Tag Archives: retirement

The Importance of Financial Planning for Retirement

Financial planning is the key to shaping the retirement you want.

If you consider yourself to be nearing the end of your career and/or planning to retire within the next 10 years or so, then you should probably consider these financial planning questions:

> Am I going to be able to afford to choose when I retire?
> Is there a chance I might run out of money?
> How can I be sure I can enjoy the sort of retirement I’m hoping for?

However, planning for retirement is an often-overlooked aspect of personal financial planning, which can be a cause for concern as retirement starts getting closer and closer.

We’ve outlined some suggestions as to how to boost your pension savings and help achieve your retirement goals sooner.

Review your pension contributions
Sometimes the simplest solutions can have the most impact – and, if you want to beef up your savings for retirement, you can simply increase the contributions you make to your pension.

For example, those who are lucky enough to receive a pay rise broadly in line with inflation each year, who then make just a 1% increase in pension contributions, could potentially add thousands to their eventual pension pot, due to the power of compounding.

Of course, the earlier you invest your money, the greater the benefit you will enjoy from the effects of compounding. Increasing your contributions as early as possible just makes the compounding effect even larger, so careful financial planning for the long term is key.

Make sure you regularly review your strategy
Many pension holders are not aware that they can choose how their pension is invested and often just leave the decision in the hands of their workplace or pension provider.

In fact, you don’t have to hold a pension with the provider your employer has chosen. If you wish, you can ask them to pay into a different pension so you can choose the provider yourself, based on the type of funds they offer, the fees they charge and other factors such as ESG (Environmental, Social & Governance) considerations.

Also, a lot of pension providers can offer you several options for investment strategies. If you’re in the default option, you could achieve higher returns with a different strategy (though this will usually mean taking on more investment risk). Note that this may not be appropriate in all circumstances, particularly if you are close to retirement.

Make sure you understand your pension contribution allowances
When you save money in a pension for retirement, the government adds tax relief on top of the contributions you make, which helps you to grow your savings faster. But the amount of contributions on which you can claim tax relief each year are limited by an ‘annual allowance’. For the 2021/22 tax year, the limit is £40,000, or may be lower in some cases, so it’s important to take this into account.

It is also important to know that, if you’ve received a lump such (e.g. an inheritance, proceeds from the sale of a business or other asset…) and you want to contribute more than your annual allowance limit into your pension in one tax year, you can use any unused allowance from up to three previous years.

So, if you have £20,000 of unused allowance in each of the past three years, that’s another £60,000 on which you could claim tax relief for this year.

Tracking down lost pensions
Very often, starting a job with a new employer means starting a new pension and the pension they had with their last employer can be overlooked. As a result, it is surprisingly common for people to lose track of the pensions they had with previous employers.  Tracking down lost pensions, especially if contributions were made many years ago, can give a very significant boost to your retirement savings.

Old pensions can usually be tracked down via the provider, so make sure you check through letters and emails you still have from your past employer(s) to see if you can find your pension provider and/or policy number.

If you’re not sure, ask your past employer(s) the about the pension provider and, once you know the name of the provider, they should be able to find your pension by using details, such as your date of birth or National Insurance number.

For independent expert advice about pensions and planning for your retirement, please contact the Farnham-based Fish Saltus team today and we’d be happy to help!

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ACCESSING PENSION BENEFITS EARLY MAY IMPACT ON LEVELS OF RETIREMENT INCOME AND YOUR ENTITLEMENT TO CERTAIN MEANS-TESTED BENEFITS AND IS NOT SUITABLE FOR EVERYONE. YOU SHOULD SEEK ADVICE TO UNDERSTAND YOUR OPTIONS AT RETIREMENT.

INFORMATION IS BASED ON OUR CURRENT UNDERSTANDING OF TAXATION LEGISLATION AND REGULATIONS. ANY LEVELS AND BASES OF, AND RELIEFS FROM, TAXATION ARE SUBJECT TO CHANGE.

TAX RULES ARE COMPLICATED, SO YOU SHOULD ALWAYS OBTAIN PROFESSIONAL ADVICE.

A PENSION IS A LONG-TERM INVESTMENT.

THE FUND VALUE MAY FLUCTUATE AND CAN GO DOWN, WHICH WOULD HAVE AN IMPACT ON THE LEVEL OF PENSION BENEFITS AVAILABLE. PAST PERFORMANCE IS NOT A RELIABLE INDICATOR OF FUTURE PERFORMANCE.

PENSIONS ARE NOT NORMALLY ACCESSIBLE UNTIL AGE 55. YOUR PENSION INCOME COULD ALSO BE AFFECTED BY INTEREST RATES AT THE TIME YOU TAKE YOUR BENEFITS. THE TAX IMPLICATIONS OF PENSION WITHDRAWALS WILL BE BASED ON YOUR INDIVIDUAL CIRCUMSTANCES, TAX LEGISLATION AND REGULATION, WHICH ARE SUBJECT TO CHANGE IN THE FUTURE.

Retirement Planning 2021a

Think about the lifestyle you’ll want

Financial security in retirement can never be taken for granted.

Life changes when you retire – and so does how you spend your money. Whatever your plans, it’s important to keep on top of things and think about the lifestyle you want. It’s also worth noting the average life expectancy at age 65 years is 18.6 years for men and 21.0 years for women[1]..

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Considering Early Retirement

The Risks Of Early Retirement

A year lost for saving and a year added for spending.

An increasing number of people have been forced into early retirement due to the economic impact of the coronavirus (COVID-19), with many worried about how they’ll make ends meet in the future. Because of the pandemic, we are currently in a challenging economic period – and the global economy has taken over ten years to recover from the shock of the last financial crisis..

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Retirement Options 2021

Retirement Options

How to ensure a comfortable retirement

The pension freedoms have given retirees a whole host of new options. There is no longer a compulsory requirement to purchase an annuity (a guaranteed income for life) when you retire. The introduction of pension freedoms brought about fundamental changes to the way we can access our pension savings.

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More over 55s dip into pension funds

More over-55s forced to dip into pension pots

Understanding the different ways you can use your pension money

The UK has seen a rise in the number of people accessing their pension pots or enquiring about doing so. People accessing their pension as a flexible income has increased by 56%[1] according to research since the first lockdown last year. The increase is due to people withdrawing after holding off when stock markets were volatile.

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Women planning for retirement

Women better prepared for retirement

Record high despite £78k pension pot gender gap

Women in the UK are better prepared for the future than ever before, with 57% now saving enough for their retirement – the highest proportion recorded in 15 years. A recent report[1] shows that average savings amongst women are up 4.6% since 2007/08, equating to an additional £5,900 in income every year of retirement.

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Age is Just a Number

Age is just a number

 

What rising life expectancy could mean for you

We know that age is just a number, and for different people it means different things. It’s also a phrase used by some people who oppose age restrictions. In the UK, 65 years of age has traditionally been taken as the marker for the start of older age, most likely because it was the official retirement age for men and the age at which they could draw their State Pension.

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