Many people ask themselves ‘when can I retire?’ or ‘how can I plan for retirement?’ But there are lots of factors that affect your retirement decisions;
- Mortality and Health – According to research from the Office of National Statistics, in the 1960s a retiring male would have a life expectancy of another 12 years. Today, he can expect to live a further 19 years. The situation is similar for retiring females. This means that retirement savings need to last longer.
- Options – Traditionally at retirement a guaranteed annuity is purchased with the pension pot. However, in today’s market there are many income options at retirement, including capped drawdown, flexible drawdown, phased drawdown, investment linked annuities, third way annuities, enhanced annuities and traditional annuities. Some of the options require an irrevocable decision to be made, this means that there is no flexibility for unforeseen events and changes in your circumstances. Understanding all of the options and ensuring the right decision is made for your objectives and circumstances is critical.
- Flexibility – For many people retiring today, it’s not just the pension that will provide an income in retirement; rental property, ISAs, deposits and other investments can all be used to supplement pension income, tax efficiently, if structured correctly.
- Legislation – It’s changing all the time! State Pension Age (SPA) for men and women is currently being aligned to age 65. In 2018 SPA will begin to increase to 66 for both men and women and by 2028 it will be age 68. In addition to the change in age there is also a change in the Basic State Pension as in 2016 it will become a flat rate pension. Knowing when you will receive your state pension and having an estimate of how much this will be enables you to manage your expectations and plan for retirement.
- Lifestyle – Employers can no longer force an employee to retire at a fixed age without justifiable reason. This means that many people of retirement age choose to continue working on a part time basis in order to provide for their lifestyle. If your current projected pension income is not sufficient to meet your lifestyle, then this may be an option…
For many people approaching retirement, they do not really understand what income they can realistically expect from their pensions and other sources. This is where quality advice and cash flow analysis can play an important role, not just at retirement, but in the years leading up to retirement.
At Springfield Financial Services, we can help you to understand your requirements, project your retirement income, identify any gaps, and devise an action plan, so you will have a clear understanding of when you can retire, and how much income you can expect. Contact us to help plan your retirement.