A recent report has found that 2022 saw a surge in demand for retirement advice.
Professional Adviser confirms that market volatility and the continuing cost of living crisis have forced pre-retirees to reassess their level of risk, the income they take, and how they plan to pass on their wealth.
Elsewhere, MoneyAge finds that more than half of Brits aged between 50 and 90 worry that they will be unable to heat their homes if the economic downturn continues. While Bank of England forecasts have improved slightly since the February survey (with a 2023 recession no longer predicted), retirees’ very real fears are clear.
Thankfully, expert financial planning and long-term retirement advice can help.
At HA&W can we help you to answer some pension basics (how, when, and why you should start) as well as guide you through more complicated areas, like those addressed by the recent spring Budget.
Here are three key ways we can help you manage your retirement.
1. We can help you to start thinking about some key retirement questions
When it comes to retirement planning, the earlier you start thinking about some of the key questions, the better. These questions are:
When do I want to retire?
Factors influencing this choice might include when you can afford to retire, whether you are opting for the traditional “cliff-edge” or phased retirement, and how long your money will need to last.
What do I plan to do in retirement?
You might want to travel the world or downsize to be closer to grandchildren and there is no right or wrong answer.
How much will that cost?
World travel will likely cost more than taking up a new hobby locally, but you’ll also need to remember that your retirement outgoings will fluctuate throughout your later life.
2. Once you know what you want, we’ll help you to make your dream retirement affordable
Whatever your dream retirement looks like, we can help to make sure it is affordable. We’ll do this in two ways:
Understanding your finances now
This will include your incomings and outgoings, any investments you hold, and the pension provisions you already have.
A certain amount of your pension income will likely come from the State Pension. To receive the full amount, you’ll need to stay on top of your National Insurance contributions (NICs).
If you think you have any gaps, it’s worth noting that the Department for Work and Pensions (DWP) recently extended its deadline for filling National Insurance gaps back to 2006 to 31 July 2023. Get in touch if you think you might have NICs gaps to plug.
You’ll also have workplace and private pensions, and we can help you to maximise the tax efficiencies these offer. This is especially important in light of pension changes made by the chancellor in his spring Budget (more on which later).
Calculating where you’ll be by retirement and helping to make up any shortfall
If there’s a gap between your finances now and where they need to be to secure your dream retirement, HA&W’s expert advice can help. We can take a closer look at your household budget and use cashflow modelling to find the best solution for you.
We might suggest:
- Topping up your pension to maximise tax-efficient limits
- Ensuring you contribute up to the ISA Allowance each year
- Talking to your employer to maximise your workplace pension.
Whatever we suggest, starting planning early gives you the time to act and the greatest chance of achieving your financial goals.
3. We keep on top of legislative change to ensure the advice we give takes advantage of the situation now
Your pension is tax-efficient but the rules governing how much you can save, and when, are subject to change. This was highlighted during Jeremy Hunt’s spring Budget (15 March).
In a series of unexpected announcements, the chancellor:
- Abolished the Lifetime Allowance (LTA), effectively removing the limit on pension withdrawals you can make during your lifetime without an LTA charge applying
- Increased the pension Annual Allowance from £40,000 to £60,000, increasing the amount you can contribute each year while still receiving tax relief
- Upped the Money Purchase Annual Allowance (MPAA) from £4,000 to £10,000, making it more tax-efficient for you to continue contributing to your pensions, even if you have already flexibly accessed one
- Increased the minimum reduction under the Tapered Annual Allowance (TAA) for high earners to £10,000 (up from £4,000).
These changes could have a huge impact on your retirement plans, allowing you to save more, re-evaluate how and when you retire, and even help you to make better use of your pension in your inheritance planning.
Get in touch to find out how these changes affect you and what they mean for your plans.
Get in touch
Contact us now to find out how our Chartered financial planners could help you.
Please note
The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor.
