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Retirement planning: The key steps to securing your future today

Retirement. For many, the post-career phase feels like a distant chapter, a story that will only unfold after several more turns of life’s pages. But to treat retirement as a mere footnote in your earlier years is to risk punctuating later life with frustrating full stops.  Retirement is a journey best prepared for well in advance. By planning early, you can map out your post-work landscape and plot a route towards security, purpose and fulfilment for you and your loved ones. Here, James Wallace, Chartered financial planner – and former specialist pensions lawyer – at Fairstone, the UK and Ireland’s most trusted wealth management firm, highlights the importance of retirement planning and why it is never too early to start.

Laying the foundations for a stronger future

Between your late teens and mid-30s, retirement can feel a lifetime away.

With studies to complete and career goals to pursue, the challenge of climbing the first rungs of the housing ladder and the journey of parenthood, the post-work stage can become easily overlooked.

It is, however, the perfect time to start planning.

According to latest research, postponing pension savings until middle age could mean missing out on up to £100,000 in investment returns and tax relief.

When you’re young, you have time on your side, which allows you to take more investment risks and benefit from market growth potential.

Don’t settle for a default employer pension plan; research your options and seek advice to find a solution that best suits your financial situation.

And early contributions benefit from compounding interest, meaning your money will grow faster over time.

For those self-employed, self-invested personal pensions, stakeholder pensions and ISAs offer tax-efficient ways to save.

Ramping up your strategy 

As you reach your mid-to-late 30s and early 40s, things have changed.

The endeavours of your earlier working years will likely have led to increased income.

And with this greater financial flexibility comes the opportunity to review your retirement plans and consider ramping up contributions.

If you haven’t already, now is the time to speak to a financial adviser, who can help you understand exactly how much you need to save and at what age you would like to be financially free. 

It is also the time to make some important adjustments:

Consolidate your plans: Consolidating multiple pension pots into one plan will help simplify your retirement strategy and potentially reduce fees

Maximise contributions: If you can, top up your pension with extra contributions; it will make a significant difference when you retire

Update beneficiaries: Ensure the beneficiaries listed on your pension plans consider marriage and children

Consider bonus sacrifice: Some employers allow you to sacrifice a portion of your bonus for pension contributions, giving you more flexibility and tax advantages

Use your ISA allowance: Using at least some of your ISA allowance each year provides additional tax advantages and flexibility

Fine-tuning your planning

As your 50s draw nearer, retirement appears more clearly on the horizon.

Whether you plan to retire early or continue working part-time, it’s imperative you ensure your pension and savings complement your future goals.

Consider consulting a financial adviser to review your strategy in detail. 

Your next steps

As you continue to approach retirement, seek answers to questions and stay abreast of legislative changes to ensure your plan is delivering the strongest return.

Work with a financial adviser to review your plan, looking at areas such as how your benefits can be taken and how your finances will look post-retirement.

Consider a self-invested personal pension, which allows you to choose how your pension is invested – it could potentially help boost your retirement income.

In an ever-changing world, seek to understand the age you can take your pension and the different ways – lump sum payments, income drawdown or annuity – you can draw it. 

In addition, find out how much you can expect from the state pension.

And factor death benefits into your plans too.

Understanding how your pension can pass to your beneficiaries is important for inheritance planning purposes.

For more information on the measures you could take to optimise your pension plan, contact Fairstone or call 0800 884 0840.

THIS ARTICLE DOES NOT CONSTITUTE TAX, LEGAL OR FINANCIAL ADVICE AND SHOULD NOT BE RELIED UPON AS SUCH. TAX TREATMENT DEPENDS ON THE INDIVIDUAL CIRCUMSTANCES OF EACH CLIENT AND MAY BE SUBJECT TO CHANGE IN THE FUTURE. FOR GUIDANCE, SEEK PROFESSIONAL ADVICE.

A PENSION IS A LONG-TERM INVESTMENT NOT NORMALLY ACCESSIBLE UNTIL AGE 55 (57 FROM APRIL 2028 UNLESS THE PLAN HAS A PROTECTED PENSION AGE).

THE VALUE OF YOUR INVESTMENTS (AND ANY INCOME FROM THEM) CAN GO DOWN AS WELL AS UP, WHICH WOULD HAVE AN IMPACT ON THE LEVEL OF PENSION BENEFITS AVAILABLE. YOUR PENSION INCOME COULD ALSO BE AFFECTED BY THE INTEREST RATES AT THE TIME YOU TAKE YOUR BENEFITS.

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