If you are concerned or confused about your pension as you approach retirement age, or possibly you are thinking about retiring and have a few questions, we may be able to help bring clarity to your situation.
Choosing your retirement age will have implications on how much money you will have in your twilight years.
Though the subject of retirement is complex, and factors such as your pension fund, life insurance, and equity release may all come into play, choosing when to retire may well boil down to a simple question: Have you acquired enough money to give you the income you want when you retire?
With this in mind it is worth considering an action plan for your retirement. This will detail your pension plan and pension fund, your state pension, and the money your annuity will yield. Your outgoings can also be put on your action plan which provides clarity on how much disposable cash you will have when you retire. The advantage of an action plan is that it makes your financial situation clearer to see.
Good financial advisers will ask you questions about how you plan to live when you retire. The more extravagant the more money you will require to sustain a lifestyle of this kind. So define your lifestyle, and possibly estimate how much you will need to sustain it.
Using your action plan as a guide, and by using a retirement calculator, you should be able to calculate how much money your various incomes will give you on an annual basis.
This may also make clear potential funding gaps. It could be possible the annuity is not going to yield as much as you thought. To be able to retire on the income you want, these kinds of hurdles need to be overcome.
To that end avoiding early retirement could have benefits. Deferring your retirement for five years for example will see your state pension rise to £152 per week for example, and a larger private pension pot will also pay dividends.
The value of annuities may drop over the years you defer retirement. So in some ways having a backup plan or alternative may be prudent. Equity release for example may provide you with the amount of money you need to address a potential funding gap.
In all instances it is worth speaking to an unbiased financial adviser like us. We also provide advice on life insurances and the different kinds of policy available.