As some of the pension decisions you make now may not be reversed later, it is important you make the right choices and shape your retirement plans to best meet your individual needs and circumstances. Each week leading up to the Budget in March we will be adding pension articles from our brochure – Your Retirement Options - Freedom & Choice: before, at and in retirement to help you make sense of the new pension changes.
Neil Homer, Independent Financial Adviser, Stafford, reviews what you should consider when you fully retire?
1. Review your Lonsdale Lifetime Financial Plan to ensure it can provide the retirement income you require.
2. Ensure you have enough money to live on for the rest of your life. When we review your Lifetime Financial Plan, your Financial Adviser will discuss the following with you:
Are you entitled to any state pension?
Are you drawing pension income in the most tax efficient way?
Review any future potential expenditure.
Should you delegate control of your finances?
How to pass wealth to any dependents tax efficiently?
How to provide for later life and plan for funeral expenses?
Jenny – 68 years old – retired marketing manager
Defined benefit pension scheme – £23,000 p.a.
Recently widowed and no dependents. £300,000 life assurance lump sum from husband.
No mortgage on her home.
Cash savings valued at £38,000.
1. To understand how the new pension changes affect her.
2. To plan for potential care costs in later life.
Neil Homer, Independent Financial Adviser, Stafford, said:
‘Before I prepared a Lifetime Financial Plan for Jenny I would want to understand her financial goals and aspirations now she is fully retired, and the type of care she would potentially require in old age. I would review her current income and expenditure, and explain how she could benefit from the flexibility introduced by the new pension changes. After inputting all the information into her Lifetime Financial Plan I would model how the £300,000 life assurance lump sum could be invested to fund her retirement costs, and fund any care costs she may require. I would also consider the value of her current property and model how much income she could generate to further supplement care costs if necessary.’
Jenny now appreciates that it is never too late to start financial planning. She is reassured that she could sell her home and invest the life assurance lump sum to cover any potential care costs. This has given her the confidence to maintain her current spending and enjoy her retirement while she is in good health.