Finance: Preparing for retirement
By ROC Consultants (IFAs) Ltd with an introduction by Grannynet.co.uk
Before we retire, it is likely that we have considered what we are going to do for income when we are no longer working. But as retirement gets ever closer, we are likely to think about this more and more as we know we are going to be faced with a whole new challenge on our finances.
While working, for most of us balancing our accounts has meant keeping our costs below our wages, an income that has remained relatively consistent every month. However, when we retire we need to take a fresh look at how we control our finances, as we are probably not completely sure of what our monthly income will be. It is also likely that you may be looking into joining your finances with your partner for the first time, which could be a real shift in independence for you both.
Grannynet.co.uk has therefore got together with Independent Financial Advisors, ROC Consultants (IFAs) Ltd to give you a brief idea of why you should consider seeing an IFA before you retire, when you retire or during your retirement to help with the new choices you may have to make. You can contact them through the details at the end of this article, or you can also go to unbiased.co.uk to find your nearest recommended IFA along with some more information on pensions and for free guides and factsheets on all sorts of savings and investments.
Why should I go to an Independent Financial Adviser (IFA)?
For Independent Advice .
A High Street Bank may well be "tied" to recommending/promoting products of the Bank, or a single Insurance Company that the Bank has an allegiance to. Independent Financial Advisers are able to select the correct product for customers from the entire market - that means they can potentially recommend any product from any insurance company providing it suits the customer's needs and objectives. With such a wide choice of companies, investments and saving tools the customer can be reassured that they are not simply being provided with a standard recommendation but are getting personalised advice.
For Investment Choices .
From childhood onwards we are told to put away money to save for the future - perhaps for something special? Or perhaps to be sure that when we really need something we have the funds to acquire it without taking on debt.
Investments are designed to be held for the longer term, usually at least 5 years. You need to be comfortable with tying up this money for a period of time and you should not normally consider investments unless you have some savings in place. Most investments are not guaranteed to return your money in full, although they do offer the prospect of higher returns than deposit accounts. Returns, risk and volatility are the factors that will determine a suitable place for your savings.
With respect to any investment it is important to put into place a regular review programme. Aside from any changes in the external market place, personal circumstances can change and/or new products launched by governments. What may be appropriate today is not necessarily appropriate tomorrow. In their capacity as Independent Financial Advisors, ROC Consultants (IFAs) Ltd ensure that clients' investments have a regular review programme which is proactive and takes into account all of these factors. This is an ongoing review and takes place either annually, semi annually or quarterly as circumstances dictate.
Help with pension selection .
Pensions are, of course, designed to provide you with sufficient money to live comfortably after you have retired from work. There are many different "tools" used to save for retirement and the taxation and investment elements of pensions can appear baffling. Independent Financial Advisers specialise in explaining, recommending and monitoring pensions for you. Here are the most common sources of pension to fund for your retirement:
- The Basic State Pension - for people who have paid sufficient National Insurance contributions while at work or have been credited with enough contributions
- Additional State Pension - this is now the State Second Pension (S2P). Before 6th April 2002 you built up SERPS (State Earnings Related Pension Scheme) benefits. Both are available to people earning more than a given amount. Additional state pension is not available in respect of self-employment income.
- An Occupational Pension (through an employer's pension scheme) - if your employer operates a pension scheme, it's usually a good idea to find out about the benefits of the scheme.
- A Personal Pension Scheme (including Stakeholder schemes) - open to nearly everyone and especially useful if you are self employed or your employer doesn't run a company scheme.
How can I receive my income when I have retired?
There are various options on how to receive your benefits, including;
- Income Withdrawal - wherein you are not purchasing an annuity, merely withdrawing a level of income with or without tax free cash. These can be complex and guidance is needed.
- Annuities - There are various types of annuities available and only an Independent Financial Adviser can research the whole market for the best provider for an individual's requirement.
Aside from annuities, many retirement contracts such as Income Withdrawal and Unit Linked Annuities again need regular reviews in order to determine the level of income taken, the funds invested in and any tax free cash entitlement not taken already for example.
Personal circumstances and market factors are also important and a review should be held at least annually if not more frequently for these types of contracts as most retirees are relying on this for part if not all of their pension in addition to any state pension or other personal occupational pensions that they may well be receiving.
In addition, the death of a spouse normally triggers a review as there are various options available depending on what type of contract is taken out at retirement. At ROC Consultants (IFAs) Ltd all post retirement contracts, bar annuities are reviewed on a regular basis along with any investments that the clients may have as appropriate.
For more details and a free initial review of your own specific situation and requirements please contact Trevor Allum on 020 8835 2385 or rocc@btconnect.com or roc.ifa-web.co.uk.
Personal circumstances and market factors are also important and a review should be held at least annually if not more frequently for these types of contracts as most retirees are relying on this for part if not all of their pension in addition to any state pension or other personal occupational pensions that they may well be receiving.
In addition, the death of a spouse normally triggers a review as there are various options available depending on what type of contract is taken out at retirement. At ROC Consultants (IFAs) Ltd all post retirement contracts, bar annuities are reviewed on a regular basis along with any investments that the clients may have as appropriate.
- DO speak to an Independent Financial ADvisor if you are looking to set up a pension
- DO look at ALL of the options out there for you
- DON'T expect to get a high return from investments over a short period of time
- DO review your pension regularly in reaction to changes in market or personal circumstances