Six Things to Consider as You Approach Retirement

We spend our working lives building towards retirement. Choices we make today will have a big impact on the quality of our lives during our golden years. A few things to understand about pensions are that:

  • A pension is a long-term investment not normally accessible until the age of 55 (57 from April 2028 unless your plan has a protected pension age).
  • It’s never too early to start planning for retirement.
  • A little planning and forethought is all it takes for a comfortable and hassle-free retirement.

  • If you only have a handful of years to go until you reach your retirement, it has never been more important to understand your options and put a plan in place. There are a few key things to consider as you approach retirement:

    1. Understand your options
    With the changes to UK pensions in 2015, there are now more choices available for funding your retirement lifestyle. It's important to understand what options are available to you and how they might impact your retirement plans.

    2. Assess your current and forecasted wealth
    Take stock of your current financial situation, including your income and expenditure, to get a clear picture of your finances both now and in the future. Consider using lifetime cash flow modelling to help ensure you don't run out of money in retirement.

    3. Consider the Pension Lifetime Allowance (LTA)
    If you're close to retirement, you may be approaching the LTA limit, which is the maximum amount you can accrue in your pension plans without incurring an additional tax charge on the excess funds. It's important to monitor the value of your pensions and be aware of the LTA threshold to avoid incurring additional charges.

    4. Decide when to retire
    The decision to retire will be personal and will depend on your individual circumstances. It's important to consider factors such as the state pension age and the impact of the pandemic on the job market when making this decision.

    5. Consider how you will take your pension
    There are various options for taking your pension, including taking a lump sum, using it to purchase an annuity, or keeping it invested in a drawdown plan. It's important to consider the tax implications of these options and choose the one that best suits your needs.

    6. Plan for the unexpected
    It's important to consider potential unexpected events, such as illness or a change in circumstances, when planning for retirement. Having a financial plan in place can help you be prepared for any potential challenges and make the most of your retirement years.

    Even if retirement isn’t far away, there are ways to increase your retirement income. This applies both to your State Pension entitlement as well as to any personal or workplace pension pots you have.

    To find out what you can do, please contact us for more information. We shall be happy to carry out a retirement plan review with you.

    Information is based on our current understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from, taxation are subject to change. Tax treatment is based on individual circumstances and may be subject to change in the future. Although endeavours have been made to provide accurate and timely information, we cannot guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough review of their particular situation. We cannot accept responsibility for any loss as a result of acts or omissions.