Retirement planning can feel like a bit of a maze; something that can be dealt with by “kicking the can down the road”….traa dy liooar, as we Manxies say!
If this blog post has landed when you’re in the mood to think about your future at the end of our second “lockdown”, these pointers might help:
1 – It’s all about cash flow; managing what’s going out against what’s coming in. You need to know how much you’re likely to spend each year in retirement. This template will help you get a handle on it.
2 – Work out how much you will have coming in from various sources. Get your hands on the latest statements for the work and personal pensions you have. Also, get up to date figures for any investments, any projected rental income, bank accounts and national savings etc. They’re likely to all form part of your retirement “pot”.
3 – Consider whether part-time or voluntary work may form part of your plan. Some people welcome the routine, structure and purpose that this can give them in retirement. It may also help bridge any pension income shortfall until your state pension kicks in.
4 – You need to know how much your state pension will be and when it will start. Despite the criticism it receives, it’s valuable and worth approximately £500,000 for most couples throughout their lives. You can ask for an IOM state pension forecast here: gov.im/categories/benefits-and-financial-support/social-security-benefits/isle-of-man-state-pension-statement . If you’ve lived in the UK previously, you may also be entitled to some UK state pension. You can check here: gov.uk/check-state-pension
5 – You need to consider how long your money may need to last for, especially if you’re relying on bank accounts and investments etc., rather than fixed pension income. It’s easy to underestimate your life expectancy – check it out here – you don’t want to run out of money in retirement! direct.aviva.co.uk/myfuture/LifeExpectancy/AboutYou
6 – Have a good think about how you and your partner will spend your time during what could be a 30+ year retirement. This exercise is as vital as doing the numbers. Will you get under each other’s feet, day in day out?
7 -There are lots of moving parts to a retirement plan. It’s okay to be in a bit of a quandary about it and not to understand pensions. Considering all of the above points will get you off to a great start. A qualified financial planner will also be able to answer other questions you have, such as:
-What options do I have with my pension/s?
-Do I really have enough to retire, could someone check my numbers?
-When should I take my pension/s?
-Should I take them as a lump sum (if permitted) or as regular payments?
-What’s the most tax-efficient way of doing things?
-How much should I keep in my bank account, uninvested?
-What should I be invested in?
-How much can I take from my pension each year?
By all means get in touch if you need help, starting with a free initial phone or video call with a Chartered Financial Planner.
