When you retire, your spending changes. Usually there is a reduced need for income. While social spending may increase, retirement will no longer need to be funded, there may be no outstanding mortgage and travel expenses are usually lower. Effective cashflow planning will help safeguard the future and avoid unnecessary anxiety.
You don’t have to accept a guaranteed pension via a traditional annuity. While it provides a secure level of income and may be your first port of call, standard annuity rates are at historically low levels. There are other options. You will also need to consider what to do with any lump sum payment in addition to what (if any) provision you wish to set in place for your spouse, civil partner or dependant. There are flexible arrangements that offer more attractive death benefits and flexible income options. We like to get a deep understanding of the individual’s circumstance before providing personal advice.
When we are advising people about maintaining their wealth, one of the most important considerations is to balance their current income requirements with ensuring the future is catered for. We find that clients are inclined to save too much or too little, which stems from not identifying correctly what their future income needs might be and how they can be met.
The people who save too much may make unnecessary sacrifices. Those who save too little face a considerable reduction in their standard of living in retirement, or will have to work for much longer than they had anticipated.
We act as an informed sounding board, helping our clients take an objective view about how much income or capital they may need in the future. We help them see what the rainy days might look like, and how much they might need in pensions and investments.
One of the most reliable ways to build wealth is to structure your assets in such a way as to ensure that you pay the lowest level of tax possible on your investments.
Our advisers consider what tax breaks and reliefs are available to you. For example, if you are married, are you making best use of your combined reliefs? We often find one person pays a higher level of tax than their spouse. PSFM looks to make sure that income-producing assets are held in the lower taxpayer’s name.
Assets should also be held in the most tax efficient way. We concentrate the least tax efficient assets in the most tax efficient wrappers – and we take an objective overview of our clients’ assets, which is something that is often overlooked.
We are experienced in providing advice on the many options available when taking benefits from pension schemes, including:
The value of your investment or pension can fall as well as rise and you may not get back the original amount invested.
The levels, bases and reliefs from taxation are subject to the individual circumstances of the investor and may be subject to future change.
We’d love to hear from you. As a firm of Independent Financial Advisers we can give you the most suitable advice for your needs from the whole of the market.
Not everyone’s financial advice is independent. Ours is.