Understanding Investments-Hoping to retire within the next 5-10 years?

Monday 17 April, 2023

We work with many clients in their 50’s who start to think about reducing their working hours or retiring. They realise that there are a finite number of working years ahead and want to save tax and maximise their savings during their peak earning years.

Often we see people paying more tax than they need, with the subsequent tax savings we identify helping them build their own retirement fund. Many people have pensions and investments but are invested in default funds with no idea of what the funds invest in and whether they are suitable for their own retirement needs. They often hold a number of pension plans built up over the years and don’t  know what they are paying in charges or whether the plans include any guaranteed benefits, which could be very valuable at retirement.

Realising there is less than 10 years to accumulate sufficient capital on which to live once retired, clients want to know “how much will we need?”. This is one of the most important questions which cannot easily be answered unless you have specific, financial planning tools and software (which we do!).

Listed below is some of the key information required to help create a plan.

1-Understand what loans (including mortgage) are outstanding, what interest is being charged and when they are due to be repaid. It is important to be debt free at retirement, albeit there are number of ways to achieve that depending on your personal tax situation.

2-Obtain a state pension projection to understand what you will be entitled to and when. This can be obtained online via the Government website and will be a valuable source of inflation-protected income at the state pension age. It is possible to top this up with lump sum or regular payments if you haven’t been credited with the full 35 years of National Insurance contributions.

3-Obtain projections from any Defined Benefit Pensions. These can also provide future inflation-protected income and the date they are due to commence will vary depending on scheme rules.

4-Quantify your personal assets which include cash, investments and property. Understand what your investments such as ISAS and Pensions are invested in, what you are paying in charges and to what level of risk they are exposed. Is this too low or too high or just right, based on when you plan to retire? Do your pension plans allow full pension freedom flexibility in the way you can access income in retirement (Flexi-Access Drawdown, UFPLS, Annuities)? 

Howard Goodship, chartered finanical planner in Ringwood said:

'It's possible to switch between pension and ISA providers if it is identified there is a financial advantage (lower charges, wider investment choice or more flexible ways to draw income in retirement). It’s also possible to consolidate multiple plans with the aim to reduce charges and simplify.We utilise specialist cash-flow tools which help clients identify “how much is enough?".  Once in retirement, we help them maximise their lifestyles by showing them whether their retirement “wish-list” is affordable and if so, encouraging them to do things whilst they are fit and able. If you would like to learn more or discuss your personal situation, our Lonsdale wealth independent financial advisers in Ringwood, St Albans, Barnet, Ware, Harpenden, Stafford, Chippenham, Wimbledon and Leeds / Bradford, would be delighted to meet you for a no obligation initial chat.  Please call us or complete our booking consultation form.'

For more information read:

Simon Prestcote - How much is your state pension worth?
Lonsdale Services voted in top 100 financial advisers in UK
Neil Homer - When should you pay for financial advice?
Howard Goodship - Business Owners retirement planning
 

 

 

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