Once you enter retirement, your pension determines your lifestyle. Naturally, the more you invest into it, the greater financial freedom you have when you decide to stop working. But for retirement planning to be effective, you need to do more than make regular installments.
By seeking pension financial advice, you can start the process of consolidating your existing pension plans and review the role of wider savings and investments. For most people, your pension is your greatest asset – and it’s the role of tailored pension advice, UK-based businesses like us to protect that asset and maximise its value.
So, as pension advice specialists, we’ve put together a guide on pension planning and how to get more from your investments.
First things first, take stock of the current pension pots you do have. If you’ve worked in multiple roles across different employers, it’s likely you’ll have a number of active pension plans. By pooling some or all of these into a single private pension, you’ll gain a more accurate picture of your current position.
From there, you need to determine your retirement needs. Having realistic expectations about your spending habits will help you ascertain the required size of your retirement plan. Most people believe that to be around 70% to 80% of their current spendings. But this depends on your mortgage and if you have post-retirement goals like travelling.
Additionally, it’s a good idea to factor in any purchases you might want to make after you retire, such as a home or fund for your children. If you don’t, you could outspend your allowance and run out of income. Pensions are a constant balancing act – only by putting in the accurate investment will you feel truly secure in your lifestyle.
Speaking of investments, it’s important to evaluate where your current scheme invests your money. A number of plans have ‘default’ options, but these may not be the best for you. Review alternative schemes based on how much you hope to spend and how long is left until your chosen retirement date. As you get closer to retirement age, try to be more conservative to ensure your expected return.
It all depends on your position. Most people are auto-enrolled into their company pension, where your employer contributes at least 3% of your salary. You may have chosen to opt out of your workplace pension if your existing plan already has individual, fixed, enhanced, or primary protection. This is where you’ll have fixed your lifetime pension allowance at a previously higher level, which you’ll lose if you take your employer’s pension.
There are a number of pensions you can choose from, the primary distinction is whether or not yours is final salary or money purchase.
Also known as benefit schemes or Career Average Revalued Earnings (CARE) schemes. These pensions are largely funded by employers, though staff may also have to pay into them. This model allows you to get a percentage of your final pre-retirement salary, or, when leaving the business, as an annual income.
Such pensions are between you and a third-party insurance provider. Your employer chooses the provider, although you are offered a choice of investment opportunities.
Much like workplace pensions, stakeholder pensions have low and flexible minimum contributions, capped charges, and a default investment choice. As mentioned earlier, this could mean the investment in question isn’t in your best financial interest.
Like DIY pensions, here, you can choose your investment, as long as you’re willing to manage the pension yourself and pick the right provider.
Obviously, the choice you make impacts your pension income. UK-based pension advice specialists can guide you on this.
Whether you’re looking for help with choosing a pension, planning your retirement or delaying your state pension payments, there’s a wealth of resources available. You can get free basic advice from the Pensions Advisory Service and Pension Wise – the latter assists with handling defined contribution pensions.
But this guidance will only get you so far. If you truly want to maximise the value of your pension then it’s worth consulting an independent financial adviser (IFA). You can do this up to three times a year without a tax charge – although not all pension schemes offer this.
IFAs may cost money in the short term, but they could save you thousands in the long run. An IFA is able to advise and sell products from any provider across the market, allowing them to give the most comprehensive support possible.
At Asden Moore, our approach to wealth advice enables you to plan for the retirement you deserve. We offer an affordable alternative to investment management, without compromising on quality. Our team gives professional advice with transparent charges that are guaranteed to see you benefit from both medium and long-term gains.
We’re regulated by the Financial Conduct Authority and offer bespoke services to secure the best deal for your retirement. If you’d like to find out more about how we can help with your pension planning, don’t hesitate to get in touch on 0203 432 5564, or request a call back, make sure to fill the form below to get started with your pension planning today!
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