Retirement Planning

How much do I need to retire? Retirement Planning is a key part of what we do. Let us help you to enjoy your well-earned retirement

Why is retirement planning so important?

Retirement should be a time to enjoy what you have spent a lifetime working towards.

For many generations retirement planning was a straightforward idea where you worked until 60 or 65 and then lived off the pension income from your employer and the state pension. Things have moved on significantly. Government legislation has enabled far more flexibility in how you can take your pension income. There is also now far more flexibility around who you can pass your pension on to.

Retirement is a far more fluid concept with many now working well into their 70’s and beyond. Many people reduce hours, go part time, or take on a lower paid or consultancy type role. With mortgages into later life and helping children with increased education costs or onto the property ladder many people’s costs in retirement are often much higher too. Throw in plans to travel the world or live abroad before the rapidly escalating costs of longer-term care. There is so much to consider. You can see just how important careful retirement planning and advice has become.

Retirement planning

So how much pension income can I draw on and from when?

The good news is that pensions have kept up with the ever-changing retirement landscape. They now offer far more freedom than they have ever done previously. You are now free to draw from your accumulated pension pot from age 55 whether still working or not. Plus, you can draw out as much or as little as you like without restriction. 25% of your pot remains tax free and the balance incurs income tax. Having access to lump sums and variable income can be an immense help when it comes to retirement planning.

You may still purchase an annuity to provide a guaranteed income or pension income through income drawdown. Annuities are designed to provide a known benefit for life regardless of how long you live but do not typically offer a lump sum death benefit.

So why should I consider Income Drawdown?

Pension Freedoms legislation has changed the pension and retirement landscape significantly over recent years. Income drawdown is now much more flexible and enables you to take flexible unsecured pension income as and when you require. This means that you can regularly revise your income requirements as your personal circumstances change.

However, as your pension pot remains invested it is down to investment performance over time to ensure your income is maintained. That obviously does mean your income can reduce or run out altogether.

There is also the added benefit with Income Drawdown of being able to pass on your pension pot to your spouse and family.

What pension death benefits are available?

You even have more choice over whom and how to pass on your pension. Historically half your income tended to pass to your spouse, and which ceased on second death. The income drawdown route today allows you to pass the whole pot to whomever you choose and if kept within a pension wrapper can now pass-through multiple generations. Pension death benefits are typically entirely tax free if you die before age 75 and liable to income tax to the beneficiary if after age 75. In most cases it does not form part of your estate for Inheritance tax purposes.

So why should I seek retirement advice?

More choice in how and when we take our retirement income can only be a positive thing but with more choice comes more complexity and risk. Should you take a guaranteed income that dies with you or a flexible pension that could run out before you die? It has never been more important to fully review all your pension options before taking a scheme pension or annuity from your current pension provider. The key factor today is looking at all your likely retirement needs and planning a pension solution that most closely matches this.

We specialise in all areas of pension and retirement planning including:

  • Flexible drawdown
  • Phased retirement
  • Ill heath pensions
  • Triviality and smaller pensions
  • Safeguarded Benefits
  • Income drawdown
  • Enhanced annuities
  • Early retirement
  • Guaranteed annuities
  • Hybrid annuities
  • Scheme Pensions
  • Cash Flow Forecasting
  • Retirement income projections

There has never been a greater need for retirement planning and advice. Our Financial Planners can guide you through every stage of your retirement journey.

Please note: The Financial Conduct Authority does not regulate tax advice.

Bigmore Financial Planning

Telephone: 01932 253939

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"I reached out to Bigmores around 4 years ago to sort out my pensions and other financial matters as I was about to retire. I met David Dunn in the office in Walton and he has since been my go to person with anything financial, offering his expert advice and recommending what he thinks are my best options to maximise my returns on my SIPP pension plan. I would recommend anyone requiring financial assistance to have a chat with them."

Tim Sillwood
Ashford

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