotment? Or maybe you want to finally set up your own small business?

Retirement is changing fast and there are many ways people want to spend their time. Whatever you want to do, it’s crucial that you start thinking about what you want retirement to look like for you.

Not only will this allow you to maximise your hard-earned retirement years, but it’s also the first step in assessing how much money you’ll need to live on. Defining how much you would need to draw from your pension each month (or the value of the annuity you’ll need) to fund the kind of retirement you envisage, and whether this will be achievable with the investments you’re accumulating, is key.

77% of people don’t know how much they’ll need in retirement
Source: Retirement Living Standards

When do you want to retire?

The key benefit of planning ahead early is that it gives you more flexibility about when you can retire. The days of waiting until a prescribed age to retire are long gone: some people dream of retiring as soon as possible, whereas others want to work for as long as they’re able to.

Defining how much you would need to draw from your pension each month (or the value of the annuity you’ll need) to fund the kind of retirement you envisage, and whether this will be achievable with the investments you’re accumulating, is key.

Speaking to an adviser will help you to assess your options and help you align your retirement with your plans and circumstances.

How many employee pensions do you have? And do you know what they are worth?

Retirement isn’t the only thing to have changed, working life is different now too. People often have many jobs over a lifetime, making it very easy to lose track of all the pensions you might have paid into. Without taking the time to track down these you could be leaving your own money unclaimed. We can help you to start finding them.

There are 1.6 million ‘lost’ pension pots, worth an estimated £20 billion
Source: Pension Policy Institute

1 in 5 people don’t know how much they have in their pension pot
Source: Unbiased/Opinium survey of 2,000 pre-retirement UK adults (June 2020)

Do you know when you can access your pensions (and how much you can take from your pensions as an initial tax free lump sum)?

Different pensions will have different stipulations regarding when you can access. If you’re not aware of exactly when you can access your pension and how much you can take initially as a tax-free lump sum, this could seriously compromise your plans.

Do you know whether your pension assets will benefit your family after your death?

It is important to consider the provisions made for your spouse, partner and family when you die. Many people are unaware that their pensions could potentially be inherited free from any Inheritance Tax and therefore form an integral part of their estate planning.

Do you want to retire abroad? If so, what are the implications for your UK pensions?

It’s becoming ever more popular to retire abroad. However, there are some pension implications that it pays to be aware of. You may be able to reap the benefits of an offshore pension plan, such as accessing your pension much earlier, avoiding restrictions on higher-rate tax relief, and having more control over where your pension is invested. These and other benefits can result in the same contributions being worth much more than a UK pension.

In summary

Planning ahead and getting advice on your pension doesn’t just make the task easier, there are financial benefits too. The International Longevity Centre found those who got advice were far better off financially after ten years than those who didn’t.

It’s easy to put off pension planning until a later date, but by starting now you’ll avoid potential pitfalls, identify ways to grow your pension pot, and ultimately ensure your retirement is everything you want it to be.

To find out how ‘retirement ready’ you are, take our quick quiz by clicking here. In less time than it takes to make a cup of coffee, find out whether you’re retirement ready. Your score out of 10 will show you whether you’re on track – and any gaps that you need to address.

Together, we can ensure that you’re retirement ready. The personal plan we can create for you will provide a clear, effective roadmap to simplify your retirement journey and optimise your assets.

To arrange a free initial consultation, please click here.

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