Retirement planning can be thought of simplistically in 3 phases:
Accumulation
- In this phase (often the longest of the three) we look to accumulate savings within a pension and also sometimes other financial products, which will produce a regular income for you during your retirement. In the meantime, the funds will be invested to grow in value and further boost your future income.
- We will initially agree with you when you would realistically like to retire and on how much income, which will allow us to calculate what your regular pension contributions should be. We will then work closely with you throughout the accumulation phase to monitor progress toward your retirement objectives and implement any necessary alterations along the way. During this phase we will also consider financial planning areas such as mitigating income tax, maintaining your personal allowance, and avoiding the high income child benefit charge.
Retirement
- When you reach the age at which you would like to retire, there are lots of decisions to be made and this can be one of the most complex areas of pension planning. Many of these decisions cannot be ‘undone’, meaning it is very important to make the right one. We will discuss with you the different methods of drawing your pension, including full encashment, drawdown and annuities. There are varying tax consequences and implications of each method, which should be thoroughly considered in line with your circumstances such as age, personal circumstances, other assets and debts.
- We will help remove the confusion and difficulty from this process by determining the optimal retirement income strategy specially tailored to your needs, which may include a combination of approaches.
Decumulation
- This is the stage following your retirement age where you draw an income from your retirement savings. If you have chosen a form of drawdown, it is crucially important to monitor your pensions to ensure they remain on track to provide a sustainable income throughout your lifetime. Furthermore, it is important to manage the investments within the drawdown pension to confirm they remain in line with your attitude to risk and are appropriate for the economic environment at the time.
- We can help during this phase by monitoring your pension projections and recommending income adjustments where necessary, reviewing your investments regularly to ensure they continue to be in line with your objectives, and recommending tax planning measures in a coordinated and holistic manner.
These can be extremely complicated areas with many decisions which are often irreversible. Let us help you to decide an appropriate strategy, which is most likely to effectively meet your needs throughout retirement. Financial planning is a complex area which varies greatly depending on individual circumstances, and holistic independent financial advice should be sought prior to making any changes. Click here to book your free initial General Financial Review.