Retirement Planning

The longer we live, the more life there is to enjoy. But this does mean we all need a fund for retirement. It might seem like a long way off, but one day there will be a time when your income will change. Despite this, only 22% of people approaching retirement know the value of their pension pot.

There are no set rules for a fulfilling retirement, but generally speaking, the earlier you start retirement planning, the more likely you are to achieve your retirement goals. This starts with having frank conversations about what you want your retirement to look like, and your saving habits.

There are many benefits of saving into a pension. With tax relief at your marginal rate, you could be at least 20 per cent better off saving into a pension rather than an ISA.

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Pensions advice

Some pension decisions are irreversible. Whether you’re approaching retirement – or are already drawing on your pension – you may need pensions advice to find out more about your options.

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Taking a flexible approach

Recent rules Pension Freedoms mean you can use your pension to generate an income, take it as one lump sum, or flexibly in smaller amounts.

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Financial planning for retirement

When planning for retirement an independent financial adviser can help you make informed decisions about your finances with the benefit of technical expertise.

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Cashflow planning

Our cashflow planning tools use information about your income, assets, liabilities and expenditure, and show you how long your money is likely to last.

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Defined Benefits Pension Transfers

If you have a Defined Benefit pension, you can take advice to find out whether you could be better off transferring this pension. Wren Sterling has been awarded the Pension Transfer Gold Standard for our work in this area.

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Retirement investments

You don’t have to rely on your workplace to help you save for your retirement. There are different types of retirement investments you can do which will allow you greater control over your retirement funds.

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Long-term retirement care

There may be a time when you require long-term retirement care. Do you have a plan in place to help you fund social care that you or your loved ones need?

Retirement planning FAQs

In theory, most people will slow down in retirement and their income needs should be reduced. That’s not always the case and if you are looking to do lots of foreign travel, buy new cars or make gifts to family members, logically, you will need a bigger pension pot.

The secret to successful investing is time in the market and pensions are no different. The earlier you start, the more chance you have of building up a substantial pot to draw on in retirement.

It’s generally unwise to rely too much on the state pension to fund your retirement as the maximum available is £168.60 per week. Other retirement investments or sources of income will help – such as pensions, property, and other investments.

  1. Find out how much you’ve saved already, and trace any lost pensions.
  2. Check how much State Pension you’re entitled to.
  3. Make a list of any other assets you have that you plan to use for retirement.
  4. Make a list of all your costs. You can use our budget tool to get an idea of what you’ll need
  5. Choose how you want to use your retirement income and assets. If you’re not sure how you can make the most of these, you can talk to a financial adviser, who will help you put a plan in place.

How much money you’ll need in retirement, and how long it will last will depend on your lifestyle. If you want to enjoy some of life luxuries, you could be in danger of running out of money in your lifetime.

A key aspect of Wren Sterling’s service is cashflow planning. Our tools can help you see how much money you need to retire and then work with you to ensure your finances work as hard as they possibly can to deliver your retirement goals.

Our cashflow planning tools use information about your income, assets, liabilities and expenditure, and show you how long your money is likely to last.

With a Defined Contribution pension you can choose whether to take your pension as one lump sum, flexibly in smaller sums, or use it to purchase an annuity (an investment which provides a regular income in retirement.)

You can withdraw 25% of your pension tax-free once you’re 55 as one lump sum, or if you take your pension in several smaller sums, 25% of each sum of will be tax free.

Taking money out of your pension at 55 may seem like a windfall – but it can mean that you’ll be worse off later on. Many people use this money to pay of their mortgage, or make improvements to their homes. However, there are concerns that people will use the recent Pension Freedoms rules to take money out of their pensions, and spend it on holidays or cars.

Working with a Wren Sterling financial adviser can help you answer questions like ‘should I take my pension as a lump sum?’. After getting an understanding of what you want from your retirement, and what you have, we can help you make a plan to get the retirement you want.

How much you need to save will depend on how close you are to retirement, and how much you think you’ll need. The later you start, the more you’ll need to save each month.

There’s no limit on what you can save, but there are tax implications of breaching these allowances:

  • Annual allowance – the limit you can contribute to your pension each year. It’s based on your earnings, and is currently £40,000. If you exceed the annual allowance in a year, you won’t receive tax relief on any contributions you paid that exceed the limit and you will be faced with an annual allowance charge.
  • Lifetime allowance – this limit is on the amount of pension benefit that can be drawn from pension schemes. This is currently £1,055,000 (tax year 2019/2020). This may seem like a lot, but with the value of Defined Benefit Pensions, it’s important to be aware of this as there are tax penalties for breaching this limit.

Ask an adviser about your retirement planning

A financial adviser can help you make the most of your income and allowances in your retirement planning. If you have a question about your plans get in touch today.

The value of an investment and income from it can fluctuate and is not guaranteed, property investments may be volatile in adverse market conditions and difficult to realise due to demand and its value is subject to independent valuation.

Accessing pension benefits early may impact on levels of retirement income and your entitlement to certain means tested benefits.

Accessing pension benefits is not suitable for everyone. You should seek advice to understand your options at retirement.

The tax rates applying are subject to the individual circumstances of the investor.