Retirement planning

Unless you’re one of the few lucky enough to have a final-salary pension due to pay out at a good rate, you will almost certainly need to invest additional savings to fund your retirement.

Companies have moved away from offering non-contributory pensions and are expecting employees to make greater contributions to schemes which will pay out according to investment performance.

The state pension currently stands at just £5,880 per year. To qualify, you need to have paid National Insurance contributions for at least 30 years. It’s obviously unrealistic to expect this to cover your living expenses at retirement.

Planning for retirement depends, then, on a number of factors. These include:

  • whether you are part of a company pension or self-employed
  • the amount you can invest
  • your current age
  • what state pension you can expect to receive.

If you don’t have a company pension to rely on there are other options to consider.

A private pension requires you to make your own arrangements for investments. A Self Investment Personal Pension (SIPP), for example, gives more freedom over how funds are invested.

Downsizing or equity release may be suitable if you have value in your home which you want to make use of but we would recommend you take advice on these options first.

If you are a business owner, you will need to decide whether to pass the business on to other members of your family, close the business or sell it on when you retire. If you decide to sell, there are tax implications for disposing of a business. There are options for pension investments for business owners or directors which you may need to investigate.

As you get nearer to your intended retirement age, it’s important to reconsider any investments you have and adjust the balance of high and low risk savings. Putting large amounts into high risk savings at a late stage could prove catastrophic if things go wrong. Equally, you may want to take some risks to accumulate extra funds if your investments aren’t due to mature to the level you need. There are limits to how much you can invest in a pension in a single year and we can advise on how to reduce any tax payable if you need to increase your pension investments.

Finally, considering your future health needs at this stage would be sensible. Consider whether you want to make provision for long term care, medical insurance and life assurance at this stage.

For advice on any of the issues above, please call us on 0113 233 8600.

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