At E.J. Willday Financial Management, we believe that retirement is more than just planning for the future; it’s about making the most of the here and now.
We take time to understand what that means for you and make sure all of the important things are covered, whilst helping you make your ambitions for your retirement a reality.
Your destiny is now in your own hands
The days when you could simply slip into retirement, confident that the state would be there to support you in your golden years, are now just a dim and distant memory. With the government’s purse strings under increasing strain, planning for our own future should be a top priority.
Where are you?
Whether you have just started out on life’s journey, or counting the days to retirement, pension planning should be high on your wealth management agenda.
However, you will have very different needs and objectives depending on which part of the journey you are on.
Whether retirement is many years away or just round the corner, unless you start planning for retirement now, there is a great danger that you could outlive your savings.
The earlier you start planning, the easier it will be to create the retirement lifestyle you want.
The stark reality is that the majority of us need to save more.
With people living to a greater age, retirement now represents a far greater proportion of our lives than previously expected. We all must accumulate more when we are earning to meet the extra costs of living longer. The decisions we make today will dictate the standard of living we will enjoy in retirement.
The golden rule is to determine exactly how much you are going to need in retirement – and to start planning for it now.
When approaching this life stage, the right type of advice can make a huge difference.
More active lifestyles, changing working patterns and longer life expectancy have changed the way people now approach retirement; the so-called ‘grey slide’ – gliding steadily into retirement rather than starting at a specific point in time – is on the increase.
This, in turn, has led to the development of more flexible solutions to meet the retirement needs of a new generation. And whilst pension freedoms have certainly opened up more opportunities for savers to access their funds, so comes with it some hidden dangers.
It’s your time – you’ve earned it
Retirement is a time to ensure that benefits accumulated over a lifetime are taken back tax-efficiently.
Since pension freedoms were introduced in April 2015, individuals no longer have to buy an annuity with their pension pot, but can take benefits in a variety of ways. This includes the option to keep the pension invested in retirement and/or withdraw cash as required.
There are two ways you can access your pension flexibly. Which option you choose will largely depend on how you wish to receive the tax-free part of your pension, whether you still want to make substantial pension contributions in the future, and whether you would prefer to receive income or lump sums.
If you were in flexible drawdown pre-6 April 2015, or are in flexi-access drawdown post-6 April 2015 and have taken any income, your annual allowance is restricted to £10,000 for money purchase pension schemes (known as the money purchase annual allowance) and you are unable to pay contributions in respect of unused relief from previous tax years.
pension lump sum (UFPLS)
If you have taken a UFPLS payment, your annual allowance is restricted to £10,000 for money purchase pension schemes (known as the money purchase annual allowance) and you are unable to pay contributions in respect of unused relief from previous tax years.
But whilst increased flexibility in pension income is welcome, the need for advice when preparing for retirement has never been more important.
Freedom has given rise to hidden dangers and increased the likelihood of people making ill-informed decisions.
One danger is that people on lower tax bands could take all, or a large part, of their pension fund and unwittingly push themselves into a higher rate tax bands, or exhaust their pension pot resulting in it not lasting their retirement.
You may well require guidance and advice around the new pension freedoms to help you make informed decisions based on your individual goals.