Pensions and Retirement Planning

There are many paths on the journey to retirement and every now and then it’s a great idea to stop, take stock (no pun intended) and seek some financial guidance in order to plan your route forward.

We’ve set out some basic questions to ask yourself in order to frame your thoughts regarding retirement and how we can help with your planning.

When and how will you retire?

No matter what people try to tell you, your retirement age does not have to be 65. When and how you retire is completely up to you.

What matters is whether you have a sufficient “pot” of assets stored away that has the potential to generate enough income to support you for the rest of your life.

When you retire, and how you retire, are therefore closely linked. If you save ‘X’ amount per month and want to retire to the centre of London, living the high life, then you will need a lot more income than if you wanted to retire to the French countryside and live the simple life. The first, and more expensive, option will probably require you to work for a lot longer in order to save up a pension pot big enough to provide the income for that lifestyle.

So, the first task is to picture your dream retirement scenario, and then figure out how much you would need each month to sustain it. The second thing to bear in mind is that the earlier you want to retire the bigger that pot of assets will need to be. 

Are you on track for that goal?

Working backwards from the monthly income requirement and the age you’d like to achieve it by, we can look at your existing investments, pensions and current rate of saving to see if you’re on track. Together with some realistic assumptions about potential growth rates we can help you make projections for your pension pot and identify any possible shortfalls.

If there is a shortfall, together we can devise a plan to help you get back on track with a clear assessment of what additional contributions will be necessary in order to help you reach your goal.

Are your investments performing or under-performing?

Other than how you want to retire and when, the third most important factor is how your investments are performing. Compound growth has the potential to hugely impact your retirement pot over time.

However, performance can be heavily impacted by poorly performing funds, excess fees or a poorly calculated risk profile.

The importance of regular reviews

We recommend that our clients review their portfolio every 3-5 years at a minimum and preferably every year. There are three key reasons that regular reviews are vitally important.

We recommend that our clients review their portfolio every 3-5 years at a minimum and preferably every year. There are three key reasons that regular reviews are vitally important.

Risk. When you’re young, market wins and losses are spread out across the entirety of your life. That means good years and bad years may average each other out in the long term. This allows young investors the option to put their money in high yielding but riskier investments because if the best occurs, they do brilliantly and if the worst occurs, they have more time to recover. If you are planning to retire next year however, losing a significant portion of your pension pot is extremely impactful. So, it is adviseable to regularly decrease your exposure to risk as you draw nearer to retirement.

Regulatory Change. Tax advantaged accounts and savings rules change over time, and if it’s not your profession it’s easy to lose track of the latest rules and regulations. A professional on the other hand will be able to inform you whether anything has changed in the last year that might affect you or your retirement plans.

Products and Assets. There are hundreds of savings accounts, ISA’s, pension funds and tax-advantaged products to choose from and the difference between one or the other could make a big difference to your overall result. So, it’s best to check what’s on offer and what has changed since your last review or speak to someone who knows.

Pension Alternatives

Pensions should always be considered the foundation of your retirement planning as the tax advantages for pensions are likely to outweigh most other methods, particularly for higher-rate earners.

However, pensions might not fulfil all your needs.

For example, financial flexibility. Many people find the restrictions placed on the movement of their money before retirement difficult and for those with significant pension pots the lifetime limit may be restricting your ability to save tax efficiently. 

There are a number of reasons why the addition of other kinds of savings vehicles, such as ISAs, might be beneficial. 

Under one roof

Before moving forward, you should find out exactly where you are. Many of our clients come to us with a multitude of different pension schemes and share options from different jobs they’ve held over the years or decisions they’ve made at various points in their journey.

A financial review from Sovereign Wealth can help you get a clear overview of your entire portfolio and form a solid retirement plan for your future.

Find out more HERE.

he value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up.  You may get back less than you invested.

The levels and bases of taxation, and reliefs from taxation, can change at any time and are generally dependent on individual circumstances.

We would encourage you to get started!

If you want to talk this over, simply call us on 01858 791 182 or get in touch here.

Get in touch.

We work with many local business owners and directors across the Midlands, helping them and their families to become financially independent.

Whether you are a startup looking to scale or a seasoned business owner planning your next journey, we will take the time to understand your objectives and plan a course of action.

You can call us on 01858 791 182  or email us at the link below.

Contact Us

Sovereign Wealth Limited is an Appointed Representative of and represents only St. James’s Place Wealth Management plc (which is authorised and regulated by the Financial Conduct Authority) for the purpose of advising solely on the group’s wealth management products and services, more details of which are set out on the group’s website Sovereign Wealth Limited is a Limited company registered in England and Wales, Number 07115386. The ‘St. James’s Place Partnership’ and the titles ‘Partner’ and ‘Partner Practice’ are marketing terms used to describe St. James’s Place representatives.