Pension Advice in Harrogate

Investing in a pension is investing in your own future. Roughly one third of UK adults aren’t saving at all for their future retirement. Of those that are saving, most aren’t saving anything like enough to give them the standard of living they hope for when they retire.

It’s time to take off the blinkers and look at the facts:

Fact #1: Don’t rely on the State Pension to keep you in retirement. Even if you’re eligible for the full State Pension of £164.35 per week for the tax year 2018-19, this is far below what most people say they hope to retire on, and indeed what they actually need to live on.

Fact #2: Rapid growth of savings. Although you have multiple savings options open to you as a retirement plan (such as properties for example), pensions have a number of important advantages that will make your savings grow more rapidly than might otherwise be the case.

Simply put, a pension is a long-term savings plan with tax relief. Your regular contributions are invested so that they grow throughout your lifetime and this then provides you with an income in retirement.

Fact #3: Tax relief. Once your income gets above a certain level, the government takes tax from your earnings. You can see this reflected on your payslips if you’re still working. If you put money into a personal pension scheme, it qualifies for tax relief. This means that as well as the money you’re putting in, some of your money that would have gone to the government as tax now goes into your pension pot instead. The government will still put tax relief into your pension pot, even if your income is too low to pay tax.

Fact #4: Now your company pays in too. To help people save more for their retirement, employers are now required to enrol their workers into a workplace pension scheme. This is called ‘automatic enrolment’. It’s basically a free pay rise for every worker in the UK, and you should already be seeing it reflected in your payslips.

But When Can I Afford to Retire?

That’s a tricky question, and it actually has a few stages as an answer. You might choose to retire gradually, or to go into part-time work before you stop completely. Once you stop completely, you’ve lost your main source of income. So it’s important to know what you can afford to do before you make any changes.

One of the things that’ll dictate your decision about retirement is knowing exactly how much money you’ll need to live on. There are several things you can do and think about which will all help you decide when you can afford to retire.

  1. Life expectancy. Retirement can last for 30 years or even more, depending on when you retire and how long you live. Most people underestimate how long they’re likely to live and thus fail to adequately prepare for their retirement needs. A 65 year old man now has a 50% chance of living to 87 and a 65 year old woman a 50% chance of living to 90 (Source: ONS data, 2014).
  2. Your money needs to last your lifespan. The longer your retirement, the longer your retirement income needs to last. Basically, you need to make sure your money doesn’t run out before you do. Your spending, and the amount of income you need every month, will change when you retire.
  3. Budget and Plan. Draw up a monthly and annual retirement budget plan. List all the essentials you’ll need to pay for in such as accommodation, car and fuel costs, food and household bills, entertainment etc. You need to make sure you’ll have enough secure income (that’s income you can rely on) throughout your retirement to at least cover these costs.
  4. “Futureproof” your plans. Bear in mind that your spending habits are likely to change during your retirement. As you get older, you might spend less on going out and more time at home and then more money on healthcare. Later in retirement you might even need extra help around your home or to pay for care fees.

Paying For My Retirement.

Consider in advance how exactly you will fund your retirement. Most people have more than one source of income. It is likely you can rely on your own State Pension as your primary source of income, plus any other pensions you’ve paid into. You might also have other sources of income such as from savings or property or a part-time job. You need to make sure you have enough secure income before you fully give up work otherwise you risk running out of money before you die.

In considering your financial future, calculating a secure income includes: your State Pension, a promised income from a past employer’s pension scheme, and any other income you’re guaranteed to receive for the rest of your life. It’s worth remembering that most of your retirement income (including your State Pension) is taxable so this will affect how much money you actually receive on a monthly basis, and this fact should be reflected in your monthly and annual budgets.

Planning for my Retirement – should I get advice?

Let’s be honest, the straightforward answer here is a resounding ‘yes’. Unless you’re an industry professional or financial adviser planning for your own retirement, you’re likely to need help and advice to navigate the murky waters ahead of you as you begin this journey.

Your chosen financial adviser should specialise in the field of retirement planning, and should have considerable experience with dealing with any circumstance with which you may present them.

Plan ahead for any meeting by listing all your questions and queries in advance: and remember, it’s never too soon to plan for your retirement. Don’t be caught out by being unprepared or uninformed, it’s your retirement so it’s your responsibility to plan for any and all eventualities.


Contact Us for Help With Pension Investment Advice

Start planning your future. Speak to us today.

Contact Us

Seventy Financial Planning
The Apple Store, Haggs Farm,
Haggs Road, Follifoot, Harrogate,

01423 611004

[email protected]

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