You work hard to earn money do the things that you want to do in life. In retirement it’s your money that must work for you.
We know from many years of experience that our clients have concerns regarding retirement planning, its associated costs, complexities and connotations.
Over this time there have been many changes to pensions from employment, those saved for privately and ‘state pensions’ provided by government. There are also significant flexibilities in how you may receive benefits in retirement.
We are acknowledged experts in these developments. We aim to make the complex simple and plan meticulously with you for you.
We believe our review process to be one of the most rigorous in the market. It needs to be – there are many thousands of pension and investment options to consider.
Together we conduct a thorough analysis of your current situation and aspirations – the suitability of your existing pension provision, the amount of money you need to live comfortably for the rest of your life, the flexibilities and options that you have, and the future welfare considerations of your family. We will evaluate if you need to invest further and how and when it is best to do so.
It is important to live throughout life with proper financial and tax efficient plans in place that fully reflect how you want to live. Retirement should be no different.
Full retirement analysis of all your pension arrangements
Retirement projections to find out where you are
Analysis of Final Salary Pension Schemes in lieu of deferred benefits and transfer values
Creation of a strategy to deliver the required pension income when it is needed
Maximise the tax efficiency of your pension income using all your resources
How we can help – case studies
Sale of business in order to retire
A client aged 62 and recently retired through the sale of his business.
Aim & Objective
To generate an income of £30,000 a year after tax in order to meet his retirement expenses.
Client has built up £500,000 in his Pension plans and is receiving £500,000 from the sale of his business after entrepreneurial relief.
Using his personal allowance of £12,500 he was able to draw this income from his pension fund tax free. In addition we topped that up with £2,500 of tax free cash a year from the same fund. The additional £15,000 has come from investing his £500,000 capital in a General Investment account. At present this will pay no capital gains tax but in the future we can use his £12,300 annual allowance to mitigate any liability.
The combination of the £15,000 from his pension fund and the £15,000 from his General Investment account has provided the client the income he needs to meet his retirement expenses and avoid paying any income tax or capital gains tax.
At age 66 he will receive his State Pension therefore less income will be needed from his Investments and Pensions to meet his needs. As a moderate risk investor and the fact he is drawing out not more than 3% a year from his capital , it is possible for the underlying funds to continue to grow and this increase in income to be index linked.
What are the main types of pension schemes?
There are two main types: a defined benefit and a defined contribution pension scheme.
What is a defined benefit scheme?
The other type of scheme is a defined contribution scheme or DC scheme. In this type of arrangement, you will normally be expected to contribute as will your employer. This is suitable for the self-employed. Payments are invested to build up a pot which will then fund your retirement.
What is a defined contribution scheme?
A defined benefit scheme (commonly known as final salary or DB Scheme) is where your employer promises to give you an income in retirement based upon the number of years you have worked for them and your salary. It may be non-contributory, or you may be required to pay into it.
How much will you need in retirement?
In retirement, your outgoings are likely to be lower. For example, most retirees will have paid off their mortgage and their children will be financially independent. A general rule of thumb is that someone under the age of 40 would need 50% of their current net salary to have a good standard of living in retirement.
An easier target to focus on might be, 2/3rds of your net final a salary.
You should also think about the state pension. Under current rules this could be worth £ 9110 per year depending on your NI record.
The amount you need to save depends on the size of the pension pot that you want, it also depends on your age.
For example, putting 10% of your earnings towards your pension is fine if you are in your 20’s but this may have increased to 20-25% if you leave it until you are in your 40’s to get the same level of income.
For example if you are in your 30’s you should look at a percentage contribution of half your age or 15%.
It all depends on your circumstances and how much income you think you will need when you stop work but essentially you should contribute as much as you can afford.
How do you work out a proper pension plan?
None of us know what the future holds but it makes sense to meet with an independent financial adviser to sense check your current financial position and plan for the future.
Speaking to a knowledgeable and experienced adviser about your retirement plans will help you get a clear view of your current situation and any changes that need to be made, so that your money works as hard as it can.
What if things change?
That is the reason for planning with a financial adviser. Almost all of us will face change through our lives either as a result of our own choice or other factors. Your adviser will work with you as these changes happen so that you can keep your retirement plans on track.
Is the pandemic affecting my retirement?
The pandemic is causing many people to reconsider their retirement plans and lockdown is giving many others the time to look more closely at their savings and outgoings. In short people are looking at various scenarios. Do I need to work for longer? Can I go part time or take early retirement? The best is to work with a financial adviser who will help you to understand and explain your options, so you can make an informed decision.
If you would like to discuss your financial position further with one of our consultants (without obligation), then click on the button and select a suitable time and date to arrange a meeting.
The Financial Conduct Authority does not regulate Tax advice.
If you would like to learn more about how Rob Mac can help you then please call us now on 0131 226 6700 or send us a message by clicking here.
Robson Macintosh & Company Ltd.
15 Manor Place, Edinburgh, Scotland, EH3 7DH
Tel: 0131 226 6700 Email: firstname.lastname@example.org
Registered in Scotland No. - SC232903.
Registered office: 15 Manor Place, Edinburgh, EH3 7DH
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