Retirement can seem decades away in your forties, but it generally starts to seem an awful lot closer once you reach your half-century.
Although pension planning should ideally begin the day you start work, more often than not, it starts in earnest when people enter their fifties. By this stage they have often reached peak earnings, and so planning for the future becomes even more important.
It’s time to start thinking about your life in retirement, how you’ll want to spend your time, and how much income you will need to make it all happen. Nowadays, retirement is a fluid concept, with many people choosing to work on well past their normal retirement age, because they enjoy the mental stimulation that work provides, or because they need to supplement their income. Getting a retirement plan in place will let you see what choices will be open to you when the time comes. Like all the other big events in life, the more time you have to explore your options, the better.
Taking financial advice will help you get a true perspective of how much money you’ll have available in retirement. We will help you work out what the values of your current plans are, including your state pension entitlement. That way, if there’s likely to be a shortfall, you still have time to increase your savings.
Now is also the time to trace any pension pots you may have accumulated with past employers and lost track of. If you have several pension plans, we will be able to help you work out if it would make sense to consolidate them.
As retirement nears, it’s important to keep an eye not just on your pension, but also to think about tax-efficient savings like ISAs, and any investments you may already own. Many people find it helpful to get a cash flow forecast prepared that enables them to see how much income they are likely to receive from all sources when they retire. A forecast can help you plan major expenditure and explore various scenarios, like the financial impact of downsizing, or the effects of giving money away to family members during your lifetime. It can also help ensure that you make provision for important things like the potential need for later-life care.
A pension is a long-term investment. The fund value may fluctuate and can go down. Your eventual income may depend on the size of the fund at retirement, future interest rates and tax legislation.