Preparing for your future in a way that suits your needs
Retirement planning is not a one-size-fits-all system. Everyone has unique lifestyle choices, so it's essential to prepare for your future in a way that suits your needs. Today's savers face challenges like longer life expectancy and the shift from defined benefit pensions to defined contribution plans.
The key to having the retirement you've always wanted is to plan ahead. Retirement shouldn't stop you from living, and it's crucial to enjoy the things you love doing. Some people choose to live off their savings, while others prefer to supplement their income with rental properties or a mix of sources.
With pension freedoms, we can take our pension money any way we choose, but it's also our responsibility to plan accordingly. Following the pension freedoms legislation, individuals now have more options for accessing their pension pot.
Before the act came into effect in April 2015, individuals had limited access to their pensions. They could only withdraw a 25% tax-free cash lump sum, and the rest of the funds had to be provided as a regular payment for life.
However, with the introduction of pension freedoms, individuals are now able to choose how they receive their pension. This means they can access their pension pot more freely, giving them more flexibility to plan for their retirement in a way that suits their individual needs.
With greater control over their pensions, individuals can make more informed decisions about their finances and enjoy greater financial security in later life. But it's not uncommon for people to underestimate how much money they will need when they retire, so having a clear plan for your retirement goals is important.
Whatever your goals may be, it's never too early to start planning for your future.
If you have a defined contribution pension, here are six simple tips to consider:
1. Use pay rises as an excuse to save more 2. Pay in more when a regular spend ends 3. Maximise any employer contributions 4. Invest lump sums you receive 5. Put off breaking into your pension pot 6. Be choosy about your investment choices
Preparing for your future retirement is an essential part of financial planning. It's important to assess your individual circumstances and goals carefully, and then create a plan that suits your needs. There are many options available, including annuities, drawdown and a combination of the two. Retirees can benefit from tax relief and tax-free growth on pension savings, so maximising contributions when possible is usually recommended.
Working with your professional financial adviser will help ensure you create a retirement plan that is tailored to your needs and goals. Whether you prefer the stability of an annuity or the flexibility of drawdown, a customised plan can help you manage your retirement income effectively.