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Planning for your retirement?

06/01/2020 Posted by Communications | Comments(0)
Planning for your retirement?

We mean two things when we talk about planning for retirement.  The first plan is to set up a pension scheme, either a personal pension or participation in your employer sponsored occupational pension scheme.  Then you will need to regularly contribute, throughout your working life with the aim of accumulating a pot of money, which you can then use to replace your salary when you retire.

The second is to actually plan for your retirement, by preparing yourself, both financially and psychologically for this new chapter in your life. In this piece, we will touch on some of the main points that should be on your retirement planning checklist;

Do you know your budget? It’s a simple enough question, but in my experience, a difficult one for people to answer.  What is your income versus your outgoings? What will the gap be when you retire?  If you can’t answer the second part of this question easily, it should be the first part of your new plan. 

Are you saving enough? At this later stage in your career, you may be in a position to increase the contributions you are making to your pension fund. You may have less financial outgoings than in earlier life stages.  Whether retirement is 10, 7 or 5 years off, it would be beneficial to establish exactly how much is in your pension fund, and what it should provide you with in retirement.  Your pension provider will be able to prepare an illustration showing what you are currently on target for, and if necessary, how additional contributions will enhance the picture.  Many pension providers also offer online tools that you can use to establish this for yourself.

Is your investment choice appropriate? Unless you are taking regular financial advice, you may be invested in the same fund you started with all those years ago when you started your pension.  You should now establish what this fund is, and is it suited to your current and future goals.  Your pension scheme may offer a lifestyle investment strategy as the default investment fund.  A standard lifestyle strategy will automatically and gradually reduce the investment risk in your fund in the run up to retirement.  Traditionally, these funds are suitable for those who plan to purchase a pension or annuity at retirement, as they match assets suited to this choice.  They are likely to have a high weighting in bonds and cash in the final few years.  However, for those thinking about the Approved Retirement Fund (ARF) option, this might not be suitable.  Some pension schemes and providers now offer an ARF lifestyle strategy.  If this is an option you are considering, you should ensure your investment choice matches your goals.

Pension or ARF? 

Read the full article on the Milestone Advisory website. 

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