Pensions and retirement planning

Planning for retirement can seem overwhelming. We’ll guide you through your options, show how much you need to save, and build a plan that helps you realise your ambitions.

Planning for retirement

Whether you want to travel the world, learn a new hobby or simply spend more time with your loved ones, planning early on will increase the chances of you enjoying a comfortable and fulfilling retirement.

Some of the questions to think about include:  

  • When do I want to retire?  
  • What do I want to do in retirement?  
  • How much money do I need to retire?
  • Do I want to leave a financial legacy for my loved ones?

We can help you consider your priorities, calculate your projected retirement pot, explain how much you need to save, and put a financial plan in place to help you achieve your goals.

With several pensions rules changing – including the abolition of the lifetime allowance and increase in the annual allowance – it’s really important to keep on top of pensions and retirement planning.

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Saving for retirement

Understanding the best way to save for retirement can seem confusing. Pensions are a highly tax-efficient way of saving for retirement, but ISAs and other savings and investments can be important too.

We can guide you through your options and advise on a retirement savings plan that works for you.

Making the most of your allowances

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A plan that suits your needs

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Taking income in retirement

There is a lot more flexibility when it comes to drawing income from your pension than there was in the past. Some of your options could include buying an annuity, taking pension lump sums, going into income drawdown, or a combination of all three. ISAs and other savings and investments could also be an important source of income in retirement.

We can guide you through your options, show how long your pension pot is likely to last, and explain how much you can afford to withdraw each year. That way, you’ll feel confident that your retirement savings will go the distance.

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A guide to saving for retirement

Jam-packed with essential information on how to save for a more comfortable life after work.

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Common questions on pensions and retirement planning

There are lots of things to consider when you’re planning for retirement. Deciding what you want to do in retirement is key, as this will influence how much you need to save and when you can afford to stop working. Other factors include your life expectancy, projected investment growth and inflation; all of these could impact how long your money lasts in retirement. It’s also worth thinking about how you want to draw retirement income, as this could affect the level of investment risk you should be taking on in the run up to retirement.

Your pension pot will need to last you for the rest of your life. It’s really important not to underestimate your life expectancy. According to the Office for National Statistics, the average life expectancy for a 60-year-old woman is 87 years. However, there is a one in four chance of living to 94 and a one in ten chance of living to 98.

The amount of money you’ll get from the state pension depends on your National Insurance record. You can check your state pension forecast on the government’s website. If you defer your state pension, the amount will increase by 1% for every nine weeks you defer, which works out at just under 5.8% every year. The age at which you can take your state pension has risen in recent years and it is likely to rise again in the future. You can check your state pension age here.

If you hope to retire in five years, it’s really important to speak to a financial adviser about whether your plans are achievable. Our advisers use cashflow modelling to illustrate how long your money is likely to last in retirement, based on your current finances, how much you’re saving and investing, your spending patterns, and your goals for the future. This will help you understand whether you need to make any changes to your plans or saving and investing habits. We can also check whether your pension is invested in the right way and that you’re not taking on too much or too little investment risk.

Five years before retirement is also a good time to start thinking about how to access your pension in retirement. We can explain the pros and cons of annuities and income drawdown, and guide you through your options.

An annuity provides you with a regular, guaranteed income in retirement. You can buy an annuity with some or all of your pension. How much income you receive will depend on factors such as the size of your pension, your age, existing annuity rates, where you live, and your health and lifestyle. Whether an annuity is right for you will depend on your individual circumstances. We can help you decide on the best way of drawing income from your pension pot.

The lifetime allowance is the amount of money you can build up in pensions without triggering a tax charge when you come to access your pension benefits. The government recently announced that the lifetime allowance will be abolished. From 6 April 2023, savers accessing pension benefits in excess of the lifetime allowance no longer face a tax charge of up to 55% on the excess.

This does not constitute tax or legal advice. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future.

You can usually take up to 25% of the amount you’ve built up in pensions as a tax-free lump sum. From 6 April 2023, this will be capped at £268,275 and frozen at this level. The remainder will be taxed as income.

This does not constitute tax or legal advice. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future.

Most people can contribute up to £40,000 or 100% of UK relevant earnings (whichever is lower) to pensions each year and benefit from tax relief. The standard annual allowance will increase from £40,000 to £60,000 from 6 April. If your income rises above a certain level, your allowance could be reduced or ‘tapered’ . The annual allowance reduces by £1 for every £2 that your ‘adjusted income’ exceeds £240,000, to a minimum of £4,000. These will rise to £260,000 and £10,000, respectively, from 6 April 2023. We can help you work out what your annual allowance is and advise on adjusting your contributions accordingly.

This does not constitute tax or legal advice. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future.

What happens to your pension when you die depends on the type of pension, whether you’ve started drawing an income from it, and how old you are. If you have a defined contribution pension and you die before age 75, benefits can be paid as a lump sum or drawdown income to your beneficiaries tax free. If you die after age 75, benefits will be taxed at the beneficiaries’ marginal income tax rate.

No retiree is the same, so the asset allocation that is right for you will be completely dependent on your individual circumstances. This will include things like your current financial position, your goals, and how long you are investing for. We can advise on an asset allocation that suits your needs and which you are comfortable with.

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