When it comes to planning for retirement there’s no one size fits all, everyone is different and each person/family has their own goals and objectives. Planning for retirement is arguably one of the most important aspects of financial planning, so naturally there are lots of options to consider and questions to answer. Below we’ve provided an overview of 5 key things to consider in 2023, if you’re beginning to think about your retirement plans.
1. Reviewing Pension Pots
Many of us switch roles and work for a number of employers over our working life. Historically, it was a lot more normal to remain with one employer for your whole career and have a final salary (defined benefit) pension waiting for you in retirement. However, it’s now normal to switch roles and work for a number of employers during the course of our working lives.
If you have multiple pension pots a good starting point when thinking about your retirement plans is to review these pots:
- Do you know what the pension is invested in, how much risk you are taking?
- Do you know how much the pension costs ?
- Do you know if you can access your pension in the way you want to in retirement?
- Do you have any guarantees attached to any of your pension pots? E.g. Guaranteed Annuity Rates, Guaranteed Growth Rates, or other valuable benefits such as, Protected Tax Free Cash greater than 25% or a contractual right to retire earlier than 55?
A financial planner can analyse the plans and provide advice around the ongoing suitability of them against your long-term objectives.
2. Combining Pension Pots
Combine or not to combine, that age old question. When it comes to deciding whether or not to consolidate your pots into one larger pot, it’s important to fully understand what each pension includes. This is where working with a financial planner can really help.
There are several things to consider when deciding whether or not to combine your pension pots. One of the most important is whether there any important guarantees. This could be benefits such as enhanced tax-free cash or guaranteed annuity rates. Should you move a pension with a guarantee or enhanced feature, this will be lost so it’s very important to analyse the plans closely.
3. Setting Objectives
When we talk about setting objectives this is essentially understanding what you want to achieve and when. As a financial planner we really get to know our clients, understand their opinions and beliefs, and then reflect that in the financial plan which is built around clear objectives. Common questions around retirement planning include:
- When do you want to retire?
- How much income will you need?
- Will you stop completely or will you gradually phase into retirement?
- Will you be moving home?
- What are your plans once in retirement?
The answers to these questions help a financial planner to pinpoint your short, medium and long term objectives and develop a financial plan that’s tailored to you.
This plan should then be reviewed regularly to make sure it remains on track and in line with your needs and objectives.
4. Will You Have Enough To Retire?
Most of us would like to retire one day, but having enough to do it and ensuring that the funds are sustainable over the long term is very important.
A great way to help establish this is through cashflow analysis. A financial planner can use this to provide a snapshot of your current financial situation. This can then help to determine how much you may need to contribute to a pension or savings vehicle to reach your retirement goal. A key benefit of cashflow analysis is that it can bring your financial situation to life and spot any shortfalls, so steps can be taken to address them.
The analysis is then reviewed regularly to ensure your plans remain on track.
5. The Effects Of The Pandemic On Retirement
There’s nothing like a global pandemic to make you re-evaluate your plans, recent research from Aviva has shown that 54% of UK adults have said that the pandemic impacted their retirement plans and 59% felt the pandemic made them question their priorities.
Positively 41% of UK adults say the pandemic encouraged them to build more long term savings with 37% planning to progress quicker with key life events.
The pandemic sadly impacted many people across the globe. While there remains some uncertainty, it’s never too late or too early to take control of your retirement planning and secure your financial future.
As you can see there are a range of factors to consider if you want to start planning for your retirement. But working with a financial planner can empower you to take control of your retirement plans and make informed decisions based on your own individual goals and objectives.
Contact us for a free consultation
For a free initial consultation about retirement planning, please call us on 0370 1500 900 or contact us online.