Key questions asked by our client on Retirement Planning.

1) When can I retire?

For some people they want this to be as early as possible. Current rules mean that the earliest someone can draw an income from their pension is age 55 but this is set to move to age 57 in 2028.

The above are only minimum age to access pensions but the bigger question would be ‘have you accumulated enough wealth to provide you with your required income for the rest of your life’. This could be cash savings, ISA investments, and property etc.

2) What is the impact on my pension if I retire early?

The earlier you retire the less time your pension has to grow but also the longer the pension will have to pay out for. You therefore have to decide if your pension is big enough to last the remainder of your life and do you have any other assets that can help provide your retirement income.

3) How do I ensure my pension pots are sufficient?

By having a solid financial plan in place and undertaking regular reviews with your Wealth Planner you will be able to understand what your retirement might look like and the commitments you need to make in order to achieve the retirement you desire.

4) How much money will I need, to retire?

This is different for everyone as it depends on the lifestyle you wish to lead and what you want to use your pension for. Some people want to live off the income so that they can leave a legacy while others want to use their whole pension fund for their retirement. . There are different ways to use your pension to provide an income in retirement, you could use it to buy what is called an annuity, this is where you exchange your pension for an income stream which can be guaranteed for life. As an alternative, you could use your pension as an investment that you can make regular withdrawals from. The problem with the later approach is that we don’t have a crystal ball to determine our life expectancy, so if you draw too much, too early, you might run out of funds. Having a cash flow model can also help map this out using Office of National Statistics data, i.e. the average male / female will live until xxx

5) How can I make my pension last longer?

Careful planning is essential. If you only take the natural income from your pension, in theory it would last throughout your retirement, but is the natural income enough? Having cash savings to fall back on in years of market poor performance is essential.

6) Where can you derive your retirement income from?

Your retirement income can be derived from a number of sources including but not limited to your pension income, property rental income, ISA’s, general investment accounts, bank accounts and offshore and onshore bonds. It depends on how many different pots you have access to. Retirement planning can be complicated, so if you are not sure on the approach to take to provide your income in retirement, it is best to obtain professional financial advice.

Important Information

This article contains general information only and is not intended to constitute financial or other professional advice or a recommendation that any recipient of this information should make any particular investment decision.
Always consult a suitably qualified financial advisor on any specific financial matter or problem that you have.
Except insofar as liability under any statute cannot be excluded, neither Brown Shipley nor any employee or associate of them accepts any liability (whether arising in contract, tort, negligence or otherwise) for any error or omission in this article or for any resulting loss or damage whether direct, indirect, consequential or otherwise suffered by the recipient of this article.
Our Wealth Planning Service can involve investing your capital, which places it at risk. Investment risk means the value of your investments or any income can fluctuate and you may not get back some, or the entire amount invested.
We recommend you seek professional tax advice to understand your personal tax liabilities. This will depend on personal circumstances and the prevailing tax rules, which are subject to change. Tax planning is not regulated by the Financial Conduct Authority or the Prudential Regulation Authority.