As parents and grandparents, we all hope the values we hold dear can somehow be passed on to our children and grandchildren. We’d all like them to be able to make the right financial decisions for their future, including saving enough in their private pension. Here are a few thoughts that might just help.
1. Get Advice
A private pension assessment by an independent financial adviser, like Pension Works, does more than just give you peace of mind or present you with a list of figures. It can be a real help to your retirement planning, and could save you money. If your pension savings are being eaten up by hidden fees, a pension assessment will check if you’re getting the best deal. The financial adviser can also review your investments to check whether switching funds might earn you more money over time.
Living through decades of increasing prosperity has undoubtedly given baby boomers a lot of advantages, but they can also face several challenges. Today, many feel pressured into working past their normal retirement date, often because of the number of demands being made on their finances by their families. If they are unable to work, they can have concerns about outliving their retirement savings.
Retirement planning is a complex process. As your retirement date draws nearer, it’s sensible to think about some key issues that will help get you off to the best possible start for the next stage in your life. Follow our simple tips below to give yourself peace of mind and, the best possible opportunity to make your pension plan work for you.
Pension drawdown has become a highly popular option for those with a private pension. Thanks to pension freedom, this means that you have the option to withdraw money from your pension fund after the age of 55. The amount of retirement income, and how often, is up to you. There are some great advantages to this – the tax-free lump sum cash option is particularly popular – but this needs careful planning to avoid your money running out and a drawdown disaster.
After years of hard work and paying in, a comfortable retirement is probably the light at the end of the tunnel.
40% of over-55s, however, are worried that their money will run out. (1)
Moneywise.co.uk – April 2018
It’s worth taking some time to make some retirement decisions and figure out how much you are going to need – and if you’re on track to build up the pension fund needed to provide this.
Many people are now choosing income drawdown as an option in their retirement planning. This is different to the traditional annuity which most people used to purchase – so here is a guide to pension drawdown, and how to work out whether it’s for you.
What is pension drawdown?
Put simply, income drawdown means your defined contribution pension is like a savings account. Whether or not you choose to claim your tax-free lump sum cash, you can withdraw money out of your DC pension whenever it’s required. The rest stays in your pension pot and means your investment can continue to grow.
As your retirement planning starts to take place, there are several options to think about to make sure you get the most from your pension savings. Pension freedom now offers a range of choices. You’ll have heard of the 25% tax free lump sum cash you can could take out of your pension at 55; you might even be enjoying it already! Since 2015, however, there have been extra options available as you consider the next steps.
The days of spending your whole career working for one company – and paying into a single pension pot – are over. Auto-enrolment laws mean that many people have a number of smaller workplace pension funds and some larger companies offer defined benefit pensions too. As well as making retirement planning harder, this potentially loses you money. Consolidating your pensions might not just make things easier but could be profitable, whether you choose income drawdown or an annuity.