In this current climate of high inflation, low interest rates and volatile market conditions, it is more important now than ever to make sure we are making the most of our hard earned cash. There are things we can all do to ensure our pension savings are working as hard as possible for us, and that we take advantage of the tax breaks available.
In this month’s blog we look at pensions and retirement planning and taking you through the steps of ensuring your goals and plans for the later years are given the best chance possible of being achieved.
Could you afford to live on an income of £155 per week in retirement? How about £8,060 per year?
You may be surprised to be told that these figures are one and the same. This is the Flat Rate State pension which a UK citizen with 30 years of National Insurance contributions will be eligible for from age 66 (as at January 2019).
The national living wage in the UK is currently £16,009 per annum. With this in mind, are you saving enough now to ensure that you can enjoy retirement without worrying about your finances?
How much are you contributing?
If you wish to receive a guaranteed income for life in retirement of the remaining £7,949 with no investment risk to your capital, you would need a pension pot of around £142,750* for a level income or a pension pot of £245,000* if you wish for your pension to increase in line with inflation.
In order to achieve these fund values in today’s terms (i.e. after the effects of inflation) this would mean making monthly pension contributions of at least £185.60 net or £317.60 net respectively from the age of 30 into a cost effect personal pension plan – assuming growth is 5% per annum, with an ongoing advice charge of 0.50% per annum paid monthly.
What can you do?
Of course, everyone’s situation is different. However, the Financial Times Adviser have calculated that clients who have an appointed financial adviser accumulate, on average, 21% more in their pensions than those who self-invest**. With this in mind, can you afford not to review your retirement planning? After all, a goal without a plan is just a wish, and you do not want to wish you did it on the day that you retire.
Contact one of our Independent Financial Advisers at Temple Wealth Management to find out how we can help you with your retirement planning and review your pension contribution levels.
You can contact us by calling our office on 01329 282882, send an email to Fareham@templewealth.co.uk or send us a message on our Facebook or Contact Us Page.
A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation which are subject to change in the future.
*Figures based on AssureWeb research completed on 08/02/2019 and are based on a single life, 5 year guaranteed annuity paid monthly in arrears for a healthy 66 year old, not taking into account advice charges.
Setting goals for your personal finances is crucial to success and achieving your financial objectives.
What does it mean for your age group?
From your first job until your 30s, these are known as “the vulnerable years” as you are trying to build up your personal finances to secure your future, protecting your income and saving for the future. You may have a specific financial objective such as buying your first car, saving a deposit for your first house or for even retirement. This means being aware that, however small, the earlier you start the better the result.
Then you move to your 40s, when you may own your own home, have a family. Your objectives will change towards protecting a higher level of income, whilst also protecting your family and lifestyle. Retirement starts to be foremost in your planning in order to ensure financial security. It is important to consider making the most of your tax allowances for the future.
In the years up until retirement, which could be any age from 55 upwards to around 70 you will begin to see the benefit of planning your personal finances from an early age. You will be looking at making retirement work for you. These are the years that you will start to think about your children and grandchildren and their financial security, maybe preparing the “bank of Mum and Dad”. Health will start to play a part in your future financial planning. An Independent Financial Adviser can help you assess if your personal finances are on track to achieve your goals.
From your 70s and through retirement, your personal finances may mean that long term care becomes more of a consideration. This can also include succession planning in terms of inheritance tax, Power of Attorney and ensuring your will is up to date.
There will be other areas of planning that will be unique to
your situation and therefore the earlier you engage with planning your personal
finances the better. It does not matter
if you think you have no money to consider these things; if you start planning
early and engaging the easier it will be in the future. An Independent Financial Adviser can help at
any stage of planning.
Temple Wealth Management – Your Financial Partner for Life.
We believe that professional financial advice can add significant value to individuals at any stage of life whether this be ensuring you have a competitive mortgage rate; reviewing your protection needs in case the worst were to happen.
Temple Wealth Management can help find the right solution to make your savings work better for you and guide you through retirement planning.
Contact TWM on 01329 282882 or email@example.com to find out how one of our advisers can help you
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We all know that investment stocks can go up as well as down but how do you know how much risk you should take with your money? Understanding your attitude to risk and completing a risk profile can relieve some of the worries of investing.
There is no right or wrong answer here; it is personal to you and your situation. This may change over time, as your family grows or you get closer to retirement. Therefore it is important to regularly assess your attitude to risk and ensure your money is invested wisely. Read more
You may have started to see the TV adverts with the big fluffy monster, called The Workplace Pension. He wanders around and is ignored by those he meets. You may have even wondered what it was all about!
A workplace pension is a system of saving for your retirement. Under the Pensions Act 2008 every employer must create a pension scheme that both the employee and employer contribute to. Read more