Six questions to ask.
When planning for retirement you need to consider what retirement means to you; where you will be, what you will do and how much money you will need.
For some of us retirement is just around the corner and very real while for others it is years away and feels like a hazy dream. Whatever retirement is to you, if you want it to be exciting and fulfilling it is clear that forward planning is needed.
So, what do you need to think about?
1. Let’s start with a review of where you are now – do you know the value of your current pensions and retirement savings?
It’s well worth taking the time to get your pension statements together and check their total value. This is a vital first step, as your pensions and savings may be worth more or less than you think. Working with a professional adviser to understand what these may provide you in retirement will allow you to make sure you save enough now to be able to enjoy your future life.
2. Are you saving enough?
Thanks to compounding, saving even as little as an extra 1pc of your income could make a significant difference to the value of your savings when you come to retire.
AAM’s Lifetime Cash Flow analysis can help you understand where you stand and how much you’ll need to enjoy your chosen retirement, including how much you can safely draw in retirement. Together we will look more closely at various aspects of your retirement, from planning your goals and your savings to working out your withdrawals.
3. Do you know where your pension is invested?
How you invest your pension will have a significant impact on the performance of your retirement savings over time. Making sure that your money is invested in different assets (equities, bonds, commodities, property and cash) can help to ride out the ups and downs of the market over time.
To help spread risk, and if you are over-exposed in a particular fund, asset class, company type or region, then you may want to consider making changes to give yourself a more balanced portfolio.
AAM’s Wealth Managers, working with our Head of Investment, can help you understand what you have and any changes which would benefit you.
4. What if you have several pension pots?
You may well have acquired multiple pensions over your working life making it difficult to keep track of your retirement savings. To simplify this and get better control, an option is to bring them together in a self-invested personal pension (SIPP) where you can more easily see what you have, where your money’s invested and how it’s performing. A SIPP also offers flexible income options at retirement and may well be cheaper that your current pension.
5. What about final salary pensions?
Sometimes referred to as a Defined Benefit (or DB) pension, with a final salary pensions your former employer will pay you a guaranteed fixed income from the day you retire until the day you die. If your spouse survives you, they will receive a reduced pension for life.
In the UK, many employers are offering pension scheme members the option to give up their guaranteed income in exchange for a much higher lump sum that will be held within a personal pension pot – known as a Defined Contribution pension.
Transferring a DB pension is probably the most important and potentially complicated financial decision you will ever make and should not be undertaken lightly. Because of this, the Financial Conduct Authority (FCA) has made it mandatory to receive professional financial advice before transferring.
6. So, what now?
It is important that you understand these issues and how they may affect you, to ensure you plan for the retirement you want.
It is vital that you seek advice from a fully qualified specialist.
AAM Wealth Solutions can provide you with a detailed UK Pension Audit, which will consider these issues in light of your needs, goals and circumstances and make a recommendation showing the right course of action for you to achieve the best retirement outcome.
Why you should have an AAM Wealth Solutions UK Pension Audit now
Every AAM UK Pension Audit is checked by a Chartered Financial Planner with over 25 years of experience in the provision of retirement planning advice.
You will always receive a full recommendation on your Optimum Pension, whether that is the Pensions(s) you already have or an alternative.
An AAM UK Pension Audit will put you in an informed position, able to make informed choices about your Optimum Pension and how best to secure your perfect retirement.
Contact your AAM Wealth Manager now to arrange your UK Pension Audit or email [email protected]
Op-ed piece by Ian Black
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