Most people planning to retire in the next 12 months haven’t sought professional advice, but it can help you get the most out of your money and your future, according to Standard Life . His recent research reveals that among people retiring this year, only two in five have received financial advice. John Tait, retirement advice specialist at Standard Life, summarizes the things an advisor could help you with.
Determine what you will need
Knowing what you expect from retirement is a good starting point for preparing for retirement, and then determining if you have enough money saved. However, people forget things that don’t immediately come to mind, such as childcare costs later in life or giving money to children and grandchildren.
Make an appointment
It’s easy to focus on retirement age, without thinking far enough into the future to know if you’ll actually have enough money to last. A financial advisor can help you set a retirement date that works for you and gives you time to save. Even if you don’t plan to retire for a while, having an idea of when it might happen will give you peace of mind.
Remove your way
Retirement questions, such as “how much do I need?” or ‘how can I access my pension?’ require answers that work for you, not a one-size-fits-all solution. Using your time and money for your retirement is essential to achieving the best results for you and your family, and financial advice can help you do just that.
Cover all bases
Planning for retirement isn’t as easy as it used to be. Retirement freedoms give everyone more control and flexibility, but you also need to consider other savings or assets, considering all of your assets as the basis of a comprehensive plan. Financial advice can help you focus on options and plan how your finances will support you from the day you retire so you can enjoy everything you have planned knowing you can afford it.
Don’t get bitten by the taxes
Most people pay more taxes than they need and they don’t know how to reduce them. You can pay too much tax by taking more of your retirement savings at one time than necessary. An advisor can make sure you’re using your retirement income in the most tax-efficient way possible and explain how individual circumstances may affect your tax treatment.
Use pensions, not ISAs to boost returns
According to NFU Mutual, savers over 50 can increase their returns by up to 41.6% by saving in a pension rather than an ISA. Tax relief on pension contributions and increased flexibility in retirement freedoms make it a better proposition than ISAs for lower and higher rate taxpayers.
|IS A||Pension (20% taxpayer on withdrawal)||Pension (40% taxpayer on withdrawal)|
|Cash available||£6000||£8,500 (+41.6%)||£7,000 (+16.6%)|
Source: NF Mutual
Example assumes savings for five years, with no growth or fees
While money can normally be withdrawn from an ISA at any time and flexible pension rules mean investors can access pensions from age 55 (57 from 2028) by taking the money in the form lump sums if they wish, once that money is withdrawn there is a limit to how much they can reinvest with tax relief
See also: Passing on your pension and six steps to get it right