Abingdon Living Jul - Aug 2022

FINANCIAL PLANNING FOR A
HAPPY RETIREMENT
The secret to a successful retirement is to
slowly and surely build up your retirement
pot. Exactly how you do that will depend
on your situation – but there are lots of
things you can do. Here we have advice
from Money Helper (moneyhelper.org.uk)
which is a government advice service.
As with any financial planning matter, it is
important that your unique circumstances
are considered and you seek the advice
of a certified professional.
REVIEW PENSIONS
REGULARLY
It’s important to review your pensions
regularly. If they’re not on track to give
you the income you want in retirement,
you need to look at how to boost them.
If they’re broadly on track, you can make
a clearer plan so that your pensions will
be able to give you the income you want
when you retire.
REVIEW THE WAY
YOUR PENSION POT IS
INVESTED
If you have a defined contribution
personal or workplace pension, you
get to choose how your pension pot is
invested. Typically, this involves choosing
from a range of funds offered by your
pension provider.
These funds will be weighted differently
between various types of assets, which
offer different levels of risk and potential
return. Generally, you can afford to take
more risk when you’re young, and less as
you get older.
The longer your money will be invested,
the more scope you’ll have to deal with
investment performance going up and
down over time. So if you are some way
from retirement and your pension savings
are invested conservatively, you might
want to consider moving at least some of
your fund into potentially higher-growth
assets, for example, company shares.
But bear in mind that there’s no
guarantee that higher growth will be
achieved.
Transferring a personal pension into a
self-invested personal pension (SIPP)
can give you a wider range of investment
options to choose from.
But this brings higher risks if you’re not
an experienced investor. And you might
face higher charges.
Unless you understand how the different
pension investments work, you might
want to consider getting regulated
financial advice before making any
changes to your pension investment.
REVIEW THE CHARGES
DEDUCTED FROM YOUR
SAVINGS
All pension providers will charge for
managing your pot and investing your
money. In defined contribution personal
and workplace schemes, these charges
are often called an annual management
charge or ongoing charge figure and are
automatically deducted from your pot.
An annual charge of 1.5% a year could
have eaten away a quarter of your
pension pot after 35 years. An annual
charge of 0.5% would have reduced your
pension pot by only 1/10th over the same
period. You don’t need to worry about
this if you’re in a defined benefit scheme.
But if you have a defined contribution
scheme, charges reduce the value of your
pension pot. Workplace pensions often
have lower charges but that isn’t always
the case.
HOW MUCH MONEY WILL
YOU NEED IN YOUR
TOTAL PENSION POT?
It’s important to think about your pension
income in building blocks - first with the
state pension, then with your private or
workplace pension savings, and then with
any other additional income you might
get, from investments or property.
How much extra income you need to
generate from your private pension
savings will depend on the type of private
pension you have.
Defined benefit and final salary pensions
pay you a regular monthly income - how
much you get is based on your earnings
while you were working.
If you have one or more of these, you
should receive annual updates telling you
how much you can expect to get.
Adding that to your state pension
(which you can find out by getting a
state pension forecast) will help you
understand how much you’ve got to play
with in retirement.
If you have any confusion surrounding
multiple pension pots, investments or
other pension queries, it is worthwhile
seeking the advice from an IFA.
28 | www.minervamagazines.co.uk