What to consider when you are almost at retirement?

Monday 15 February, 2016

As some of the pension decisions you make now may not be reversed later, it is important you make the right choices and shape your retirement plans to best meet your individual needs and circumstances.  Each week leading up to the Budget in March we will be adding pension articles from our brochure – Your Retirement Options -  Freedom & Choice: before, at and in retirement to help you make sense of the new pension changes.

Deb Nolan, Independent Financial Adviser, Leeds, Yorkshire reviews what you should consider when you are almost at retirement?

What to consider when you are almost at retirement?
1. Use your Lonsdale Lifetime Financial Plan to project the level of income you require by factoring in any special purchases.
2. Create a plan that ensures you save enough to produce the income you require.
3. Plan now to ensure you generate income in a taxefficient way.
4. Keep your plan on track by annually reviewing it with your Financial Adviser.

When we set up your Lifetime Financial Plan, your Financial Adviser will discuss the following with you :
When do you want to retire?
When you reach your selected retirement date do you intend to give up work completely or work part time?
How much income do you need to fund your retirement lifestyle?
Are you maximising your pension contributions without exceeding your annual or lifetime allowances?
Are you maximising death benefits for your family?
Are you making full use of your tax allowances?

Case Study
Alan – 56 years old – accountant earning £80,000 p.a.
No mortgage on his home.
Defined benefit pension scheme £45,000 p.a. from aged 60.
Savings and investments valued at £350,000.
Dependents – three daughters aged 28, 25 and 23.

Key Considerations
1.Is Alan currently utilising all his tax allowances?
2. Can Alan afford to maintain his lifestyle in retirement?
3. How can Alan pass his wealth to his daughters tax-efficiently?

Deb Nolan, Independent Financial Adviser, Leeds, said:

‘On meeting Alan I would explain how the new ‘Freedom & Choice in Pensions’ legislation would affect him, and his pension options in retirement. I would review his current income and expenditure, and understand what his potential retirement expenses are likely to be. All this information would be used to prepare a Lifetime Financial Plan. The model would show him how he could benefit in retirement if he currently took advantage of his full tax allowances. By reviewing his current savings, investments and his pension I could provide advice about other products that offer a higher return for a similar amount of risk. I would review Alan’s options for estate planning, and discuss gifting income to his children now to potentially avoid inheritance tax costs.

Conclusion
By fully utilising his tax allowances and switching his investment portfolio into better performing assets, Alan could potentially increase his retirement income. Now Alan has set up his Lifetime Financial Plan he is confident he can maintain his lifestyle in retirement, even if he starts gifting income to his daughters earlier than he expected. 

Lonsdale Services operate offices in St Albans, Barnet, Harpenden, Leeds, Stafford, and Ware supporting a variety of wealth management and employee benefit clients across the United Kingdom.

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