As you draw nearer to retirement age, you may well be dreaming of sipping cocktails in some sunny, tropical idyll. We don’t blame you! But – and we’re sorry to bring you back down to earth here – have you made all the financial arrangements that will make your vision come true? Acumen explores what to consider when planning for retirement.
First and foremost, it is essential to determine exactly how much you will have to enjoy your retirement. You may want to start by getting a State Pension statement from the GOV.UK website; find out how much you are forecast to receive from your defined benefit pension; trace any lost pensions, using the Government’s free Pension Tracing Service; and tally up all your savings and investments.
Know how much you have and plan accordingly
If you have a personal, stakeholder or defined contribution pension then you may want to gradually move your money to lower-risk investments in the last 10 years before retirement. Some pension funds will do this automatically for you and others won’t but either way it is a good idea to take financial advice to discuss your options to make sure your funds are being managed in a way that is right for you.
If you are worried about your overall funds, you can boost your pension pot by paying more into it and delaying the date when you intend to start drawing funds. This will give you some breathing space, giving you the opportunity to top up your pot and foreshortening the amount of time that you are actually dependent on your pension funds.
It goes without saying that your income and spending patterns will alter in retirement and this will take some adjustment. On the one hand, those work-related costs like the daily commute, lunch and work clothes will no longer be a burden. But, on the other hand, you may find your spending rise on other things like healthcare and heating. It is a good idea to draw up a budget to ensure that these changes don’t come as too much of a shock to the system.
Clear your debts and set a date
Another important retirement prerequisite is to clear as much of your debt as possible. With a curtailed income, any repayments are likely to make you feel the pinch that much more. With all these steps taken care of, you are now armed with enough information to start thinking about a target retirement date for drawing down an income from your pension.
You don’t have to stop work but you must be aged at least 55 (or earlier if you are in ill health) to access your funds. You might also want to consider how you would like to withdraw your pension funds because, with the new pension freedoms, there are several different options available to you.
Retirement planning takes time and is well worth thinking about well in advance of when you wind down your career. So why not get started today by speaking to one of our professional and knowledgeable advisers.
To discuss your retirement plans with one of our dedicated team please contact us today on 0151 520 4353 or email [email protected].